Mskuwait.comIFRS 18 in Kuwait: What Businesses Need to Know and How Odoo Can Help
Financial reporting is entering a new phase. IFRS 18 Presentation and Disclosure in Financial Statements introduces a more consistent and transparent way for companies to present their financial performance.
The standard becomes effective for annual reporting periods beginning on or after 1 January 2027, with early application permitted. It replaces IAS 1 and will primarily change how information is presented in the statement of profit or loss and disclosed in the notes. IFRS Foundation
For businesses in Kuwait, preparation should begin now.
What Is IFRS 18?
IFRS 18 was introduced to make financial statements easier to understand and compare.
Under the previous requirements, companies could present operating profit, adjusted profit, EBITDA and similar performance measures differently. This made comparisons between businesses difficult for investors, lenders and other users of financial statements.
IFRS 18 introduces a clearer and more consistent reporting structure.
The standard focuses on three major areas:
1. A More Structured Profit and Loss Statement
Income and expenses will be classified into five categories:
Operating
Investing
Financing
Income taxes
Discontinued operations
The operating category will generally include income and expenses arising from the company’s principal business activities.
2. Two Defined Subtotals
Companies will be required to present:
Operating profit or loss
Profit or loss before financing and income taxes
These standardized subtotals will make it easier to compare the financial performance of different companies.
3. Greater Transparency in Management Performance Measures
Many organisations publish measures such as:
Adjusted operating profit
Adjusted EBITDA
Normalised profit
Profit excluding exceptional items
Under IFRS 18, qualifying Management-Defined Performance Measures, or MPMs, must be properly explained and reconciled with the nearest IFRS-defined figure.
Companies will need to clearly disclose:
How the measure is calculated
Why management considers it useful
How it reconciles with the corresponding IFRS subtotal
The tax and non-controlling-interest effects of each adjustment, where applicable
IFRS 18 also strengthens the principles for grouping or aggregating and disaggregating information in financial statements and their accompanying notes.
Importantly, IFRS 18 mainly changes the presentation and disclosure of financial information. It does not generally change how transactions are recognized or measured, nor does it change the company’s overall net profit simply because the report format has changed.
How Will IFRS 18 Be Applied in Kuwait?
Kuwait has adopted IFRS Accounting Standards. According to the IFRS Foundation’s Kuwait jurisdiction profile, IFRS Standards are required for listed companies, financial institutions and companies falling under the Kuwait Commercial Companies Law. The profile also states that Kuwait applies IFRS Standards as issued by the IASB. IFRS Foundation Kuwait Profile
Therefore, companies in Kuwait preparing full IFRS financial statements should assess the impact of IFRS 18 and prepare for its application from 2027, subject to any specific instructions issued by the relevant Kuwaiti regulators.
Because IFRS 18 requires retrospective application, businesses should also be prepared to reorganize and restate comparative information. For a company adopting IFRS 18 from 1 January 2027, its 2026 comparative figures will need to be available in the new reporting structure.
This means businesses should not wait until the end of 2027. The preparation process should begin by reviewing:
The existing chart of accounts
Current profit-and-loss classifications
Operating, investing and financing transactions
Management reports and performance measures
Expense classifications
Comparative financial information
Group reporting and consolidation structures
Current ERP and accounting-system capabilities
What Will Change for Businesses in Kuwait?
The impact will vary depending on the size and complexity of the organization.
For many businesses, the biggest challenge will be determining whether each income and expense account belongs under operating, investing or financing activities.
Companies may also need to reconsider:
“Other income” and “other expense” accounts containing different types of transactions
Foreign-exchange gains and losses
Finance costs and interest income
Income from investments
Results from associates and joint ventures
Lease-related income and expenses
Management adjustments used in public reports
Expense reporting by function and by nature
Reporting consistency across subsidiaries and legal entities
Businesses with a detailed and well-maintained chart of accounts may only need systematic account mapping and reporting changes. Organizations using broad or unclear accounts may require restructuring, data cleansing and additional controls.
How Can IFRS 18 Be Managed in Odoo?
Odoo can provide the accounting data, classifications, reporting structure and audit trail required to support IFRS 18 reporting. However, IFRS compliance is not achieved by installing software alone. The system must be configured according to the company’s approved accounting policies and reviewed with its auditors.
An IFRS 18 implementation in Odoo may include the following:
IFRS 18 Chart-of-Accounts Mapping
Each relevant account can be reviewed and mapped to the appropriate IFRS 18 category:
Operating
Investing
Financing
Income tax
Discontinued operations
Where an existing account combines transactions belonging to different categories, new accounts or additional reporting dimensions may be introduced.
Custom IFRS 18 Profit and Loss Report
A customized financial report can be developed in Odoo to present:
Operating income and expenses
Operating profit
Investing income and expenses
Profit before financing and income taxes
Financing income and expenses
Profit before tax
Income-tax expense
Profit from continuing operations
Discontinued operations
Final profit or loss
The report can include current-year and comparative-year balances, filters, drill-down capability and supporting transaction details.
Management-Defined Performance Measures
Odoo can support the tracking and reconciliation of management-defined measures such as adjusted operating profit or adjusted EBITDA.
Custom reports and schedules can show:
The IFRS-defined subtotal
Each management adjustment
The reason for the adjustment
The tax effect
The effect on non-controlling interests
The final management-defined measure
Analytic Accounting and Reporting Dimensions
Odoo’s analytic accounting can help businesses analyze revenue and expenses by:
Department
Branch
Project
Cost centre
Product line
Business unit
Legal entity
This provides the detailed information required to understand and correctly classify financial performance.
Comparative and Multi-Company Reporting
For groups operating through several companies or branches, Odoo can help standardize account mapping and reporting structures across the organization.
This supports consistent comparative reporting and helps reduce manual consolidation work.
Supporting Schedules and Audit Trail
Every figure in an Odoo financial report can be linked to the underlying journal entries and source documents. This gives finance teams and auditors a clear audit trail while improving the reliability of the reporting process.
How MicroSolutions Kuwait Can Help
As an Odoo Silver Partner in Kuwait, MicroSolutions Kuwait can help organizations prepare their Odoo environment for IFRS 18.
Our services can include:
IFRS 18 readiness and system-gap assessment
Review of the existing Odoo chart of accounts
Mapping of accounts to IFRS 18 categories
Restructuring of unclear or combined accounts
Development of customized IFRS 18 financial reports
Configuration of required subtotals and disclosures
Management-performance-measure reconciliation reports
Comparative-period reporting
Multi-company and consolidated reporting
Data migration and historical-balance mapping
User-access controls and approval workflows
Testing with finance teams and external auditors
Training for accountants, finance managers and management
Post-implementation support
We work with the company’s management, finance department and appointed auditors to translate the approved accounting treatment into a practical Odoo reporting solution.
Start Preparing Before 2027
IFRS 18 is more than a change in the appearance of the profit and loss statement. It requires businesses to examine how financial data is recorded, classified, reviewed and communicated.
Starting early gives companies enough time to:
Identify reporting gaps
Restructure the chart of accounts
Collect comparative information
Test the new financial statements
Align management reports with statutory reporting
Train the finance team
Obtain feedback from auditors
With the right preparation and a properly configured Odoo system, IFRS 18 reporting can become more structured, transparent and efficient.
Prepare your business for IFRS 18 with MicroSolutions Kuwait.
Contact our team for an IFRS 18 readiness assessment, Odoo accounting review and customized financial-reporting solution.
Disclaimer: This article provides general information and does not constitute accounting, audit or legal advice. The final accounting treatment and disclosures should be confirmed with the company’s qualified auditors and the applicable regulatory authorities in Kuwait.
