IFRS 2026 Updates: IFRS 18, IFRS 9 Amendments & What Changes This Year
The International Accounting Standards Board (IASB) has been active in 2025 and early 2026, issuing a series of amendments and new standards that will reshape financial reporting for entities applying IFRS globally. The IFRS 2026 updates span immediate changes effective for annual periods beginning January 1, 2026, and major structural changes arriving in 2027. Grant Thornton’s 2026 edition of “Navigating the Changes to IFRS” and the IASB’s March 2026 update both confirm that this is one of the most consequential periods for IFRS preparers in recent years. In this guide, we break down every key change, their effective dates, and what your organization needs to do now.
What IFRS 9 Amendments Are Effective for 2026? 💡
Two sets of IFRS 9 amendments take effect for annual reporting periods beginning on or after January 1, 2026: the Classification and Measurement of Financial Instruments amendments, and the Contracts Referencing Nature-dependent Electricity amendments — both with significant implications for financial statement preparers.
1. Amendments to the Classification and Measurement of Financial Instruments (IFRS 9 and IFRS 7)
These amendments address two longstanding areas of diversity in practice:
- Settlement of liabilities through electronic payment systems: The amendments clarify when a financial liability is derecognized. Generally, a company derecognizes its trade payable on the settlement date — normally when payment is completed. An optional exception allows earlier derecognition (potentially on the date payment is initiated and cannot be cancelled) when the electronic payment system meets specific criteria: no practical ability to withdraw or cancel the payment, no practical ability to access the cash after initiation, and insignificant settlement risk.
- Financial assets with ESG-linked features: Under the previous IFRS 9, it was unclear whether financial assets with ESG-linked features (e.g., interest rates tied to sustainability performance targets) passed the Solely Payments of Principal and Interest (SPPI) test. The amendments introduce an additional SPPI assessment for financial assets with contingent features unrelated to basic lending risks or costs, providing clearer guidance on whether such instruments are measured at amortized cost or fair value through profit or loss.
2. Contracts Referencing Nature-dependent Electricity (Amendments to IFRS 9 and IFRS 7)
Renewable power purchase agreements (PPAs) — contracts for electricity from wind, solar, and other nature-dependent sources — have been difficult to account for under existing IFRS 9. These amendments:
- Clarify the application of the own use exemption to nature-dependent electricity contracts
- Allow contracts for electricity from nature-dependent renewable energy sources to be used as a hedging instrument under specific conditions
- Introduce additional disclosure requirements to help investors understand the impact of these contracts on financial performance and future cash flows
For companies with significant renewable energy procurement — particularly large manufacturers, technology companies, and utilities — the nature-dependent electricity amendments are a game changer. Previously, PPAs were often off-balance-sheet arrangements with limited hedge accounting options. The 2026 amendments open up hedge accounting treatment and require new disclosures that investors have been requesting for years. We recommend that affected entities assess their existing PPA contracts immediately to determine if hedge accounting elections are beneficial.
What Is IFRS 18 and When Does It Replace IAS 1? 📊
IFRS 18 Presentation and Disclosure in Financial Statements replaces IAS 1 Presentation of Financial Statements and is effective for annual periods beginning on or after January 1, 2027 — meaning December 31, 2027 year-end companies must apply it in their next set of annual financial statements.
IFRS 18 is arguably the most significant change to financial statement presentation in a generation. Its key reforms include:
| Change Area | What Is Different Under IFRS 18 |
|---|---|
| Statement of Profit or Loss | Introduces defined “operating profit” and “profit before financing and income tax” subtotals. All income/expenses categorized as operating, investing, or financing. |
| Expense Presentation | Companies can no longer disclose operating expenses only in the notes. Must present expenses by nature, function, or mixed presentation in the statement of P&L. |
| Management Performance Measures (MPMs) | Non-GAAP subtotals used in public communications must be disclosed in a dedicated note with explanations, calculations, and reconciliation to IFRS line items — and are subject to audit. |
| Cash Flow Statement | Operating profit becomes the starting point for the indirect method. The option to classify interest and dividends as operating activities is eliminated for most entities. |
| Balance Sheet | Goodwill is required to be presented as a separate line item on the face of the balance sheet. |
The transition requirements are also demanding: in the first year of IFRS 18 application, entities must provide a reconciliation for each line item in the statement of profit or loss between the restated IFRS 18 amounts and the previously presented IAS 1 amounts for the comparative period.
Do not delay IFRS 18 preparation until 2026 year-end. The standard requires significant systems and process changes: new categories for income and expense items, restructured P&L templates, audit-ready MPM disclosures, and revised cash flow presentations. Many large organizations are already running parallel reporting to test IFRS 18 outputs. Start your gap analysis now — 2027 is closer than it appears.
What Is IFRS 19 and Who Does It Apply To? 🏗️
IFRS 19 Subsidiaries without Public Accountability: Disclosures allows qualifying subsidiaries to apply full IFRS Accounting Standards with significantly reduced disclosure requirements — effective for annual periods beginning on or after January 1, 2027.
IFRS 19 is designed to reduce the disclosure burden for subsidiaries that do not have public accountability (i.e., they are not publicly traded and do not hold assets in a fiduciary capacity for a broad group of outsiders). To qualify, a subsidiary must:
- Not have public accountability at the reporting date
- Have a parent that produces consolidated financial statements under IFRS Accounting Standards
A qualifying subsidiary applying IFRS 19 must explicitly state in its compliance statement that IFRS 19 has been adopted. The benefit: significantly fewer note disclosures across many areas — a meaningful reduction in preparation effort and cost for groups with numerous subsidiary entities.
Note: IFRS 19 has not yet been endorsed by the European Union as of early 2026, so EU-based entities must monitor EU endorsement status before applying it.
What Did the March 2026 IASB Meeting Decide? 🔍
The March 2026 IASB meeting, summarized in the March 2026 IASB Update, addressed several ongoing standard-setting projects including a tentative IFRIC agenda decision on IFRS 10 Consolidated Financial Statements — open for comment until May 29, 2026.
The March 2026 IFRIC Update contains one new tentative agenda decision relating to IFRS 10 Consolidated Financial Statements — specifically addressing a control assessment for a single-investor fund. The March 2026 IASB Update also covers ongoing work on:
- Post-implementation Review of IFRS 9 Hedge Accounting
- IFRS for SMEs Accounting Standard — new webcasts and modules
- IAS 28 Investments in Associates and Joint Ventures
- Scope of IFRS 18 expense classification requirements
Interested parties can comment on the tentative IFRIC agenda decisions through the IFRS Foundation’s website at ifrs.org before the May 29, 2026 deadline.
Annual Improvements Volume 11 — What Changed? 🛠️
Annual Improvements to IFRS Accounting Standards – Volume 11 is also effective for periods beginning on or after January 1, 2026, with minor but important amendments to IFRS 9, IFRS 1, IFRS 7, IFRS 10, and IAS 7.
The Volume 11 improvements address a conflict between IFRS 9 and IFRS 15 regarding initial measurement of trade receivables, and clarify the derecognition of lease liabilities under IFRS 9. Specifically:
- Trade receivables without a significant financing component must now be initially measured using the IFRS 15 transaction price — resolving a previously unclear overlap.
- When a lease liability is derecognized under IFRS 9, the difference between the carrying amount and the consideration paid is recognized in profit or loss — eliminating divergence in practice.
🔑 Key Takeaways: IFRS 2026 Updates Summary
- IFRS 9 amendments effective Jan 1, 2026: ESG features, electronic payment derecognition, renewable energy PPAs
- Annual Improvements Volume 11 effective Jan 1, 2026: Trade receivables initial measurement, lease liability derecognition
- IFRS 18 replaces IAS 1 — effective Jan 1, 2027: Start gap analysis and systems preparation now
- IFRS 19 effective Jan 1, 2027: Disclosure relief for qualifying subsidiaries without public accountability
- IFRIC tentative decision on IFRS 10 open for comment through May 29, 2026
