FASB proposes changes to statement of cash flows

By Ken Tysiac

FASB has proposed new requirements for the statement of cash flows designed to eliminate diversity in practice in the classification and presentation of changes in restricted cash.

Current GAAP does not include specific guidance on the cash flow classification and presentation of changes in restricted cash or restricted cash equivalents, except for limited guidance for not-for-profits.

The amendments proposed Thursday to Topic 230, Statement of Cash Flows, would require that a statement of cash flows explain the change during the period in the total of cash, cash equivalents, and amounts generally described as restricted cash or restricted cash equivalents.

As a result, amounts generally described as restricted cash and restricted cash equivalents would be included with cash and cash equivalents when reconciling the beginning-of-period and end-of-period total amounts shown on the statement of cash flows.

If approved, the amendments would apply to all entities that have restricted cash or restricted cash equivalents and are required to present a statement of cash flows in accordance with Topic 230.

Feedback on the proposal can be provided by June 27 at FASB’s website.

Ken Tysiac (ktysiac@aicpa.org) is a JofA editorial director.

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