Special Purpose Financial Statements – Cash Flows

From Carmen Ridley – www.afrs.com.au)

I have a client who does not want to include a statement of cash flows in their special purpose financial statements, is there any requirement for them to do so?

AASB 107 Statement of Cash Flows is applicable to the following entities:

• each entity that is required to prepare financial reports in accordance with Part 2M.3 of the Corporations Act;
• general purpose financial statements of each reporting entity; and
• financial statements that are, or are held out to be, general purpose financial statements.

This is a different application to many of the other accounting standards, since it is mandatory for all entities preparing financial statements under the Corporations Act regardless of whether they are general or special purpose.

In summary:

• Company preparing special purpose financial statements under Part 2M of the Corporations Act 2001
  Statement of cash flows is a mandatory primary statement.
• Non-corporate entity preparing special purpose financial statements in accordance with legislation
  Generally legislation would require compliance with Australian Accounting Standards which would mean at least preparation of the four primary statements.
• Entity preparing special purpose financial statements without any legislative requirements
  No requirement for preparation of statement of cash flows unless requested by the users.

For further information about Special Purpose Financial Statements, or other interpretations of the accounting standards, contact Carmen Ridley (cridley@afrs.com.au).