ICAI — Recent Opinions of The Expert Advisory Committee - Presentation of accrued interest in the Statement of Cash Flows
Facts of the Case : Querist presented all the interest accrued during the year on the fixed deposit as below in the cash flow statement :
Method : Indirect Method followed by Querist
Relevant Extract Only:
Under Cash Flow From Operating Activities: -XXX (Deducted TOTAL Interest received during the year including accrual)
Under Cash Flow From Investing Activities: +XXX (Added TOTAL Interest received during the year including accrual)
C&AG — Disagreed with the above presentation
The impasse was resolved after resolving to approach the Expert Advisory Committee (EAC) of the Institute of Chartered Accountants of India for its opinion.
Few Points considered by the EAC:
Ind AS 1 — “An entity shall prepare its financial statements, except for cash flow information, using the accrual basis of accounting”
Ind AS 7 “ The objective of this Standard is to require the provision of information about the historical changes in cash and cash equivalents of an entity by means of a statement of cash flows which classifies cash flows during the period from operating, investing and financing activities.”
EAC Opinion :
Relevant Extract Only :
A. Cash Flow From Operating Activities: -XXX (Deducted TOTAL Interest received during the year including accrual)
B. Cash Flow From Investing Activities: +XXX — Accrued Interest during the year(Added ONLY Interest received during the year in cash/cash equivalents/bank)
Nutshell — In the cash flow statement, only cash and cash equivalents movements should be captured.
Notes :
1. XXX = Total Interest
2. — = Minus Sign
3. + = Add Sign
4. For detailed discussion/document and points considered by the committee kindly refer https://resource.cdn.icai.org/71546eac57582-17.pdf
Thank You❤️
