A roadmap to the preparation of the statement of cash flows (2018)

This Roadmap provides Deloitte’s insights into and interpretations of the accounting guidance on the statement of cash flows, primarily that in ASC 230.

The accounting principles related to the statement of cash flows have been in place for many years; however, errors in the statement of cash flows continue to be one of the leading causes of restatements and companies continue to receive comments from the SEC staff on cash flow presentation matters.

Further, while ASC 230 provides some guidance on cash payments and receipts that are classified as either operating, investing, or financing activities, it does not provide consistent principles for evaluating the classification of cash payments and receipts in the statement of cash flows, which has led to diversity in practice.

To address these concerns, the FASB issued ASU 2016-15 and ASU 2016-18, which clarify guidance in ASC 230 on the classification of certain cash flows. The 2018 edition of this Roadmap incorporates additional interpretations and guidance related to the amendments in these two ASUs, highlighting guidance (including pending guidance) and interpretations that entities apply both before and after adopting the standards. (See Appendix E for a listing of changes made in the 2018 edition of this publication.)

We hope that you find this publication a valuable resource when considering the accounting guidance on the statement of cash flows. Finally, although this Roadmap is intended to be a helpful resource, it is not a substitute for consulting with Deloitte professionals on complex accounting questions and transactions.

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The Roadmap Series contains periodic collections of our accounting guidance on selected topics of broad interest to the financial reporting community.

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