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The International Accounting Standards Board (IASB) is developing potential ways to improve the requirements of IAS 7 Statement of Cash Flows including:

  1. the disaggregation of cash flow information;
  2. the reporting of information about non-cash transactions;
  3. the transparency of information communicated about cash flow measures not specified in IFRS Accounting Standards;
  4. the consistent application of requirements to classify cash flows as operating, investing or financing; and
  5. the consistent application of the definition of ‘cash equivalents.’

The IASB will also consider how any improvements might apply to the statement of cash flows for financial institutions.

IASB® Update June 2026

The IASB met on 23 June 2026 to discuss improving the classification and presentation of cash flows related to derivatives and government grants.

Cash flows related to derivatives

The IASB tentatively decided to propose requiring an entity to classify cash flows from a derivative used to manage identified risks (and not designated in a hedging relationship in accordance with IFRS 9 Financial Instruments):

  1. in the same manner as the cash flows from the item(s) whose identified risks are being managed. This approach would align the classification with that for derivatives designated in a hedging relationship in accordance with IFRS 9.

    All 13 IASB members agreed with this decision.

  2. as cash flows from operating activities, if classifying the cash flows as described in (a) would involve undue cost or effort.

    Seven of 13 IASB members agreed with this decision.

The IASB tentatively decided to propose requiring an entity to classify cash flows from a derivative not used to manage identified risks as cash flows from financing activities, if the derivative relates to a transaction that involves only the raising of finance.

Twelve of 13 IASB members agreed with this decision.

Cash flows related to government grants

The IASB tentatively decided to propose requiring an entity:

  1. to classify receipts from government grants for a grant related to assets (as defined in IAS 20 Accounting for Government Grants and Disclosure of Government Assistance) as investing activities.

    Eleven of 13 IASB members agreed with this decision.

  2. to classify receipts from government grants for a grant related to income (as defined in IAS 20—that is, a grant other than one related to assets) as operating activities.

    Eleven of 13 IASB members agreed with this decision.

  3. to present receipts from government grants related to assets on a gross basis—that is, the entity would present cash flows received from grants related to assets and payments for the related items as separate items in the statement of cash flows.

    Twelve of 13 IASB members agreed with this decision.

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