EFRAG Research Project on the Statement of Cash Flows, Research phase

Project history

Following EFRAG's 2021 proactive research agenda consultation, EFRAG undertook a proactive project on the statement of cash flows for the following reasons:

Firstly, because the IASB decided to include a project on the statement of cash flows in its pipeline. An EFRAG project on the statement of cash flows could therefore be helpful for the IASB and could have an impact in the near future.
Secondly, because it presented an opportunity to consider some issues related to supplier finance arrangements. A project on supplier finance was one of the projects that received most support in the agenda consultation.

For the project to be as helpful for the IASB as possible, the main purpose of EFRAG’s project was to list the issues currently existing with the statement of cash flows as prepared in accordance with IAS 7 Statement of Cash Flows. Providing an inventory of these issues would, among other things, be helpful for the IASB when it had to decide on the scope of its project on the statement of cash flows. However, what is considered to be an issue could depend on what the statement of cash flow is used for. The discussion paper therefore first examined what the objectives of the statement of cash flows were and how the statement was used.

EFRAG's Discussion Paper

On 20 November 2024, EFRAG published its Discussion Paper on the Statement of Cash Flows – Objectives, Usages and Issues.

The objective of the Discussion Paper (the ‘DP’) was to list the perceived issues with the statement of cash flows as prepared in accordance with IAS 7 Statement of Cash Flows. As encountered issues with the statement of cash flows depend on how the statement is being used / the objectives of the statement, the DP first listed possible objectives of the statement of cash flows and input collected on how the statement was being used by the primary users of financial statements. The DP considered which of the objectives of the statement of cash flows could be affected by each of the listed issues and which objectives might be affected by a solutions addressing each of the issues. The DP also presented some alternatives/supplements to the current statement of cash flows, that were brought to EFRAG’s attention.

The DP questioned the relevance of the statement of cash flows for financial institutions and provided a list of alternatives that were brought to the attention of EFRAG that could be considered for these entities.

Finally, the DP discussed whether the issues identified would be best addressed through targeted improvements or a comprehensive review of IAS 7.

EFRAG welcomed any comments on the DP by 15 May 2025.

To stimulate the debate, EFRAG had published a report summarising the EFRAG symposium on the statement of cash flows at the 2024 EAA congress.

EFRAG is currently analysing the comments received in response to the DP.