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Section 7 – Statement of Cash Flows
Section 7 sets out the information that is to be presented in a statement of cash flows and how to present it. The statement of cash flows provides information about the changes in cash and cash equivalents of an entity for a reporting period, showing separately changes from operating activities, investing activities and financing activities.
Scope
Extract from FRS102: Section 7.1
7.1A This section and paragraph 3.17(d) do not apply to:
(a) mutual life assurance companies;
(b) retirement benefit plans;or
(c) investment funds that meet all the following conditions:
(i) substantially all of the entity’s investments are highly liquid;
(ii) substantially all of the entity’s investments are carried at market value; and
(iii) the entity provides a statement of changes in net assets.
OmniPro comment
From the above guidance all entities are requirement to prepare cash flow statements with the exception of:
- Mutual assurance companies
- Retirement benefit plans
- Investment funds that meet the conditions outlined in Section 7.1A(c) above
- A small company as defined by the Small Companies Regulation for the UK (The Companies, Partnerships and Groups (Accounts and Reports) Regulations 2015 (SI 2015/980)) or an equivalent Regulation when enacted by the Republic of Ireland.
- Qualifying entities. A qualifying entity is an entity which is consolidated into publically available consolidated financial statements that give a true and fair view. Therefore an entity which is considered a subsidiary of a parent company.
NOTE: The exemption for small companies only applies to UK and Northern Ireland registered companies. It does not apply to companies in the Republic of Ireland at this time. A company registered in the Republic of Ireland cannot apply this exemption until the Irish Government enact the EU directive 2013/34 for Ireland. This is expected to be issued in early 2016 however where financial statements are prepared and signed off before the enactment of this directive a cash flow statement will be required. The only exception to this is where the small company is a member of a group where its results are consolidated into a consolidated set of financial statements of its ultimate parent company and the accounts are publically available.
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