ACCA backs overhaul of international cash flow accounting standard

The Association of Chartered Certified Accountants (ACCA) has welcomed efforts to update IAS 7, the planetary modular connected currency travel statements.

The determination comes aft caller world enactment highlighted the worth of currency travel accusation for assessing liquidity, solvency and fiscal flexibility, arsenic good arsenic its documented links with marketplace outcomes specified arsenic stock prices, returns and indicators of fiscal distress.

A study by academics from the British Accounting and Finance Association's Financial Accounting and Reporting Special Interest Group (FARSIG) draws connected empirical world lit pointing to these relationships. The findings reenforce the relation of currency travel reporting successful helping users measure companies' fiscal resilience.

The report, The Future of Financial Reporting 2026: The Statement of Cash Flows, concludes that portion the currency travel connection is informative, IAS 7 does not consistently conscionable users' needs and leaves country for improvement.

It highlights opportunities to heighten clarity, cohesiveness and comparability – peculiarly astir non-cash movements, moving superior changes, exceptional items and nett debt.

One cardinal proposal is to necessitate other disclosures including reconciliations of nett indebtedness to springiness investors and different users a clearer presumption of financing structures and leverage.

The study appears arsenic the International Accounting Standards Board (IASB) considers imaginable revisions to IAS 7, Statement of Cash Flows.

The task was added to the IASB's enactment program aft users identified currency travel reporting arsenic a precocious precedence topic.

FARSIG seat Christian Stadler said: "FARSIG's symposium this twelvemonth explored the currency travel statement, including its narration with sustainability reporting, critically examining however currency flows and ESG [environmental, societal and governance]-related accusation could beryllium integrated.

"The treatment addressed some the opportunities and challenges associated with this statement, highlighting however accountancy professionals could leverage it to heighten the relevance and reliability of firm reporting practices.

"All this underlines however academics are good placed to enactment with the IASB connected this issue.'"

Symposium discussions indicated that IAS 7 is not consistently aligned with what users privation from the currency travel statement.

By contrast, galore preparers reportedly spot the currency travel connection chiefly arsenic a compliance requirement.

This mindset contributes to a spread betwixt what is reported and however users similar to analyse show and risk.