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Exposure Draft on Statement of Cash Flows Issued

The Financial Accounting Standards Board (“FASB”) has issued an Exposure Draft for Proposed Accounting Standards Update, Statement of Cash Flows (Topic 230): Restricted Cash.

The Exposure Draft addresses how entities classify and present restricted cash changes on cash flow statements under Topic 230. There has been diversity in practice as to how transfers between cash and restricted cash are classified. In addition, some entities have treated direct cash receipts into, and direct cash payments made from, a bank account that holds restricted cash are sometimes presented as cash inflows and cash outflows. Meanwhile, other entities disclose such cash flows as noncash investing or financing activities.

In response, the FASB proposes amendments to the guidance that would require a statement of cash flows to disclose adjustments during the period in the total of cash, cash equivalents, and amounts usually termed restricted cash or restricted cash equivalents. When reconciling the beginning-of-period and end-of-period total amounts on the statement of cash flows, amounts normally considered as restricted cash and restricted cash equivalents are to be included with cash and cash equivalents.

Comments on the Exposure Draft are due Monday, June 27th.

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