Using the latest Cash Flow Worksheet

Published: 16/02/2023

The Cash Flow Worksheet has been introduced into the IFRS (from version 2022.02.01) and IFRS for SME (from version 2022.01.01) templates as a tool to efficiently prepare the Statement of Cash Flows. Note that this has not been introduced in SME Afr.

The fundamental principle of the Statement of Cash Flows is to present only an entity's cash movement during a financial reporting period. This information is rarely available from trial balance data exclusively and due consideration is required to correctly prepare and present the Statement of Cash Flows.

The Cash Flow Worksheet has been designed to assist with this process, allowing the preparer, auditor and other interested users to determine and interrogate, in a single document, the full cash flow movement per line item of the Statement of Financial Position. The Cash Flow Worksheet also automatically populates the Statement of cash flows in the financial statements.

For a detailed explanation of how the Cash Flow Worksheet works, you can watch the YouTube video. If you have not subscribed to our channel yet, you can sign up and get access to our latest videos and receive notifications as soon as we make them available here.

Answer:

How will the Statement of Cash Flows be populated with the new Cash Flow Worksheet?
Will the file include the new Cash Flow Worksheet for the prior year?
Where is the Cash Flow Worksheet?
The layout of Document 01.70 (Cash flow worksheet)
Frequently asked questions
1. How can interest received (paid) and dividends received (paid) be reallocated between operating, investing and financing activities?
2. Cash flow worksheet and interim financial statements

1. How will the Statement of Cash Flows be populated with the new Cash Flow Worksheet?

The Statement of Cash Flows for the current reporting period can only be populated from the Cash Flow Worksheet.

The Statement of Cash Flows for the prior reporting period is populated by means of the roll-forward process, but the manual input ability has been retained for first-time files.

2. Will the file include the new Cash Flow Worksheet for the prior year?

No. Only the current year worksheet will be included in the files.

The prior year's cash flow figures will have rolled forward from the prior year's file and will not be necessary to compute again. The Cash Flow Worksheet for the prior year will be retained in the prior year's file.
It will therefore only be necessary to manually capture the prior year's Statement of Cash flow values for files using Caseware for the first time.

3. Where is the Cash Flow Worksheet?

The Cash Flow Worksheet is document 01.70 and can be accessed either by clicking the link at the beginning of the Statement of Cash Flows within the Financial Statements or through the Document Manager.

Link in Statement of Cash Flows

4. The Layout of Document 01.70

The Cash Flow Worksheet (Document 01.70) is made up of 5 components which can be navigated from the document map. These 5 components are presented separately for “Group” and “Company”.

The components are as follows and are discussed briefly below:

Cash Flow Worksheet (non-cash movements workpaper)
Cash Flow from operating activities workpaper
Cash Flow from investing activities workpaper
Cash Flow from financing activities workpaper
Test of cash flow

These components fit together as depicted in the following flow chart:

4.1 Cash Flow Worksheet (Non-cash movements workpaper)

The non-cash movements workpaper is where the actual workings take place. Detailed guidance is provided directly in the workpaper.

It has been designed in a Statement of Financial Position (Balance Sheet) style layout. The methodology is to begin with the opening balance for each line item of the Statement of Financial Position and to add all non-cash movements for the reporting period to this balance. The closing balance is then subtracted so that the result is only cash movements.

The non-cash movements which can be obtained from mapping or from other sources in the financial statements are automatically included in the worksheet.
Any other non-cash movements must be input by the user.

Non-cash movements automated from mapping include, amongst others, depreciation, impairment and gains or losses on disposals.

It is very important to remember to make sure of the following before attempting the Cash Flow Worksheet:

That all accounts are mapped and that the Statement of financial position balances.
That all reconciliations of assets and liabilities, other comprehensive income and business combinations are completed.

The figures below show the assets and equity and liabilities sections of the worksheet respectively.
Figure 4.jpg

From the above image, notice that the retained income line works differently compared to the other lines. The various non-cash items which are adjusted against profit or loss are split out into their own lines rather than directly against retained income.

The final portion of the non-cash movements workpaper is a test of the movement of cash flow. The net cash (outflows) inflows for the full statement of financial position, excluding cash and cash equivalents, are compared to the movement in cash and cash equivalents and the difference should be zero.

This is demonstrated in figure 6.
Figure 6.jpg

4.2 Cash flow from operating activities workpaper

This section of the workpaper is where the disclosure is prepared for the cash flow from operating activities section of the Statement of Cash Flows. It is automatically populated from mapping and from the non-cash movements workpaper.

The first portion is a replica of the statement of profit or loss, with all values assigned a specific default column to separately allocate the net profit (loss) before tax between the “cash received from customers” and the “cash paid to suppliers and employees”. Users who do not wish to show this allocation on the Statement of cash flows can switch the lines off using builder mode.

The remainder of the workpaper is in a very similar format to the “Cash flows from operating activities” section of the Statement of cash flows as well as the related notes.

There is a column labelled “Reclassifications for cash flow line items”. In the operating activities section, this is only used to reallocate an item which has been defaulted to operating activities, but the user wishes to present it in investing or financing activities. Interest received and dividends paid are examples. This is discussed in more detail in the FAQ portion of this document.

Refer to figure 7 for an illustration of the cash flows from operating activities.
Figure 7.jpg

4.3 Cash flow from investing activities workpaper

This section of the workpaper is where the values are determined for the “Cash flows from investing activities” section of the Statement of cash flows and is designed in a very similar layout.

The workpaper consists of 3 columns:

Default cash flows
Reclassifications for cash flow line items
Cash flow statement.

Default cash flows

The total cash (outflows) inflows per asset are determined in the non-cash movements workpaper. These cash inflows (outflows) are automatically allocated to a specific investing activity in the “default cash flows” column. For example, the cash flow movement for property, plant and equipment is defaulted to “Purchases of property, plant and equipment”.

Reclassifications for cash flow line items

This column is used to adjust the investing activities where the default allocation is not the appropriate allocation.

The adjustments are made as follows:

Asset classes with reconciliation of movement tables: The amount of proceeds on disposals of assets is determined automatically from assigned mapping and from the disposal columns in the reconciliation tables. The amount can be manually overwritten.
All other asset categories: The user is required to manually type in the appropriate adjustment in the yellow input cells.

When an adjustment is made, the amount of the adjustment is deducted off the default row so that the full cash flow for the asset remains as calculated in the non-cash movements workpaper.

For example, consider loans to group companies (illustrated in figure 8). The total cash outflow was calculated as CU4 million in the “non-cash movements workpaper”. This full amount defaults to “Cash receipts on repayments of loans to group companies”.

In this scenario, however, the cash outflow was actually attributable to “Cash advanced in loans to group companies”. To obtain the desired outcome, the CU4 million must be typed into the “reclassifications for cash flow line items” column in the “Cash advanced in loans to group companies” row. The total movement for loans to group companies remains unchanged as an outflow of CU4 million. Refer to figure 8.

Cash flow statement

This column is used to populate the actual Statement of cash flows in the financial statements.
Figure 8.jpg

4.4 Cash flow from financing activities

This section of the workpaper is where the values are determined for the “Cash flows from financing activities” section of the Statement of cash flows and are designed in a very similar layout.

The methodology by which it is populated is the same as for cash flows from investing activities.

See figure 9 for an illustration of a portion of the cash flow from investing activities workpaper.
Figure 9.jpg

4.5 Test of cash flow

This section of the workpaper is exactly as the name depicts. It is a test to determine whether the statement of cash flows is in balance.
Figure 10.jpg

5. Frequently asked questions

5.1 How can interest received (paid) and dividends received (paid) be reallocated between operating, investing and financing activities?

Interest received (paid) and dividends received (paid) default to the cash flows from operating activities workpaper. In order to reallocate to investing or financing activities, the amount to be reallocated must be typed into the corresponding row in the financing or investing activities workpaper in the “Reclassifications for cash flow line items” column. It will automatically be adjusted out of operating activities. In total, the amount will always agree to the amount of interest or dividends which was calculated in the non-cash movements workpaper.

Note that this process replaces the allocation that was previously made in “Settings”.

This is explained in the example which follows:

Step 1

Assume that the cash portion of interest income amounted to CU135 000, as determined in the non-cash movements workpaper. Figure 11.
Figure 11.jpg

Step 2

The interest received defaults to the cash flows from operating activities workpaper (Figure 12).
Figure 12.jpg

Step 3

If the interest income is required to be presented as part of investing activities, then the user must type CU135 000 into the reclassification column in the investing activities section (Figure 13). This amount will automatically adjust against the interest income in the operating activities section (Figure 14).
Figure 13.jpg

5.2 Cash flow worksheet and interim financial statements

The cash flow worksheet is linked to the annual financial statements and to the most recent imported trial balance. This means that it will be updated at each interim period when the new trial balance is imported.

For purposes of interim financial statements, the cash flow worksheet can be used to determine the amounts to be used for the interim statement of cash flows at each interim period. The cash flow worksheet should be saved as a pdf document in the file at each interim period and that used as a supporting document for the related interim financial statements. The amounts will have to be manually captured into the interim statement of cash flows.

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