Statement of Cash Flows
Context and background
The IASB decided to add a project on the Statement of Cash Flows and Related Matters to its research pipeline following feedback on its Request for Information: Third Agenda Consultation (published March 2021).
In the Feedback Statement to the Request for Information (published July 2022) most respondents recommended the addition of a potential project on cash flows to the IASB’s workplan and many of them rated it as high priority.
The IASB staff plan to perform initial research to gather evidence of the nature and extent of the perceived deficiencies and the likely benefits of developing new financial reporting requirements for IAS 7 Statement of Cash Flows. This research is intended to provide evidence to support the IASB’s decision on the scope of the project. The initial research will also address possible ways of improving the perceived deficiencies. The IASB plans to discuss the initial research outcomes and determine next steps in the first quarter of 2025.
UKEB Project objectives
A UKEB project on the statement of cash flows and related matters supports meeting its responsibilities regarding thought leadership in accordance with the UKEB Terms of Reference. It will also help deliver the UKEB’s 2024-25 Regulatory Strategy (page 8) aim to influence IASB early in its development cycle.
The research will be grounded in previous work undertaken by the IASB, FRC and UKEB. It will gather primary evidence on the improvements investors and creditors want made to the statement of cash flows, and preparer views on these possible improvements. This will provide a foundation for the UKEB to propose potential solutions for the problems already identified by the IASB for this project.
UKEB Project outputs
The UKEB will undertake the following set of activities:
- December 2024: Background paper – this research paper will set the stage, examining the background of the project, relevant research and previous CRR findings.
- March 2025: UK Investor and Preparer Perspectives paper – this research paper will summarise user and preparer perspectives on how the Statement of Cash Flows could be improved including consideration of financial institutions.
In meetings subsequent to the March 2025 Board meeting, the UKEB will consider whether:
- the UKEB papers, developed to that point, should be consolidated into a single comprehensive report for publication; and
- whether additional research is appropriate and feasible given the IASB’s project plan and UKEB priorities at that time.
UKEB Outreach
The UKEB intends to conduct interviews with a diverse range of preparers and users of financial statements, in addition to consultation with UKEB Advisory Groups. Depending upon the number of UK stakeholders wishing to engage, the UKEB may hold a roundtable event.
If you would like to contribute to the UKEB research work on this project by attending a one-to-one interview, please complete the form or email us at UKEndorsementBoard@endorsement-board.uk with Statement of Cash Flows in the email subject.
To stay up to date on all UKEB news and events, including project updates SUBSCRIBE here.