The paper, published in July 2015, discusses the usefulness of the statement of cash flows for financial institutions and possible alternatives.

ESMA welcomes the paper “as an important contribution to the discussion on how to improve the information to enable investors to assess prospects for future net cash inflows of financial institutions”.  ESMA also shares EFRAG’s concerns regarding the relevance and usefulness of the statement of cash flows prepared by financial institutions under IAS 7 Statement of Cash Flows especially when using the indirect method.    

ESMA supports an approach that “retains the requirement to present the statement of cash flows for all entities but improves its content and presentation and accompanies it by a set of disclosures that provide relevant information for a particular type of entity”.

ESMA comments that the Discussion Paper is “a good starting point” in the debate around how existing requirements could be changed to provide more relevant information to users of the financial statements.  ESMA “acknowledges the analysis EFRAG has made in identifying potential improvements to the requirement to present the statement of cash flows by financial institutions and possible additional disclosure requirements that could provide relevant information to users”.  However ESMA encourages EFRAG to undertake further work in this area “in order to identify the information that would be most relevant about various types of entities”. 

In its comment letter, ESMA provides a number of approaches for the preparation of the statement of cash flows by certain financial institutions that EFRAG could further analyse.

The full comment letter is available on the ESMA website.