ASCG comments on the EFRAG Discussion Paper “The Statement of Cash Flows – Objectives, Usages and Issues”

On 14 July 2025, the Accounting Standards Committee of Germany (ASCG) submitted its comment letter on the EFRAG Discussion Paper “The Statement of Cash Flows – Objectives, Usages and Issues” to EFRAG. The main objective of EFRAG’s project on the statement of cash flows is to list the issues that currently exist for statements of cash flows prepared in accordance with IAS 7, thereby contributing to the IASB’s research project “Statement of Cash Flows and Related Matters”.

The Financial Reporting Technical Committee (FR TC) of the ASCG welcomes the discussion paper but notes that a more focused approach—with fewer topics and clearer prioritization—might have resulted in a more concise and manageable discussion basis.

In its comment letter, the FR TC emphasizes that the statement of cash flows under IAS 7 is fundamentally functional and does not require a comprehensive review. Therefore, the ASCG recommends that the International Accounting Standards Board (IASB) consider targeted improvements only where users perceive actual information gaps.

Key positions of the ASCG’s comment letter:

• Do not aim for full coherence with other primary financial statements—particularly the statement of profit or loss.
• The statement of cash flows should focus on actual changes in cash and cash equivalents. Including cash flows of agents or hypothetical/non-cash transactions would fundamentally change the statement’s core purpose.
• Maintain the current definitions of cash and cash equivalents.
• Do not standardize performance metrics such as Free Cash Flow (FCF), net debt, or working capital.
• Preserve both the direct and indirect methods for presenting operating cash flows
• Support the disaggregated presentation of dividends to controlling and non-controlling interests, as this enhances transparency around group-level liquidity outflows.
• For financial institutions, despite doubts regarding the usefulness of the statement of cash flows, the FR TC supports retaining the current requirements—especially considering the practical implementation challenges that would result from eliminating them.

The comment letter aims to contribute to the targeted further development of the statement of cash flows but deliberately rejects a fundamental redesign of the existing structure.