The SEC announced that its Division of Economic and Risk Analysis (DERA) reviewed certain Forms 10-Q and Forms 10-K filed in 2023 to determine whether filers’ cash flow statement data element presentation structure (such as parent and descendant relationship) is organized correctly. Cash flow statement presentation structure includes three parents: Net Cash Provided by or Used in the Operating Activities Abstract, Financing Activities Abstract, and Investing Activities Abstract.
The Division noted that some filers incorrectly included elements in one of the three presentation abstracts that are not the descendants of that abstract under the US GAAP Taxonomy, for example:
- The Income Taxes Paid element and the Effect of Exchange Rate on Cash Equivalents, Restricted Cash and Restricted Cash Equivalents element should not be presented as descendants of the Financing Activities Abstract
- The Repayments of Long-Term Debt element should not be presented as a descendant of the Investing Activities Abstract
Proper presentation structure is necessary because it helps locate and group elements. Filers should carefully review the parent and descendant relationship reflected in the presentation structure of the cash flow statement to guarantee the accuracy of the presentation.
For more data quality reminders, see Staff Observations and Guidance on the SEC’s website.
Source:
Cash Flow Statement Data Element Presentation (sec.gov)
