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IAASA publishes a Commentary on the review of the application of IAS 7 Statement of Cash Flows by selected Irish equity issuers

Monday, 13 October 2014: IAASA has today published its findings from a thematic examination of how selected Irish equity issuers prepare cash flow statements under international accounting standard IAS 7 Statement of Cash Flows. The findings are published in IAASA’s Commentary:

Review of the application of IAS 7 Statement of Cash Flows by selected Irish equity issuers.


A statement of cash flows is one of the four primary financial statements that entities are required to produce. IAS 7 requires the entity to classify cash flows during the reporting period into operating, investing, and financing activities.

The statement of cash flows is useful in:

• determining the short-term viability of an entity;

• providing information as to how the entity conducts its operations;

• providing insight into the ability of the entity to provide returns to investors; and

• understanding the changes in the financing of the entity.

Preparers of financial statements exercise judgement in the preparation of financial statements with the result that reported amounts may not be comparable from one entity to another. Users of such financial statements need to study the financial statements carefully to fully understand the entity’s cash flows and preparers need to provide sufficient disclosures to aid users’ understanding.

IAASA’s publication has been prepared to highlight for users of Irish equity issuers’ annual financial statements the areas where divergent, but not necessarily non-compliant, approaches have been adopted in practice. The document also aims to stimulate debate amongst stakeholders as to whether and, if so, how existing approaches could be modified to provide enhanced comparability with similar information about other entities and with similar information about the same entity for another reporting period.

Key findings and messages

• The level of compliance with the presentational requirements of IAS 7 Statement of Cash Flows by the equity issuers selected was satisfactory;

• There are a number of areas where the presentation of cash flows does not result in information that is readily comparable between equity issuers;

• The application by issuers of alternative financial reporting treatments permitted by IAS 7 highlights the need for users to carefully study the particular treatments adopted in specific instances; and

• Issuers produce various non-accounting standard based cash flow statements and the measurement basis used for these Alternative Performance Measures varies.