IFRS 18 Compliance Checklist for UAE Businesses: What You Need in 2025

Rajinder Singh Nagiyal

December 8, 2025

Accounting

IFRS 18 Compliance Checklist for UAE Businesses: What You Need in 2025

Staying ahead in the fast-paced world of financial reporting is crucial—especially with the arrival of IFRS 18. For every UAE business, 2025 is the pivotal year to begin preparations for seamless compliance. The new international standard means a major update in the way companies present profit and loss, structure disclosures, and communicate performance to stakeholders. This comprehensive guide combines a practical checklist, pitfalls to avoid, and solutions tailored for your business, helping you ensure transparent, investor-friendly financial statement presentation under IFRS 18.

Whether you are part of a family business, a Dubai-based SME, or a publicly listed group in the UAE, the checklist for UAE compliance is changing. The new focus is clear: clarity, structured reporting, and strong internal audit practices. Read on to discover how to future-proof your financial statement preparation and align your business with global best practices starting now.

What is IFRS 18?

IFRS 18, issued by the International Accounting Standards Board (IASB), is the new international accounting standard changing the rules for financial statement presentation from 2027 onwards. It brings defined structure and clarity to the profit and loss statement, introducing new categories—operating, investing, financing, tax, and discontinued operations—and requiring clear subtotals for transparency and comparability.

The standard mandates that every income and expense item be classified into these categories, making financial statements more meaningful to users and investors. Companies must now disclose management-defined performance measures (MDPMs), adding discipline and transparency to the presentation of key financial statement metrics. The result: UAE businesses present financial information in a much more accessible, structured way, aligned with the latest global expectations of audit, compliance, and risk management.

IFRS 18 also sets out stricter rules regarding the aggregation and disaggregation of data, giving much clearer insights into what makes up subtotals like operating profit or loss.

What is the 2025–2027 timeline for IFRS 18 compliance in the UAE?

IFRS 18 is mandatory for annual reporting periods starting on or after 1 January 2027, but the standard allows for early adoption by UAE companies that wish to streamline compliance and bolster financial credibility ahead of time. The 2025 and 2026 reporting years are crucial for businesses operating in the UAE to align their processes, update accounting systems, and test presentation layouts.

Early adoption is available if companies provide adequate disclosures and restate comparative financial statement periods to match the new requirements. This provides an important window for businesses to refine templates, retrain internal audit teams, and update financial statement preparation practices before the regulation becomes compulsory.

Transition timelines mean companies must plan now to ensure compliance, including updates to accounting software, policies, and staff skills. The FTA and regulatory authorities in Dubai and across the UAE expect firms to begin preparations throughout 2025 and 2026.

What are the IFRS 18 checklist essentials for financial statement preparers?

A robust compliance checklist for UAE companies preparing for IFRS 18 should cover the following core items:

Categorisation of Income and Expenses: Every financial statement must now show clear breakdowns of operating, investing, financing, tax, and discontinued items, using the exact definitions in IFRS 18.
Disclosure Standards: Enhanced note disclosures must explain the basis for classification, segment reporting, significant estimates, and the use of management-defined metrics.
Defined Subtotals: Profit or loss statements must include new, mandatory subtotals such as operating profit or loss and profit or loss before financing and income taxes, all prepared with strict aggregation and disaggregation principles.
Segment Reporting: Segment data (as per IFRS 8) must be more detailed, with consistent categorisation and explanations of the risks and performance of different business lines.
Management-Defined Performance Measures: Where management presents its own measures (e.g., ‘adjusted EBITDA’ or industry-specific KPIs), these must be fully reconciled and disclosed.
Comparative Period Adjustments: All prior year comparatives must be restated to allow proper comparison under the new standard.
Aggregation and Disaggregation: Apply enhanced principles to ensure items are reported at the right level of detail—avoiding both excessive summarisation and unnecessary complexity.

A full internal audit, or ‘health check,’ against this checklist is essential before the 2027 deadline to ensure nothing falls through the cracks.

How does IFRS 18 impact audit firms, SMEs, and public companies in the UAE?

The new standard affects every business that prepares financial statements under IFRS, but the impact is felt differently by public and private companies, SMEs, and audit firms.

Audit Firms: Auditors must now review compliance not just with general IFRS rules but with the much more detailed structure imposed by IFRS 18. Audit checklists also expand to include management-defined performance measures and detailed aggregation notes.
SMEs: While some smaller businesses in the UAE may follow IFRS for SMEs, many operate in free zones or sectors that require full IFRS. The increased burden of disclosure, system updates, and comparative figures means SMEs need efficient processes and support for compliance.
Public Companies: Listed and public interest entities face the highest compliance bar. Analysts and investors will closely scrutinise the new subtotals and segment information, making accuracy and clarity more important than ever. Public companies in Dubai and Abu Dhabi should lead the way in early adoption.
Internal Controls: All businesses will need tighter internal audit procedures and improved controls to avoid errors, manage risk, and provide audit evidence for classification decisions.

The landscape of the UAE, with its close regulatory scrutiny and international investor community, makes compliance especially urgent for businesses aiming for regional or global growth.

IFRS 18 vs IAS 1

IFRS 18 replaces the previous IAS 1 standard on the presentation of financial statements. Key changes include:

More Structured Reports: IFRS 18 enforces a uniform structure for the profit or loss statement, unlike the more flexible presentation under IAS 1. This means financial reporting is less subject to personal judgement and more comparable across UAE businesses.
Mandatory Subtotals: Under IAS 1, companies could define their own subtotals. Now, you must use those specified by IFRS 18, making internal reporting and external audits both more disciplined and transparent.
Notes Section Expansion: Disclosures in the notes section are expressly extended, with companies now required to explain significant judgements in classification, segment breakdowns, and the use of management-defined metrics.
Disaggregation and Aggregation: The standard introduces clearer, more explicit principles for both grouping and splitting financial data—helping users understand the underlying detail.
Audit Scope: Audit processes must now cover the rationale for categorisation and management choices in much more detail.

For UAE companies, this means templates and system logic must be updated, and all disclosures carefully mapped against the new checklist.

What financial policy adjustments should UAE firms make now?

To ensure compliance for 2025 and beyond, every business needs to review and update its internal accounting policies and communication protocols:

Classification Policies: Firms must create or update internal policies defining exactly how to assign income and expense items to each IFRS 18 category.
Disclosure of Management-Defined Metrics: Where businesses use bespoke measures internally or externally, these need clear definitions, reconciliations, and supporting notes.
Retrospective Adjustments: Companies must be ready to restate prior-year figures for comparability, which requires both strong historic records and audit trail controls.
Staff Training: Financial statement preparers, accountants, and finance managers need in-depth training in the new structure and associated requirements.
Board and Investor Communication: Boards and audit committees should be briefed early, and investor relations teams must be ready to explain new subtotals and variances year-on-year.

A solid transition plan, including internal consultation and stress testing with audit teams, will be essential for a smooth switch.

What new internal controls and management metrics are required?

Stronger internal controls are key to successful IFRS 18 rollout:

Internal Control Adjustments: Companies need enhanced processes for verifying the proper classification of items, especially in complex businesses or those operating in multiple segments in the UAE.
Workflow for Disaggregation: Ensure financial teams document and justify disaggregation decisions, linking expense records directly to the statement of profit and loss.
Review of Management Performance Measures: Ensure all management-defined metrics are documented, calculated consistently, and independently reviewed as part of internal audit.
Management Oversight: Senior management and the board must take a more active oversight role, with defined responsibilities for policy approval and financial statement sign-off.
Link With Audit Planning: Audit scope and checklists must explicitly cover the controls over new IFRS 18 requirements, ensuring nothing is missed before external audit deadlines.

For groups with Dubai and UAE subsidiaries, centralised templates and checklists can help ensure consistent compliance across the organisation and reduce risk.

What are the most common IFRS 18 reporting mistakes in the UAE?

Despite the focus on checklists and controls, certain pitfalls are likely to trouble UAE businesses:

Misclassification: Placing income or expenses in the wrong category is expected to be a leading error. Operating vs investing splits may cause confusion, especially for diverse companies.
Incomplete Disclosure: Failing to provide full reconciliations for management-defined performance measures, segment analyses, or aggregation/disaggregation notes can derail compliance.
Inconsistency in Comparatives: Not properly restating prior year figures breaks comparability and may undermine both FTA tax filing and investor trust.
Insufficient Internal Audit Trail: Poor documentation makes it hard for external auditors to verify classification and aggregation decisions.
Over-Summarisation or Excess Detail: Either grouping too much under broad headings or disclosing excessive, low-value line items—both can harm clarity and compliance.

UAE businesses should combine their compliance checklist with thorough audit checklists and periodic internal reviews.

How does RSN Finance Support IFRS 18 training, templates, and audit readiness?

RSN Finance is at the forefront of IFRS and audit support for businesses across the UAE and Dubai. Our team helps businesses navigate the compliance requirements of IFRS 18, including:

Compliance Training: Customised IFRS 18 courses for finance and internal audit teams, focusing on new categorisation, aggregation, and disclosure standards.
Template Updates: Provision and support in updating your chart of accounts, reporting systems, and financial statement templates—aligned with the new checklist and UAE regulations.
Audit Readiness Reviews: Pre-audit assessments, document checklists, and “dry-run” reviews to ensure full regulatory compliance before your financial statements are submitted for external audit.
Policy and Process Advisory: Development of clear policies for classification, aggregation, and management-defined metrics, tailored for your business model and sector.
Segmentation Guidance: Support for segment reporting, ensuring robust allocations and accurate segment note disclosures.

With these services, RSN Finance helps businesses in the UAE stay ahead on both compliance and investor trust while minimising stress, risk, and last-minute reporting issues.

Book Your IFRS 18 Compliance Training or Statement Review

Are you ready for IFRS 18? Contact RSN Finance to schedule a tailored IFRS training session, review your financial statement templates, or book a pre-audit health check. Our experts are ready to ensure your business in the UAE—large or small, public or private—meets every detail of the new standard and secures the confidence of auditors, regulators, and investors.

Frequently Asked Questions

What is the deadline for IFRS 18 compliance for UAE businesses?

IFRS 18 is mandatory for annual reporting periods starting on or after 1 January 2027 in the UAE, but early adoption is permitted.

What are the key new categories for profit or loss under IFRS 18?

The statement of profit and loss now requires classification into operating, investing, financing, tax, and discontinued operations, with strict definitions and required subtotals.

How does IFRS 18 affect SMEs and free zone companies in the UAE?

IFRS 18 applies to all entities reporting under full IFRS, including many SMEs (especially in free zones) and most public companies. SMEs using IFRS for SMEs must check if local requirements mandate early alignment.

What are the main enhancements to disclosure compared to IAS 1?

IFRS 18 introduces a much more structured notes section, with requirements for management-defined performance measures, aggregation and disaggregation explanations, and segment reporting, enhancing comparability and transparency.

How should UAE companies adjust their internal audit or controls for IFRS 18?

Firms must upgrade internal audit processes to cover the new classification requirements, implement regular compliance checklists, and maintain clear documentation for all categorisation decisions.

What are the main risks if a business fails to comply with IFRS 18 in the UAE?

Non-compliance can lead to audit qualifications, regulatory fines, loss of investor confidence, and problems with bank or FTA filings. Accurate financial records and internal controls are now essential.

Does RSN Finance offer tailored compliance and audit readiness services for IFRS 18?

Yes. RSN Finance supports UAE clients with customised training, template/design reviews, and pre-audit compliance checks, helping businesses prepare for the new standard smoothly and efficiently.

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IFRS 18 Compliance Checklist for UAE Businesses: What You Need in 2025