IFRS Disclosure Initiative Project with Focus on IAS 7

Hesham Avais & Sohaib Zahid

Student thesis: Master thesis


The purpose of this master thesis is to analyse the information value that users of Financial Statements can expect from the new amendments to IAS 7 - Statement of Cash flow. During recent times users of Financial Statements has expressed the need of information regarding entities’ debt and the movement in debt during the financial year. In order to meet these needs that the users have expressed, the International Accounting Standards Board has developed a new set of rules in addition to the existing ones in IAS 7. The effective date for these amendments is 1. January 2017.
In regards to meeting the needs from the users of Financial Statements the International Accounting Standards Board has concluded that due to the lack of definition of net debt in the International Accounting Standards the Board has decided to use the definition of financing activities within the Statement of Cash Flow. Considering the existing issues with the accounting rules in IAS 7 this thesis seeks to analyse how these issues have an effect on the new disclosure requirement of entities’ net debt reconciliation. One of these main issues is regarding the classification flexibility of certain activities. The new amendments require preparers of the Statement of Cash Flow to include non-cash changes which affects the cash flow arising from financing activities. The purpose of the existing Statement of Cash Flow is to present actual cash flows whereby the consequences of the amendments, results in a difference from the existing purpose of the standard.
Furthermore, the new accounting standard IFRS 16 ‘Leases’, which are to replace the existing standard IAS 17 ‘Leases’, have an impact on the net debt reconciliation. To analyse the effects the new standard IFRS 16 has on the net debt reconciliation, we have focused the analysis on entities that uses a high amount of leases. In regards to the new amendments it is evaluated whether the information needed to prepare a net debt reconciliation by the users is available in the entities’ Annual Reports.

EducationsMSc in Auditing, (Graduate Programme) Final Thesis
Publication date2017
Number of pages114