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Introduction. Financial Accounting Statement 95 and International Accounting Standard 7 contain similar and different information required by each individual regulator, U.S GAAP or IASC. The harmonization of these comparative standards is an ongoing global concern. The principals of each standard should not be a problem in merging the differences in FASB Statement 95 and IAS counterpart, yet enforcement of a global standard could be of concern. The ethnocentric view of United States and the establishment of a well accepted International Standard also plays a role in harmonization of Statement of Cash Flows. The U.S GAAP standard for the Statement of Cash Flows seems to be pleasing among enterprises, so there is no pressure for change. Alternatively, business has become largely international leading to the need for a common International Accounting Standard that meets the needs and objectives of all enterprises no matter what country. The purpose is to display differences and similarities in the Statement of Cash Flows between FASB statement 95 and counterpart IAS 7 so that a global standard can be established. Therefore, information can be globally reported with comparability and consistency, as well as being relevant and reliable to users of financial statements. With the harmonization of international standards, the Statement of Cash Flows can become internationally useful. II. IAS 7 – Presentation and Reporting IAS 7 was set up by the International Accounting Standards Committee (IASC). “IAS 7, Cash Flow Statements, became effective for financial statements covering periods beginning on or after 1 January 1994” (Iasc.com). The IAS 7 deals with the cash flows of the accounting profession. “All enterprises that prepare financial statements in conformity with IAS are required to present a cash flow statement” (Iasplus.com). The cash flows statement is a very important source of information about a corporation’s cash receipts and payments during a normal business cycle. The information from the cash flows helps investors, employees of the business, lenders, suppliers, and other trade creditors to determine if the business is worth investing in. Therefore, the IAS 7 addresses what is needed on the statements and its usefulness. There are three different classifications involved in the cash flows; investing, operating, and financing. Also, extraordinary items need to be classified as operating, investing, or financing activities when extraordinary items are present within a company. Cash flows of foreign subsidiaries should be transformed at the exchange rates present. Reporting Cash Flow from Investing Activities. The investing section of the cash flow statement needs to be completed after the operating section net flow amount is calculated. Examples of investing activities from the IAS 7 include: “(a) cash payments and receipts from future contracts, forward contracts, option contracts and swap contracts except when the contracts are held for dealing or trading purposes, or the receipts or payments are classified as financing activities; (b) cash payments to acquire property, plant and equipment, intangibles and other long-term assets. These payments include those relating to capitalized development costs and self-constructed property, plant and equipment; (c) cash advances and loans made to other parties (other than advances and loans of a financial institution); (d) cash receipts from sales of property, plant and equipment, intangibles and other long-term assets; (e) cash payments to acquire equity or debt instruments of other enterprises and interest in joint ventures” ( pp. 7-8 to 7-9). Reporting Cash Flow from Financing Activities. The financing section involves stockholders equity, different types of securities, and bonds. Examples of financing cash flow activities from IAS 7 are: “(a) cash proceeds from issuing shares; (b) cash payments to owners to acquire or redeem the enterprise’s shares; (c) cash proceeds from issuing debentures, loans, notes, bonds, mortgages and other short-term borrowings; (d) cash repayments of amounts borrowed; and (e) cash payments by a lessee for the reduction of the outstanding liability relating to a finance lease” ( p.
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