FASB Revisits the Cash Flow Statement
With the Financial Accounting Standards Board and the International Accounting Standards Board parting ways from their convergence projects, FASB is taking a fresh look at a number of standards that may have fallen by the wayside in the pursuit of the ambitious goal of achieving a common global financial reporting language. While less ambitious, these projects involve deep dives into domestic accounting issues that the board feels are in need of attention.
One child of neglect has been the cash-flow statement. In November 1987, FASB issued a standard later codified as Topic 230, Statement of Cash Flows. Recently, the Board got feedback from it constituents “indicating that there is diversity in practice regarding the application of Topic 230,” according to a statement on its web site concerning a new project aimed at “Clarifying Certain Existing Principles on Statement of Cash Flows.”
Launched on April 28, the project will try to offer corporations guidance on how to spruce up reporting on their cash-flow statements, focusing on seven areas: insurance proceeds; debt payment; restricted cash; zero-coupon bonds; dividend payments; determining where predominant cash flows are; proceeds from company-owned life insurance; and securitizations. Read more at CFO.com.