In this article
01 · THE QUESTION
The transition question
IFRS 18 changes how income and expenses are grouped, which subtotals appear and how management-defined performance measures are explained. Comparative figures must be restated before the first IFRS 18 statements are issued.
The finance team needs to know which existing choices still work, which balances move and which judgements need an explicit record.
02 · THE FRICTION
Why this is difficult
The standard supplies categories and principles, but the answer depends on how the organisation earns money, how accounts are used and what management communicates outside the financial statements.
Foreign exchange differences follow their underlying source. Interest may be operating, investing or financing. A measure used publicly may require disclosure while a similar internal measure does not.
The rule is only one part of the answer. The organisation's accounts, contracts and public reporting determine how it applies.
03 · DENDROH'S WORK
What Dendroh does
Dendroh brings the standard, the ledger and the organisation's reporting records into one transition programme. Separate investigations cover scope, the main business activity, account classification, expense presentation, performance measures and comparative restatement.
STATEMENT OF PROFIT OR LOSS
Each balance follows its underlying evidenceMiscellaneous income remains unclassified until the transactions behind the balance are identified.
04 · THE EVIDENCE
What the review surfaces
The scenario separates clear classifications from decisions that depend on context. Interest on a fixed deposit sits in investing. Lease interest sits in financing. Foreign exchange follows the transaction or balance that created it.
Statement categories
Ledger populations map to operating, investing, financing and tax.
Adjusted EBITDA
Public use makes it a management-defined performance measure in this scenario.
Miscellaneous income
The balance cannot be classified until its source transactions are known.
05 · THE OUTPUT
What the work produces
The finance director receives a transition record that ties the proposed presentation to the ledger and the evidence used. It identifies the comparative restatement, required disclosures and the items that remain open.
- IFRS 18 and related amendments
- Prior-year financial statements
- General ledger and account narratives
- Board and public reporting material
- Finance and deposit agreements
- Management explanations and approvals
06 · AUTHORITY
Authority and accountability
Dendroh performs the structured investigation, tests the classification and keeps the sources attached. The finance director approves the reporting method and decides how open items will be resolved.
The external auditor reviews the resulting financial statements within the wider audit. Dendroh prepares the basis for that review; it does not issue the audit opinion.
