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Azmi, Achmad Faizal
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Economics, Econometrics & Finance

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Anticipating PSAK 118: A disclosure processing cost framework Azmi, Achmad Faizal
Journal of Contemporary Accounting Volume 8 Issue 2, 2026
Publisher : Master in Accounting Program, Faculty of Business & Economics, Universitas Islam Indonesia, Yogyakarta, Indonesia

Show Abstract | Download Original | Original Source | Check in Google Scholar | DOI: 10.20885/jca.vol8.iss2.art9

Abstract

PSAK 118, effective from 1 January 2027, replaces PSAK 201 and aligns Indonesian financial reporting with IFRS 18 by restructuring the income statement, introducing management defined performance measures (UKTM) within audited financial statements, and strengthening aggregation and disaggregation requirements. This paper examines how these reforms are expected to influence disclosure processing in the Indonesian capital market using the disclosure processing cost framework of Blankespoor et al. (2020). The framework's three cost channels, namely awareness, acquisition, and integration costs, are applied to the three pillars of PSAK 118, incorporating Indonesian institutional characteristics such as limited analyst coverage, growing retail participation, concentrated ownership, and administrative enforcement. The analysis suggests that the structured income statement primarily reduces acquisition costs, UKTM disclosures reduce awareness costs mainly for users who access audited financial statements, and enhanced disaggregation requirements reduce integration costs. The paper develops six testable propositions and offers a research agenda for examining the implementation and economic consequences of PSAK 118 in Indonesia.
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