Parque temático

Australian funds and cash flow reporting followed a similar cycle to that observed in both the U.S. and U.K., with firms incorporating some form of funds flow statement as part of their annual accounts by the start of the 1970’s (Donleavy, 1994, page 98).10In January 1971, the Institute of Chartered Accountants in Australia (ICAA) initially recommended funds flow reporting by issuing Technical Bulletin F1: “The Funds Statement”. However, funds flow statements only became widespread after the Australian Associated Stock Exchanges amended their listing rules in 1972 to mandate all public companies file one as part of their annual accounts (Walker and Robinson, 1994).11

10_{See Table 2-5 for a summary of the development of cash flow reporting in Australia.}

11_{The Australian Associated Stock Exchanges was the predecessor to the Australian Stock Exchange}

Table 2-5 Summary of the development of cash flow reporting in Australia Key Date Key Development

1971 Issue of Technical Bulletin F1: The Funds Statement, by the Institute of Chartered Accountants in Australia (ICAA) recommended but not mandatory for all public firms

1972 The Australian Associated Stock Exchange mandates the

inclusion of a funds flow statement in all listed company accounts

1980 Issue of Exposure Draft (ED) 16: Statement of Sources and Application of Funds by the Australian Accounting Research Foundation (AARF) for comment

1983 Issue of Australian Accounting Standard 12: Statement of

Sources and Application of Funds (AAS12) by AARF applicable to all firms

1985 The Companies and Securities (Miscellaneous Amendments) Bill in the Companies Act and Codes is amended by the National Companies and Securities Commission (NCSC) to require all companies to disclose a funds flow statement as part of their annual accounts

1986, June AAS 12 is approved by the Accounting Standards Review Board (ASRB) and issues ASRB 1007: Financial Reporting of Sources and Application of Funds.

1986, July Issue ofED 37/Release 410: Proposed Amendment to Statement of Accounting Standards AAS 12 and Approved Accounting Standard ASRB 1007 to require the Disclosure of Cash Flow from Operationsby the ASRB and AARF

1990, October The ASX proposes that companies should be required to report a cash flow statement rather than a funds flow statement as originally stipulated in their 1972 paper An Issues Paper: Improved Reporting by Listed Companies

1991, May Issue of ED 52: Statement of Cash Flows by the AARF for comment

1991, December Issue of AASB 1026: Statement of Cash Flows by the AASB requiring all Australian firms to report a Cash Flow Statement as part of a complete set of company accounts

Table 2-5 (continued)

Key Date Key Development

1997, October AASB 1026 is amended to conform with the requirements of International Accounting Standard 7: Cash Flow Statements 2004, July Issue of AASB 107: Cash Flow Statements which is the

equivalent of IAS 7

2005, January Application date for AASB 107for annual reporting periods on or after this date

2006, November Issue of ED 151: Australian Additions to, and Deletions from, IFRSsfor comment

2007, April Issue of AASB Amendment Pronouncement (AP) 2007-4 which amends AASB 107 in response to ED 151 to allow the use of the Indirect method of cash flow disclosure as well as allowing dividends paid to be classified as either a financing or operating cash flow

2007, July Application date for AASB AP 2007-4 for annual reporting periods on or after this date

2007, September Issue of AASB AP 2007-8 which amended the title of AASB 107 fromCash Flow StatementstoStatement of Cash Flows Based on Yap (1994), Belkaoui and Jones (1996), Hendersonet al.(2004) cited in Farshadfar (2008), in addition to Walker and Robinson(1994) and AASB 107(2009)

Ten years later, responding to comments received back from the issue of Exposure Draft (ED) 16: Statement of Sources and Application of Funds, the accounting profession, in the form of the Australian Accounting Research Foundation (AARF), issued Australian Accounting Standard 12: Statement of Sources and Application of Funds(AAS12). Funds flow reporting in Australia was, therefore, further standardised whilst the accounting profession had signalled their support for the ASX requirement of their mandatory disclosure (Walker and Robinson, 1994; AASB 107, 2009). Further endorsement of the funds flow statement came from the National Companies and

Securities Commission (NCSC) when, in 1985, they amended the statutory rules to require all companies disclose a funds flow statement with their filed accounts.

Prior to 1985, the AARF largely developed and issued Australian Accounting Standards without any independent regulatory oversight. Regulation of Australian Accounting Standards only started once the Accounting Standards Review Board (ASRB) was formed in 1985 with the mandate to review all the standards issued by the AARF (Walker and Robinson, 1994). One of the first standards reviewed and issued by the ASRB was when they initially endorsed AAS 12 in 1986 and subsequently issued

ASRB 1007: Financial Reporting of Sources and Application of Funds.

Conflicts between the ASRB and the AARF significantly slowed the transition from funds flow reporting to cash flow reporting in Australia (Walker and Robinson, 1994). SFAS 95 had found favour with the ASRB who were pushing to move away from the funds flow statement and adopt an entirely new method of cash flow reporting. Meanwhile, however, the AARF were content to retain the funds flow statement with modification. Ultimately, the development of cash flow reporting in America, and the 1987 Australian stock market crash, prompted increased pressure from analysts and the public for significant reforms in accounting and auditing (Walker and Robinson, 1994). Reforms were, however, slow as the ASRB and the AARF were still at a deadlock over whether or not to issue a cash flow reporting standard equivalent to SFAS No. 95.