FRC discussion paper on improving the statement of cash flows

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Oct 20, 2016

On October 20, 2016, the UK Financial Reporting Council (FRC) issued a discussion paper on improving the statement of cash flows with the aim of identifying possible evolutionary improvements to the requirements of IAS 7 'Statement of Cash Flows'.

Noting that IAS 7 is more than twenty years old and that it would be "surprising if improvements cannot be identified from the perspective of 2016", the paper presents some ideas to improve the usefulness of the statement of cash flows. The paper is divided into five sections:

  • The usefulness of information about cash flows
  • The classification of cash flows
  • Cash equivalents and the management of liquid resources
  • Reconciliation of operating activities
  • Direct or indirect method?

The discussion paper includes 11 specific questions relating to these sections but also invites any other comments on issues relating to possible improvements to the statement of cash flows.

The discussion paper and associated press release are available from the FRC website.

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