Abstract
Abstract The recently issued UK Financial Reporting Standard 1 (FRS 1) requires the replacement of the Statement of Source and Application of Funds by a Cash Flow Statement. A significant issue, disregarded in the past and specifically addressed by the new standard, is the reporting of foreign cash flows in a consolidated cash flow statement involving foreign subsidiaries. This paper evaluates the provisions of FRS 1 in relation to this issue. It is argued that the new requirements will not entirely resolve existing comparability problems and will not necessarily result in a cash flow statement which reflects the sterling equivalent of cash flows as they occur in a foreign currency.
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