Join the Corporate Reporting Users’ Forum
Join a network of investors and analysts engaged in debates about accounting, governance and regulatory issues.
While the focus of company conference calls and investor presentations may be primarily on items in the income statement, for users to really understand performance we need to be able to refer across all three primary statements. Key information should be made prominent on the face of the statement of cash flows, or should be clearly cross-referenced.
The CRUF sees two main problems with the cash flow statement: inconsistent category definitions across the primary financial statements and excessive aggregation on the face of the cash flow statement.
It should be possible, in theory, for a user to derive the statement of cash flows from the other primary statements and the notes. However, the usefulness of the statement of cash flows is limited because it is missing information that is necessary to reconcile cash flows with the other primary statements. This means that users cannot forecast the statement of cash flows directly and, as a result, they typically build their own derived cash flow statements based on projected income statements and balance sheets rather than using the company’s reported cash flow statement. We would like the cash flow statement to be more relevant to users.
Some of our suggestions below are consistent with the proposals in the IASB’s Exposure Draft (ED) ‘General Presentation and Disclosures (Primary Financial Statements)’.
Click the tabs below to reveal what CRUF would like to see for each of these current problems
Having different category definitions between a company’s own primary financial statements and also from company to company causes unnecessary confusion and hinders users’ understanding of performance.
To understand the cash flow statement, users often need to refer to information disclosed in numerous notes. This is time consuming and may lead to some important information being missed.
The current level of aggregation in the cash flow statement limits users’ understanding of the business’s performance and their ability to forecast future cash flows with sufficient precision.
For example, some activities may require future cash spend on assets, and others may not and without sufficient disaggregation we cannot attempt to predict this accurately.
Join a network of investors and analysts engaged in debates about accounting, governance and regulatory issues.
PwC provides ongoing administrative support to the CRUF and, if requested by CRUF participants, PwC may provide assistance on technical points. PwC does not influence the CRUF in its discussions or responses on any given topic, and any views expressed in comment letters or otherwise are the views of the individual CRUF participants involved, not the views of PwC
PwC refers to the PwC network and/or one or more of its member firms, each of which is a separate legal entity. Please see www.pwc.com/structure for further details.
CRUF © 2005-2021 All rights reserved
This website uses cookies, for more information click here