Dear reader,

welcome to the third edition of my newsletter! Year 2025 is coming to an end and

I am going to use quiet time around holidays to take stock of my past year in accounting.

There are areas I want to improve, such as taxes and financial instruments. There are areas I want to do less of, such as intangible assets. And I can see areas that promise growth opportunities, for example proof-reading of large language model (LLMs) outputs & trainings.

How year-end reckoning will look like for you?

I hope anyone can find an area of focus for the upcoming year. And I sincerely hope you will be free to make choices based on your likings and not solely on interests of your company or clients.

Technical topic of the week - it is all about preparation for transitioning to IFRS 18!

The beginning of the financial year 2026 marks the countdown for implementation of IFRS 18 Presentation and Disclosure in Financial Statements. Transition to the new presentation structure and disclosure requirements is restrospective. Companies shall be able to present comparatives under IFRS 18 for the upcoming fiscal year, meaning it is time to reconciliate the past (IAS 1) with the future (IFRS 18).

IFRS 18 in the simplest terms:

The role of financial statements is to be useful structured summaries for users. Focus is on nature or function of - assets, liabilities, income, expenses, equity and cash flow prospects - not on the formal labels.

Learning nugget - Quiz on Sunday! tested your knowledge of disagreggation principles of IFRS 18 using one of the final illustrative examples on Disclosures about Uncertainities in the Financial Statements (published November 28th, 2025).

An entity owns two types of storage units, classified as items of Property, Plant & Equipment. Some units are used for battery storage, which carry specific risks compared to other non-battery storage units (overheating and fire). Battery storage units underly stricter safety protocols and require more frequent inspections. All types of storage units are considered to be material for entity's financials.

How to consider this pattern in light of IFRS 18?

This is a topic of disaggregation of material information about items in the financial statements in accordance with paragraphs 41 (b) and (d), 42 and B110 of IFRS 18.

How this scenario can work in practice?

• An entity maintains separate records of its storage units and has risk management processes in place.
• The entity is aware of the requirements of IFRS 18 as described above, especially factors requiring disaggregation under consideration of materiality.
• Characteristics that might lead to disaggregation of material items are: a) nature, b) function, c) duration and timing of recovery of settlements, d) liquidity, e) measurement basis, f) measurement/ outcome uncertainity, g) size, h) geographical location/ regulatory environment, i) type (e.g. of good), j) tax effects, k) restriction on use (asset) or on recoverability (liability).
• The entity is able to apply the final illustrative examples on Uncertainities in the Financial Statements to its own business scenario.
• Disclosure of separate risk profiles is made in accordance with provisions of IAS 16.73 and contains both quantitative and qualitative information.

If there is only one thing labelled 'accounting' you should read this week...

...is the article by the Footnote Analyst: Equity analysis when accounting and economics diverge offers interesting insights into dual views - accounting vs economic - on selected topics.

For example, accounting ignores time value of money for deferred tax assets. Accounting is not in the position - understandably - to recognize all immaterial values as intangible assets. Lifetime expected credit losses for debt instruments are recognized in full on day-2. In economic reality though this approach may lead to double-counting of losses for loans measured at fair value.

Good and challenging, don't you think?

Have a great accounting week & happy holidays!

Best

Barbora