An International Accounting Standards Cash Flow Statement produced for ‘First Year Adoption’ (as per example above) will not have an IAS ‘pre comparative’ (04 IAS posting entry) to compare the comparative (05 IAS posting entry) with, therefore the comparative years movements will not be calculated correctly and the Cash Flow Statement is likely not to balance.
The opening positions of the comparative (05 IAS posting entry) will need to be entered. The data screen International | First Year Adoption | Reconcilliation of Equity must be completed for the first year of IAS adoption (06 IAS) with details of the opening position as per the comparative.
Note: In the example above within the 06 data screens the 04 closing trial balance would be entered (as 04 closing trial balance would be 05 opening trial balance). This will provide the opening ‘cash’ position for cash flow purposes for 05 IAS.
Additionally opening positions must be entered as ‘adjustments’ within the comparative years (05 IAS) data screens International | Cash Flow Statement. The following are some common examples:
Operating Profit (data screen)
Financing Activities (data screen)
Note: Again these opening positions can be taken from the pre comparatve (UK GAAP 04) trial balance. Unless any figures have been restated due to the differences in IFRS.
Select Reports | Annual and run report TBL, selecting posting entries for first year adoption (IAS 06), IAS comparative (IAS 05) and pre comparative (UK GAAP 04). This report will assist in making sure the movements are shown on the Cash Flow Statement correctly.
Make sure when running the annual reports the entries are adjusted from above accordingly.
Once the opening positions have been entered within the appropriate screens use the TBL report produced to confirm the movements between the comparative (05 IAS) and pre comparative (04 UK GAAP) for each of the items listed above.
i.e. Movement on Inventories is calculated as £1,500 therefore the Cash Flow Statement once opening positions are entered should show on Note 1, Increase/Decrease in Inventories = £1,500 (if not the opening position has not been entered correctly).
Movement on Share Capital is calculated as £0 (no movement) therefore the Cash Flow Statement should NOT show a movement for Share Capital (if it does the opening position has not been entered correctly).
Additonal items to consider:
Check postings made to ‘Depreciation’ accounts on the Profit & Loss and Balance Sheet as the totals should agree. An adjustment may be required.
Have postings been made to Account 296? An adjustment may be required.
If problems persist then it is the users/accountants responsibility to understand the cash movements required and therefore calculate which movements are missing. Any adjustments can then be made via the data screens.
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