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EFRAG final comment letter on the IASB's exposure draft of amendments to IAS 7

  • EFRAG document (dk green) Image

12 May 2015

The European Financial Reporting Advisory Group (EFRAG) has issued its final comment letter on the IASB exposure draft (ED) proposing amendments that would improve disclosure in financial statements on an entity’s financing activities and liquidity.

On 18 December 2014, the IASB issued ED/2014/6 Disclosure Initiative (Proposed amendments to IAS 7). The main objectives of the proposal are to (1) improved information about an entity's financing activities, excluding equity items and (2) Improved disclosures about the liquidity of an entity.

EFRAG believes that there is a need to introduce disclosures on movements in net debt to meet the requests of users for a net debt reconciliation.  However EFRAG is concerned that the IASB is “proposing a piecemeal and prescriptive requirement” and should instead set “clear principle-based objectives for the disclosures” that would allow entities the flexibility to determine the most appropriate way to provide the information.

EFRAG also disagrees with the proposed disclosures relating to restrictions on cash and cash equivalent balances.  EFRAG encourages the IASB to clarify existing guidance in this area rather than developing new supplementary guidance.

The press release and full comment letter are available on the EFRAG website.

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