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New Accounting Standards to Alter Operating Profit Reporting Starting Next Year
Commercial Services · Financial Publishing/Services · yonhap_finance · 2026-09-02
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NICE Investors Service warns that new K-IFRS standards will change how operating profit is calculated, urging companies to improve disclosure for investors.
What Happened
Accounting Standard Shift: Starting January 1, companies must adopt the new K-IFRS 1118 standard, which redefines how operating profit is calculated. Items previously categorized as non-operating income, such as foreign exchange gains or interest income, may now be included in the operating category.
Early Adopter Analysis: An analysis of four early adopters, including APR and TmaxSoft, shows that the new standard has led to fluctuations in reported operating profit. While the impact has been modest so far, experts suggest that variations could become more significant as the standard is applied across diverse industries.
Disclosure Requirements: There is currently a lack of consistency in how companies disclose these changes, with some failing to provide detailed adjustments in their interim reports. NICE Investors Service emphasizes that companies must provide clear, detailed explanations to help investors distinguish between actual operational performance and accounting adjustments.
Credit Rating Impact: The rating agency clarified that the change in accounting standards does not automatically trigger credit rating adjustments. Until the impact of the new standard is fully understood, analysts will continue to use traditional operating profit metrics in their credit assessments.