IFRS 18: Are you prepared for the new EBITDA?

This change in accounting standards will impact the management analysis of results starting in 2027, requiring the attention of decision-makers

By Marluci Azevedo

IFRS 18 (CPC 51), which takes effect on January 1, 2027, represents a significant structural change in how companies’ financial performance will be presented, interpreted, and used by senior management.

Indicators such as EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization) require attention in this new context. The standard addresses the subjectivity that often arose in connection with the calculation of this metric.

More than an update, IFRS 18 redefines the logic of the Income Statement, with direct impacts on governance, systems, chart of accounts, and closing processes.

In essence, this represents a transition from a flexible presentation model to a more standardized and globally comparable model, with direct effects on how the market and management interpret performance.

New Income Statement structure and reorganization of performance

The central change in IFRS 18 lies in the new income statement structure, which will now organize revenues and expenses into three major categories: operating, investing, and financing. This reorganization significantly changes the way results are interpreted and how performance is segregated and analyzed.

In addition, the standard reinforces stricter principles for aggregating and disaggregating information, requiring greater consistency in how data is presented. This directly impacts the calculation of subtotals and the visibility of operating income.

Management Performance Measures (MPMs) disclosure is now required in the explanatory notes. The goal is to increase transparency and ensure alignment between the performance measures reported to the market and international accounting standards.

In practice, MPMs were already in use, but there was no standardization or clarity regarding how these measures aligned with the figures presented in the financial statements. For example, EBITDA and adjusted EBITDA are now formally regulated in terms of disclosure.

Currently, EBITDA is calculated using the following formula: EBIT (earnings before interest and taxes) + Depreciation + Amortization; it may also include additional adjustments that can lead to distortions—one of the issues that IFRS 18 will address.

Operational impacts: Chart of accounts, systems, and closing

The implementation of IFRS 18 requires a thorough review of companies’ accounting and operational structures. The chart of accounts must be realigned with the new economic classification framework, which directly affects the bookkeeping model and the consolidation of results.

From a systems perspective, ERPs and reporting tools must support the new income statement structure and ensure consistency in the financial closing process. This makes the process multidisciplinary and more dependent on cross-departmental integration.

Also see: IFRS 18: Understand what is changing and how it affects your company

Comparative Data for 2026 and the Transition challenge

Therefore, as of December 31, 2027, annual financial statements must be issued in accordance with IFRS 18. However, the transition process should begin as soon as possible.

This is because one of the most sensitive aspects of applying the standard is the need to organize the 2026 comparative data from the new perspective. In practical terms, this means that a reconciliation must be presented between each item in the income statement reported in accordance with IAS 1 versus IFRS 18 for the comparative period. This requires the historical restatement of financial information and the reclassification of results.

This process increases the complexity of the transition and requires advance planning, otherwise there is a risk of compromising comparability between periods and the reliability of the reported information.

Impacts on management’s interpretation of performance

It is essential to emphasize that the impact of IFRS 18 is not limited to accounting, but extends to the way management interprets results. The structure of the income statement directly influences the interpretation of operating income, performance indicators, and management reports used in decision-making.

This implies the need to recalibrate analytical models, since the format of financial information will undergo structural changes. In other words, it is not just the numbers that change, but the way performance is interpreted.

Managers and decision-makers in the financial sphere must understand the key aspects of this change so they are not caught off guard by information presented in a new format.

Risks and points of concern for senior management

From a governance perspective, three points deserve special attention: the risk of misalignment between financial and management reporting, the complexity of reconstructing historical data, and the reliance on integrated systems to ensure consistency of information.

A lack of coordination between accounting, IT, and the controller’s office can lead to distortions in this transition process.

IFRS 18: Support for a secure implementation

Domingues e Pinho Contadores helps you understand the technical implications of this new reality, ensuring that business decisions continue to be made on a sound basis.

From assessment to implementation—including the adjustment of accounting, tax, operational, and system practices to meet the new requirements—you can count on DPC’s advisory support. Contact us to schedule a meeting: dpc@dpc.com.br.