Aggregating and splitting items under IFRS 18
IFRS 18 adds principles on grouping and splitting items. How to decide which accounts earn their own line or note, and how to test the result.
By Achekam · · 5 min read · For Accountants & audit firms in South Africa, Nigeria, Kenya
Two income statements land on a reviewer's desk in the same week. The first, for a family-owned hardware chain, runs to dozens of expense lines, from "cleaning materials" to "staff tea", each mapped straight from the trial balance. The second, for a logistics company, shows revenue, cost of sales and a single "other operating expenses" figure that turns out to hold most of the business's overheads, including a large fuel bill and a lease charge the owner would rather nobody noticed.
Both sets add up. Neither tells the reader much. The first buries the important costs among trivia; the second hides them inside a total. IFRS 18 addresses exactly this, and preparers in South Africa, Nigeria and Kenya whose clients report under full IFRS will meet it soon.
What IFRS 18 adds on aggregation and disaggregation
The IFRS Foundation states that IFRS 18, Presentation and Disclosure in Financial Statements, adds new principles for the aggregation and disaggregation of items in financial statements. The IASB issued the standard in April 2024, and it is effective for annual reporting periods beginning on or after 1 January 2027, with earlier application permitted.
Those principles govern how items are grouped into lines in the primary statements and how they are split out in the notes. This article does not paraphrase them, because the wording matters and the standard should be read directly. What a preparer can do now is look at how the client's current statements group items, and decide where the grouping helps the reader and where it gets in the way.
The two failure modes: lines lumped together and lines split into clutter
IFAC's article "Making Sense of Materiality", written in 2017 by Hans Hoogervorst as IASB chairman, explains that the accounting concept of materiality means only information that is important to investors needs to be included, and that trivial matters can be left out. It warns that when materiality is not applied well, the result may be too much information, sometimes called clutter, or too little.
Aggregation and disaggregation are where those two failures show up on the page:
- Lumping. A large or unusual item is absorbed into a generic total. "Other expenses" grows each year; "sundry income" contains a one-off insurance payout; "trade and other payables" holds a director's loan.
- Clutter. Every account in the ledger becomes a line or a note. The reader sees dozens of small figures and cannot tell which few matter.
The same article makes a point every reviewer recognises: companies that use the requirements as a checklist instead of exercising judgement produce statements that comply but do not communicate effectively. A set that mirrors the chart of accounts is the checklist approach in its purest form.
Deciding which trial balance accounts deserve their own line
There is no formula that substitutes for judgement here, but a consistent set of questions helps. For each account or group of accounts, ask:
- Is the amount large relative to the line it would otherwise join?
- Is it different in nature from the items around it, for example a finance cost sitting among operating costs?
- Would a lender, owner or tax authority reading the statements ask about it?
- Did it change sharply from last year, so that combining it would hide the change?
- Is it the kind of item, such as a related party balance, that matters regardless of size?
An account that answers yes to any of these is a candidate for its own line or for separate disclosure in a note. Accounts that answer no to all of them can usually be grouped with similar items. Write down where the line was drawn and why; the reviewer will want to see the reasoning, and next year's preparer will want to reuse it.
Moving accounts between lines and notes on the Studio's mapping workbench
In Achekam, the grouping decision is made in the mapping. When the Studio builds a draft, AI mapping suggestions with a confidence of 0.5 or more go into the draft at once and are listed as proposals a person can accept, move or set aside. Treat those proposals as a first pass, not as a presentation decision: an AI suggestion can map an account to a sensible line without knowing that the amount is large enough to deserve its own.
The mapping workbench, found under Canvas and then Mapping, shows each account's line and note and lets staff move accounts by hand. (The menu entry "Trial Balance & Source Mapping" opens the Source Room instead.) Where the standard lines do not give the split the client needs, a firm can add its own statement lines and groups and change the wording of any row title, and later builds keep those choices. Each custom line still totals into a standard line, so the notes and the cash flow stay consistent with the face of the statements. How that works in detail is covered in custom statement lines and groups and moving accounts between lines.
A reviewer's test: can a reader follow each total back to its parts?
Once the grouping is settled, read the draft as an outsider would. For every line on the face of the statements, the reader should either understand it from its label or be able to find its parts in a note.
Two features of the Studio help with that check. Notes take their figures from the mapped trial balance, so a note analysing a line agrees with it by construction once the mapping is right. And a line carries a note reference only when that note is in the set, so a line without a reference is a prompt to ask whether its parts are explained anywhere. Facts the trial balance does not hold are left as "[to be completed]", which makes gaps visible rather than silent.
A short review list:
- No line labelled "other" or "sundry" that hides an item a reader would ask about.
- No run of trivial lines that could sit together without loss.
- Every line either self-explanatory or referenced to a note.
- Custom lines named in the client's own words, not the ledger's.
The IFRS Foundation's IFRS 18 page explains the new standard on presentation and disclosure that replaces IAS 1, and is the source to read before redesigning a client's line structure. For trimming the notes once the lines are right, see cutting disclosure clutter.
Begin with the client whose "other expenses" line is largest. That is usually where the first useful split is waiting.
General guidance only, not advice on your own circumstances. Tax and payroll rules change: check the current position with the authority or your adviser.
