EFRAG Publishes Feedback Statement on its Discussion Paper ‘The Statement of Cash Flows–Objectives, Usages and Issues’
EFRAG has published the feedback statement summarising constituents’ comments on its Discussion Paper (the ‘DP’) The Statement of Cash Flows - Objectives, Usages and Issues. The feedback will inform EFRAG’s response to relevant IASB proposals.
The DP was issued on 15 November 2024, identifying the current issues with the statement of cash flows as prepared under IAS 7 Statement of Cash Flows. The DP asked for comments on the identified issues, objectives and uses of the statement, and potential approaches to address them.
Respondents confirmed that the statement of cash flows remains essential for assessing an entity’s ability to generate cash and cash equivalents. Differing views were expressed on other identified objectives of the statement. Constituents highlighted issues with how the statement of cash flows is currently prepared under IAS 7 in areas such as the definitions of cash and cash equivalents, disclosures and disaggregation. It was also generally considered that the statement of cash flows is not useful for most types of financial institutions. While views diverged on the priority of specific issues, most respondents favoured targeted improvements to IAS 7 rather than a full-scale review.
When considering the feedback, EFRAG’s Financial Reporting Technical Expert Group (EFRAG FR TEG) noted that much of it had already been communicated to the IASB staff. As a result, the potential recommendations from EFRAG were already reflected in the IASB’s approach to its Statement of Cash Flows and Related Matters project. EFRAG FR TEG therefore concluded that issuing additional formal recommendations was unnecessary.