The ugly stepchild of financial statements, and one of the more common causes of restatement, will be getting a bit of a makeover in the coming year as companies adopt new rules around how to classify cash moving in and out of the organization in the statement of cash flows.
The Financial Accounting Standards Board adopted Accounting Standards Update No. 2016-15 to address eight specific cash flow classification issues that companies historically have handled in different ways, botching comparability for users of financial statements. The new accounting pronouncement is meant to lay out more explicit requirements around historical accounting rules that provided only scant principles about how to classify cash flows into the three major categories in the cash flow statement—operating, investing, and financing.
