IFRS news | 10 February 2016
IASB issues amendments to IAS 7 Statement of Cash Flows requiring disclosure of changes in liabilities arising from financing activities
The amendments are part of the IASB’s Disclosure Initiative project and introduce additional disclosure requirements intended to address investors’ concerns that financial statements do not currently enable them to understand the entity’s cash flows; particularly in respect of the management of financing activities.
The amendments require disclosure of information enabling users of financial statements to evaluate changes in liabilities arising from financing activities.
The amendments do not define financing activities, instead they clarify that financing activities are based on the existing definition used in IAS 7.
Although there is no specific format required to comply with the new requirements, the amendments include illustrative examples to show how an entity can meet the objective of these amendments.
The amendments are to be applied prospectively for annual periods beginning on or after 1 January 2017 with earlier application permitted. Entities are not required to present comparative information for earlier periods.