The International Accounting Standards Board (IASB) member Nick Anderson has issued an article that discussed the objectives of the 2016 Disclosure Initiative (Amendments to IAS 7). These amendments to IAS 7 Statement of Cash Flows require a disclosure of changes in liabilities arising from financing activities, including both changes arising from cash flows and non-cash changes. Disclosure Initiative (Amendments to IAS 7) was effective for annual periods beginning on or after 1 January 2017.

In his article, Mr Anderson looks at what is required by the amendments and why this disclosure so important for investor analysis.  He considers the following aspects:

  • Is this different from a ‘net debt reconciliation’?
  • Reconciliation to other areas of the financial statements
  • Sufficient disaggregation  
  • Adequate explanation
  • Simple communication

The article summaries questions such as “What does good disclosure look like?” or  recommendations such as “Companies can help users by…”.

The full article can be viewed from the IASB website.

Source: IASB, 21 February 2019.