The improvements to disclosures  require companies to provide information about changes in their financing liabilities and come in response to calls from investors for information that helps them better understand changes in a company’s debt. position.

The amendments to IAS 7 are meant to help investors evaluate changes in liabilities arising from financing activities, including changes from cashflows and non-cash changes (such as foreign exchange gains or losses). 

The IASB has confirmed that there will be initial costs for preparers to update IT systems to enable changes in liabilities arising from financing activities to be tracked and collated. There are also likely to be additional costs for companies with the extended disclosure requirements, such as extending the existing internal controls and audit processes of the entity. 

The improvements are part of the IASB’s Disclosure Initiative to improve the overall quality of disclosure reporting in financial reports, an area which has become increasingly complex, removing transparency from reports and making it increasingly difficult for stakeholders to review, compare and analyse financial performance.

The IAS 7 amendments become mandatory for annual periods beginning on or after 1 January 2017. 

Detailed information about the January 2016 amendments to IAS 7 are available here