Following intense pressure from investors for companies to provide improved disclosures about an entity’s financing activities and its cash and cash equivalents balances, the international standard setter, the International Accounting Standards Board (IASB) has announced a consultation on IAS 7, Statement of Cash Flows
This work forms part of the IASB’s wider disclosure initiative.
The 23-page Exposure Draft, ED/2014/6, Disclosure Initiative, Proposed amendments to IAS 7, proposing amendments to current standard.
The IASB is proposing that an entity should disclose a reconciliation of the amounts in the opening and closing statements of financial position for each item for which cashflows have been, or would be, classified as financing activities in the statement of cashflows, excluding equity items.
The standard-setter suggests that this reconciliation will give investors improved disclosures about an entity’s debt and movements in debt during the reporting period.
It also wants to extend the disclosures under IAS 7 covering an entity’s liquidity and plans to introduce ‘disclosures about the restrictions that affect the decisions of an entity to use cash and cash equivalent balances, including tax liabilities that would arise on the repatriation of foreign cash and cash equivalent balances’.
Any amendments will result in changes to the IFRS Taxonomy, which have also been outlined in the ED. This is the first time IASB has taken this into account at the time of issuing a consultation document.
The deadline for comment is 17 April 2015.
The Exposure Draft, ED/2014/6, Disclosure Initiative, Proposed amendments to IAS 7, is available here: http://www.ifrs.org/Open-to-Comment/Pages/International-Accounting-Standards-Board-Open-to-Comment.aspx