IFRS18 – how it will affect retirement benefit schemes
International Financial Reporting Standard: IFRS18 (Presentation and Disclosure in Financial Statements) is a new international accounting standard issued by the International Accounting Standards Board. IFRS18 replaces International Accounting Standard: IAS1 and will be mandatory for financial statements starting on or after 1 January 2027. The key rationale for IFRS18 is to improve comparability across different entities and foster greater transparency in financial reporting.
The Institute of Certified Public Accountants of Uganda (ICPAU) approves the adoption of IFRS Accounting Standards in the country and also licenses and regulates the accounting profession. On the other hand, the Uganda Retirement Benefits Regulatory Authority (URBRA) licenses and regulates the retirement benefit schemes. The retirement benefit schemes in Uganda prepare their financial statements in accordance with IFRS. Consequently, IFRS18 will become relevant for such retirement benefit schemes and become mandatory for financial statements starting on or after 1 January 2027. However, they will apply IFRS18 in conjunction with IAS26 (Accounting and Reporting by Retirement Benefit Plans). The Statement of Changes in Net Assets Available for Benefits could be re-configured as follows, as an illustration:
- Operating activities: Interest income from investments, less operating expenses;
- Investing activities: Dividends and fair value gains/losses on equity investments;
- Financing activities: Member contributions less the withdrawals (net dealings with members); and
- Taxation: Income and deferred tax expense.
Appropriate accounting policies and detailed accompanying notes should provide the readers with extra information on the aggregated figures in the Statement of Changes in Net Assets Available for Benefits for the year, and the Statement of Net Assets Available for Benefits at end of the financial year.
Next steps:
- IFRS18 impact assessment and gap analysis
- Chart-of-account review and revision, coupled with staff training
- Board approval of revised accounting policies
- Comparative-data preparation and early-adoption for 2026 (if approved by the Board of Trustees)
Conclusion: IFRS18 is not replacing IAS26 which is the specific standard for the preparation of financial statements for retirement benefit schemes. Nonetheless, the standardization of the disclosure of management-defined performance measures (MPMs) like the net investment return %, operating-cost ratio, net assets growth, should promote transparent comparison between schemes, improve regulatory and board oversight and even enable East African regional or international comparability.
By CPA Dr. Albert Richards Otete
Partner, J. Samuel Richards & Associates
