Chapter 2 — Scope | DART – Deloitte Accounting Research Tool

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Chapter 2 — Scope

Although entities are required to present a statement of cash flows, there are certain exceptions (identified in ASC 230). ASC 230 also defines the periods for which an entity is required to present a statement of cash flows.

ASC 230-10

15-2 The guidance in the Statement of Cash Flows Topic applies to all entities, including both business entities and not-for-profit entities (NFPs), with specific exceptions noted below. The phrase investors, creditors, and others includes donors. The terms income statement and net income apply to a business entity; the terms statement of activities and change in net assets apply to an NFP.

15-3 A business entity or NFP that provides a set of financial statements that reports both financial position and results of operations shall also provide a statement of cash flows for each period for which results of operations are provided.

A statement of cash flows should be presented for each of the periods in which a statement of operations (or statement of activities for not-for-profit entities [NFPs]) is provided. For example, if a statement of operations is provided for the most recent three periods, a statement of cash flows should also be provided for the same three periods. However, certain types of entities are exempt from the requirement to present a statement of cash flows under ASC 230 when they are presenting a complete set of financial statements.

ASC 230-10

15-4 The guidance in this Topic does not apply to the following entities:

A statement of cash flows is not required to be provided by a defined benefit pension plan that presents financial information in accordance with the provisions of Topic 960. Other employee benefit plans that present financial information similar to that required by Topic 960 (including the presentation of plan investments at fair value) also are not required to provide a statement of cash flows. Employee benefit plans are encouraged to include a statement of cash flows with their annual financial statements when that statement would provide relevant information about the ability of the plan to meet future obligations (for example, when the plan invests in assets that are not highly liquid or obtains financing for investments).
Provided that the conditions in (c) are met, a statement of cash flows is not required to be provided by the following entities:
1. An investment company within the scope of Topic 946 on investment companies
2. Subparagraph superseded by Accounting Standards Update No. 2013-08.
3. A common trust fund, variable annuity account, or similar fund maintained by a bank, insurance entity, or other entity in its capacity as a trustee, administrator, or guardian for the collective investment and reinvestment of funds.
For an investment company specified in (b) to be exempt from the requirement to provide a statement of cash flows, all of the following conditions must be met:
1. Subparagraph superseded by Accounting Standards Update No. 2013-08.
2. During the period, substantially all of the entity’s investments were carried at fair value and classified in accordance with Topic 820 as Level 1 or Level 2 measurements or were measured using the practical expedient in paragraph 820-10-35-59 to determine their fair values and are redeemable in the near term at all times.
3. The entity had little or no debt, based on the average debt outstanding during the period, in relation to average total assets. For the purpose of determining average debt outstanding, obligations resulting from redemptions of shares by the entity from unsettled purchases of securities or similar assets, or from covered options written generally may be excluded. However, any extension of credit by the seller that is not in accordance with standard industry practices for redeeming shares or for settling purchases of investments shall be included in average debt outstanding.
4. The entity provides a statement of changes in net assets.

Entities that are not required to present a statement of cash flows include defined benefit pension plans that prepare financial information in accordance with ASC 960, certain investment companies within the scope of ASC 946 that meet all of the conditions in ASC 230-10-15-4(c), and certain funds described in ASC 230-10-15-4(b)(3).

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This publication provides comprehensive guidance; however, it does not address all possible fact patterns, and the guidance is subject to change. Consult a Deloitte & Touche LLP professional regarding your specific issues and questions.