This free, guided checker walks your finance team through the key decision points for IAS 7 Cash Flow Classification. Answer a few questions to see the likely treatment and the evidence to document.
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This tool is a high-level IFRS screening aid for general information only and is not accounting, audit or legal advice. Conclusions require entity-specific evidence and judgement - confirm the treatment with your advisor.
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Cash with management companies or custodians requires IAS 7.6-7 cash-equivalent tests before operating, investing, or financing classification. Common examples are ATM replenishment cash held by armored-carrier agents, payment-processor settlement balances, and pooled treasury accounts run by a service provider.
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Official guidance: IFRS issued standards
Ownership retained throughout custody is a primary indicator the balance qualifies as the entity's cash rather than a receivable from the agent. Read the contract for title-transfer, commingling, and set-off clauses, and confirm what happens to the funds in the provider's insolvency; segregated client-money accounts support retained title.
Present the balance as a receivable or other asset, not within cash and cash equivalents, until the IAS 7.6 ownership test is met.
Official guidance: IFRS issued standards
Review the custody agreement for redemption mechanics: same-day or next-day return on demand, subject only to physical transit time, supports demand-deposit character for ATM replenishment and operational liquidity pools. Notice periods, provider consent rights, or minimum-balance holds point away from cash classification under IAS 7.6-7.
Exclude the balance from cash and cash equivalents; access restrictions mean it fails the on-demand convertibility test in IAS 7.6-7.
Official guidance: IFRS issued standards
Insurance or contractual indemnity covering transit losses supports insignificant value risk under IAS 7.6. Weigh who bears loss between collection and deposit, the provider's credit standing, and any exposure to currency or price movements; uncompensated exposure indicates the balance is a receivable or investment rather than cash.
Classify the balance within cash and cash equivalents under IAS 7.6 and remap operating working-capital lines if restating comparatives. Exclude the balance from cash and cash equivalents; the IAS 7.6 insignificant-value-risk condition is not demonstrated.
Official guidance: IFRS issued standards
Profit-or-loss linkage is an indicator, but investing and financing definitions take precedence for many items. For example, a gain on selling equipment enters profit or loss yet the sale proceeds are investing under IAS 7.16, and interest or dividends follow the entity's consistent IAS 7.31-34 policy rather than automatic operating treatment.
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Official guidance: IFRS issued standards
IAS 7.16 restricts investing classification to expenditures that result in a recognized asset in the statement of financial position. Expensed research, exploration outlays written off, and advertising stay in operating even when management views them as investment-like; capitalized development costs and PP&E progress payments qualify as investing.
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Official guidance: IFRS issued standards
IAS 7.17 lists proceeds from issuing shares or debt, payments to acquire or redeem the entity's own shares, repayments of amounts borrowed, and lease principal payments by a lessee. Watch supplier-finance and factoring programs: when the substance of the liability becomes a borrowing, the related payments may move from operating to financing.
Classification remains open; analyze the substance of the transaction against the IAS 7.6 definitions and split components where IAS 7.12 requires.
Official guidance: IFRS issued standards
IAS 7.11 requires classification in the manner most appropriate to the business, and IAS 7.12 requires a single transaction to be split when it contains differently classified components - for example, a loan repayment separates into interest (per the IAS 7.31-33 policy) and principal (financing). Keep the mapping consistent from period to period.
Present the flow within operating activities under IAS 7.14 and apply the classification consistently period to period. Present the flow within investing activities under IAS 7.16, gross unless the IAS 7.22 netting conditions are met. Present the flow within financing activities under IAS 7.17 and capture it in the IAS 7.44A reconciliation of financing liabilities.
Official guidance: IFRS issued standards
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