From IAS 1 to IAS 8: What the Shift Means for Going Concern Disclosures

The recent changes introduced by IFRS 18 represent more than a technical reshuffle—they reflect a broader evolution in financial reporting transparency. One of the key updates is the relocation of going concern requirements from IAS 1, Presentation of Financial Statements, to IAS 8, Basis of Preparation of Financial Statements. While the fundamental principles of going concern assessment remain unchanged, this transition emphasizes its integral role in the basis of preparation and underscores the need for clear, principle-based disclosures.

For finance leaders, auditors, and governance professionals, understanding the implications of this shift is critical. It’s not just about compliance—it’s about reinforcing investor trust through transparency.

Key Changes Explained

Historically, the specific requirements for going concern assessment and disclosure were embedded in IAS 1. With the introduction of IFRS 18, Presentation and Disclosure in Financial Statements, these requirements now reside in IAS 8.

What does this mean?

• Refined Structure: Going concern disclosures are now explicitly aligned with the broader concept of basis of preparation, making the connection between financial statement preparation and disclosure obligations clearer.

• Consistency with IFRS 18: IFRS 18 seeks to modernize presentation and disclosure requirements, providing a stronger foundation for principles-based reporting. Moving going concern requirements supports that goal.

• Effective Date: IFRS 18 applies for annual periods beginning on or after 1 January 2027. Entities need to plan early to ensure a smooth transition.

While the technical relocation may seem minor, its impact on processes, governance, and disclosure practices is significant.

What Stays the Same

Despite the structural shift, the core principles of going concern assessment have not changed:

• Management must assess whether financial statements should be prepared on a going concern basis.

• Disclosure of material uncertainties remains mandatory when conditions cast significant doubt on an entity’s ability to continue as a going concern.

• When significant judgment is applied in concluding that no material uncertainties exist, disclosure of those judgments is required.

The binary decision—prepare on a going concern basis or not—still applies, but the expectations for transparency around that decision remain as important as ever.

Practical Implications for Preparers

This change is not just a technical update—it requires preparers to rethink internal processes, governance, and communication strategies:

1. Policy Updates

   • Revise internal accounting policies to reflect the IAS 8 framework.

   • Ensure staff training includes updated IFRS references and disclosure guidelines.

2. Enhanced Documentation

   • Document assumptions, mitigating actions, and significant judgments clearly.

   • Align narrative disclosures with other sections of the financial statements to avoid inconsistencies.

3. Governance Oversight

   • Boards and audit committees should review how going concern assessments are challenged and approved.

   • Engage auditors early to ensure interpretations align, especially under ISA 570 (Revised 2024).

4. Technology and Reporting Systems

   • Update templates and checklists to incorporate IAS 8 requirements and IFRS 18 presentation rules.

The Bigger Picture

The relocation of going concern requirements reflects a principles-based approach to disclosure. Rather than treating going concern as an isolated compliance requirement, IAS 8 positions it as part of the broader narrative on basis of preparation and judgment transparency.

This move also signals an expectation that companies will adopt a forward-looking mindset—integrating going concern considerations into risk management and strategic planning, not just year-end reporting.

Preparing for the Shift

The clock is ticking toward 2027. Here are three steps organizations should take now:

• Start Early: Update internal guidance and educate teams on IFRS 18 and IAS 8 requirements.

• Focus on Disclosure Quality: Going beyond boilerplate language builds trust with investors and regulators.

• Collaborate Proactively: Involve auditors, risk managers, and governance committees early to align on interpretation and application.

By embracing these changes proactively, organizations can strengthen transparency, meet compliance obligations, and reinforce stakeholder confidence in an increasingly complex financial environment.

Next Step!