This is an unusual move for the FRC, who does not normally directly consulting on changes to International Financial Reporting Standards (IFRS).

The International Accounting Standards Board is currently examining potential improvements to the standard as part of its Primary Financial Statements project, which is also considering the wider purpose, structure and content of the primary financial statements. The long-term project is initially focusing on structure and content of the statements of financial performance, including potential demand for changes to the statement of cash flows and the statement of financial position and assessing whether to require a defined sub-total for operating profit and examining the use of alternative performance measures. The project has no stated end date.

But the FRC’s consultation suggests a ‘more ambitious approach could have been adopted’, which would ‘attempt to determine the statements or disclosures that would be the ideal supplement for the statement of financial position and the statement(s) of financial performance’.

It calls for any improvements to be considered in relation to the wider financial statements landscape to ensure there is no chance of clashes with other standards.

‘The usefulness of the financial statements is greatly enhanced if information reported in one statement can be related to information reported elsewhere,’ the FRC consultation said.

In particular, the consultation focuses on transparency and the consistency of statements, including a call for disclosure of non-cash transactions instead of reporting notional cash flows in the statement of cash flows. It also suggested cash flows from operating activities should include capital expenditure, with a sub-total drawn before capital expenditure, and disclosure of the extent to which capital expenditure represents ‘replacement’ or ‘expansion’.

The FRC did caution, however, that such moves may entail a radical change in practice, with ‘unwelcome implications for both preparers and users of financial statements’.

Indeed, the regulator added the ‘proliferation of disclosure requirements may lead to excessively detailed financial statements’, in which the most relevant information may be hard to find. The IASB’s Principles of Disclosure project is expected to address the issue of ‘disclosure overload’ and that of linkage between standards.

Asked about the possibility the two bodies’ activities could clash, the IASB said feedback to the FRC’s consultation ‘would be relevant’ to the Primary Financial Statements project.

The FRC's Improving the Statement of Cash Flows consultation can be read here and runs until 28 February 2017.

More on the IASB's Primary Financial Statements Project can be found here.