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AASB 107 - Cash Flow Statements

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Summary 
Developments, Key Differences & History 
Compared to IFRS 
Interpretations 
Rejection Notices 
Questions & Answers 
Articles 
AASB website 

 
Cash Flow statements 
as reported in ANT 41/2005: 
 
Q: I know reporting entities are required to prepare a cash flow statement in accordance with AASB 1026 and that this requirement was extended to entities preparing accounts under part 2M by the Corporations Law. However I can no longer find the requirement to do this in the Corporations Act. Am I mistaken? 
 
A: The relevant section of the Corporations Law is s295 and its wording was recently changed with the passage of the CLERP 9 reforms. Previously, s295(2) specified that the term "financial statements" must include a cash flow statement under s295(2c). However, the new s295(2) refers to "financial statements ... that are required by the accounting standards". 
 
For reporting entities the current relevant standard is AASB 1026 "Statement of Cash Flows". For non-reporting entities preparing accounts under Part 2M, the relevant standard is AASB 1034 "Financial Report Presentation and Disclosure" which applies to all entities that are required to prepare accounts under the Corporations Act. In this standard the term "financial statement" is defined as including a cash flow statement (see AASB 1034.8.1). Therefore, CLERP 9 has resulted in no essential change to the requirements to prepare cash flow statements for large proprietary companies. 
 
The need for cash flow statements will also remain unchanged with the transition to AIFRS. However, the direction will then come from AASB 107 "Cash Flow Statements" which is applicable to all entities preparing accounts under part 2M and general purpose financial reports of all other entities. Additional support comes from AASB 101 "Presentation of Financial Statements" which states that a financial report includes a cash flow statement (see AASB 101.8(d)). This standard has the same applicability as AASB 107. 
 
 
Cash Equivalents 
as reported in ANT 24/2004: 
 
Q: The definition of “cash equivalents” at paragraph 6 of pending AASB 107 refers to “short-term highly liquid investments” rather than the AASB 1026 wording of “highly liquid investments with short periods to maturity”. Does this mean that more investments will qualify as cash equivalents for 2005? 
 
A: Items that are included in cash equivalents should remain unchanged for 2005. Paragraph 7 of pending AASB 107 states that "an investment normally qualifies as a cash equivalent only where it has a short maturity of, say, three months or less from date of acquisition." This is also the current position under paragraph 14.1.1 of AASB 1026.