The International Accounting Standards Board (IASB) announced in a Sept. 16 release the beginning of a research project with the purpose of reviewing and improving the requirements for the statement of cash flows and related matters in IFRS Accounting Standards.

According to the IASB, this project came about as a response to feedback during the IASB’s Third Agenda Consultation, which was when investors, firms and others identified this project as a high priority.

The general objective for this consultation was to gather views on a three-pronged agenda: the strategic direction and balance of the IASB’s activities; the criteria for assessing the priority of financial reporting issues that could be added to the work plan; and new financial reporting issues that could be given priority in the IASB’s work plan.

In terms of the research project, the stakeholders, specifically investors, have recommended that the current requirements in the IAS 7 Statement of Cash Flows can be improved to offer more useful data to financial statements statement users. The IFRS describe the IAS 7 statement as prescribing how to present information in a cash flows statement on how an entity’s cash and cash equivalents changed during the period. 

The IASB will now undergo its initial research, which would cover meetings with stakeholders and the review of existing studies. The research will be gathering proof on the nature and extent of perceived deficiencies in current reporting. It will also look into the probable benefits of creating new financial reporting requirements.

The IASB intends to talk about the initial research outcomes and determine the next steps for the project in the first quarter of 2025.

Accounting Today reported that, in the U.S., the Financial Accounting Standards Board (FASB) has also added a project to its technical agenda in order to make targeted improvements to the statement of cash flows.

According to the above statement on cash flows, the FASB added a project to its technical agenda to make targeted improvements to the statement of cash flows to offer investors with decision-useful information.