4.1 Presentation of Financial Statements

There are many similarities between financial statement presentation under IFRS Accounting Standards and U.S. GAAP, although there are more requirements under IFRS Accounting Standards governing line items and comparative information than under U.S. GAAP. Specific presentation of particular financial statement line items is required by individual accounting guidance and SEC rules and regulations under U.S. GAAP. Under IFRS Accounting Standards, particular financial statement line items and one year of comparative financial information are required, with certain exceptions. While there is no requirement to present comparative financial information under U.S. GAAP, SEC regulations require comparative financial information for public registrants. Under both IFRS Accounting Standards and U.S. GAAP, a complete set of financial statements consists of the following: a statement of financial position, a statement of profit or loss and OCI, a statement of cash flows, a statement of changes in shareholders’ equity, and accompanying notes. The table below shows the key differences between the presentation of financial statements under IFRS Accounting Standards and under U.S. GAAP. Other differences that affect the presentation of financial statements are included in Section 4.4, which discusses changes in accounting principles, changes in accounting estimates, and error corrections.

Changing Lanes

IFRS Accounting Standard on Presentation and Disclosure in Financial Statements

On April 9, 2024, the IASB published IFRS 18, a new accounting standard on presentation and disclosure in financial statements that replaces IAS 1. Although IFRS 18 carries forward many of the existing requirements in IAS 1, it also introduces new requirements to (1) present specified categories and defined subtotals in the statement of profit or loss, (2) provide disclosures on management-defined performance measures in the notes to the financial statements, and (3) improve the aggregation and disaggregation of information in the primary financial statements. In addition, some of the requirements in IAS 1 have been moved to IAS 8 and IFRS 7, and minor amendments were made to IAS 7 and IAS 33. For further information regarding the main provisions in IFRS 18, see Deloitte’s April 2024 iGAAP in Focus.

Entities are required to apply IFRS 18 for annual and interim reporting periods beginning on or after January 1, 2027, with earlier application permitted. Retrospective application is required.

Proposed ASU on the Disaggregation of Income Statement Expenses

Similarly, the FASB is expected to finalize its Disaggregation — Income Statement Expenses (DISE) project in the fourth quarter of 2024. The proposed ASU would add ASC 220-40, which would require PBEs to disclose, in a tabular format in the footnotes to the financial statements, disaggregated information about specific categories underlying certain income statement expense line items that are considered “relevant” (or “relevant expense captions”). The effective date is expected to be set for fiscal years beginning after December 15, 2026, which would align with IFRS 18.

We expect the adoption of IFRS 18 and the DISE standard to result in differences between presentation and disclosure in financial statements under IFRS Accounting Standards and under U.S. GAAP. Such differences are not included in the table below.

Topic	IFRS Accounting Standards (IAS 1)	U.S. GAAP (ASC 205-10, ASC 220-10, ASC 470-10, ASC 505-10, ASC 810-10) and SEC Regulation S-X
Comparative financial statements	An entity must provide one year of comparative financial information.	No specific requirement under U.S. GAAP to present comparative financial statements. Generally, at least one year of comparative financial information is presented. Public companies are subject to SEC rules and regulations, which usually require two years of comparative financial information for the income statement and the statements of equity and cash flows.
Debt classification — subsequent events	Events that take place after the reporting date (refinancing, covenant violation waiver, and so forth) are generally not considered in the classification of debt as of the reporting date. A short-term obligation is classified as current even if the debtor refinances it on a long-term basis (or a long-term financing arrangement is executed) after the balance sheet date.	Events that take place after the reporting date (refinancing, covenant violation waiver, and so forth) are generally considered in the classification of debt as of the reporting date. A short-term obligation is classified as noncurrent if it is refinanced on a long-term basis (or a long-term financing arrangement is in place) by the time the financial statements are issued (or available to be issued).
Debt classification — violation of loan covenants as of the reporting date whereby a long-term loan becomes payable on demand	Debt is classified as a current liability.	Such debt is classified as a noncurrent liability if the lender provides a qualifying covenant waiver before the financial statements are issued.
Classification — expenses	An entity may present its expenses either by function or nature. Certain disclosures are required if the entity chooses to present the expenses by function.	An entity may present its income statement in (1) a single-step format (all expenses are classified by function and deducted from total income to arrive at income before tax) or (2) a multiple-step format (operating and nonoperating expenses are separated before presenting income before tax).