A recent proposal to change the presentation of financial information for not-for-profit entities, especially cash flow classifications, could serve as a preview of what might be in store for public companies down the line.
The Financial Accounting Standards Board has issued a proposal meant to improve the presentation of net asset classifications presented in financial statements and footnotes around liquidity, financial performance, and cash flow. In addition to some new requirements around measuring and presenting operating performance, net asset classifications, and liquidity, the proposal seeks to make the statement of cash flows easier to understand. The proposal would require entities to present cash flows using a direct method of reporting rather than an indirect or reconciliation method, and to classify cash flows in ways that are more consistent with classifications in the statement of activities.
