Publication Details
Abstract
The Conceptual Framework's Performance Reporting project culminated in IFRS 18 Presentation and Disclosure in Financial Statements, which replaces IAS 1 from 1 January 2027 and introduces a mandatory three-category structure - operating, investing, and financing - together with related amendments to IAS 7 that remove the previous accounting policy choice for the presentation of interest and dividends paid and received. This paper examines how this reform will interact with the existing structure of Uzbekistan's national accounting standards (NAS/BHMS), which currently has no equivalent activity-based classification mechanism. Using a qualitative, document-based comparative methodology combined with an illustrative case application, the study first develops a structured comparison of classification rules under IAS 7, the new IFRS 18 framework, and Uzbekistan's national practice across five dimensions, including the treatment of interest, dividends, lease-related liabilities, and the new "specified main business activity" test. The comparative framework is then applied to a composite enterprise and, in a numerical illustration based on a large export-oriented holding company, the reclassification of four financing- and investing-related items is shown to raise reported operating profit by approximately 31% and operating margin by 3.4 percentage points, with no change in net profit or underlying cash flows. The findings indicate that Uzbekistan's current chart of accounts is not structurally equipped to generate IFRS 18-compliant categorization without targeted modification, and that the magnitude of the presentation effect is large enough to materially affect covenant calculations and ratio-based analysis relied upon by lenders and analysts. The paper concludes with a practical model for chart-of-accounts redesign and policy recommendations for enterprises and regulators preparing for the mandatory 2027 transition.