The consultation was launched to provide input to the IASB’s project on Primary Financial Statements and to make the statement of cashflows more useful.

A large majority of respondents welcome the publication of the discussion paper or agree with most or some of its suggestions.

A representative group of users said: ‘We welcome the FRC’s detailed review of the cash flow statement as it has been a long neglected financial statement from a standard setting point of view despite the information contained within it being integral for assessing the liquidity, working capital management, and quality of earnings reported by companies.’

It was agreed that the main purpose of a statement of cashflows is to help users to assess liquidity and the financial structure of the entity and changes in these. A large majority of respondents agree that speculative cashflows should not be reported although there should be disclosure of non-cash transactions.

Views were split as to whether or not capital expenditure should be reported within operating activities rather than as an investing activity, with most agreeing that all cashflows relating to financing liabilities should be reported in the financing category and tax should be in a separate section.

It was not decided whether the statement should report flows of cash or of cash and cash equivalents.

The discussion paper was issued in October 2016 and closed on 31 March 2017.

The FRC’s Feedback Statement: Discussion Paper Improving the Statement of Cash Flows is available here.