IAS 7 — Determination of cash equivalents

Date recorded:

The staff presented the IFRIC with an issue about the definition of cash equivalent in IAS 7 Statement of Cash Flows. The submission asked whether money market funds that are readily convertible and subject to only an insignificant risk qualify as cash equivalents.

It was clear that the question was whether an entity had to look through the investment and make sure that all underlying investments meet the definition of a cash equivalent to conclude that the money market fund was a cash equivalent.

The IFRIC had a lively debate on the issue, in particular on the question whether an entity could be required to look at the underlying investments for the assessment. Many were concerned about applying the US SEC guidance staff referred to as a starting point.

The chairman in the end asked the staff to bring back a paper that would suggest a way to bring the IFRS guidance closer to US GAAP, as in this area the standards were deemed to be substantially converged. This might result in an agenda decision or in a proposal to change IAS 7.

Correction list for hyphenation

These words serve as exceptions. Once entered, they are only hyphenated at the specified hyphenation points. Each word should be on a separate line.