Flow of funds. Methods of reporting

As practice shows, today many companies,which experience some difficulties in the preparation of a report reflecting the movement of cash. These difficulties are often caused by differences in the rules for preparing a report on international and Russian standards. International standards, in addition, provide relative freedom to companies on the degree of disclosure of data and the choice of methods and accounting procedures.

When compiling a report that reflects the movementmonetary funds, an indirect or direct method can be used. For example, for financial and investment activities, only the direct method is applicable. It is considered more informative both from the interpretation of the report and from its application in analyzing the financial state of the organization. When compiling a report using this method, a detailed estimation of cash flows is required because the direct method is very laborious. The use of this technique is most effective and expedient in the framework of automation.

Indirect method used in the formation ofconsolidated financial statements. This format is necessary when placing public reporting on the exchange. It should be noted that this method less clearly reflects the movement of cash. In accordance with it, it is quite difficult to "spin" any indicator before financial transactions. And this is often required for budgeting and internal control.

Some companies practice the compilation of tworeports reflecting cash flow. One is made by indirect, and the other by a direct method. In this case, one report is used to check the indicators in the second. As a result, the final items reflecting cash flow are identical in them. This integrated approach contributes to the management of the enterprise and users of the reporting with all the necessary information for decision-making. However, the use of two methods immediately requires a lot of labor.

It should be noted that, regardless ofapplied method, the report shows the sources of financing of the enterprise, as well as the target direction of their application. Reporting is of great importance in the financial analysis of the company's activities, since it is possible to determine its ability to receive income from basic operations. The document shows a part of the proceeds, which falls on the enterprise in the form of cash. This is important in the situation when the receivables are to some extent covered in the netting of claims or there is a substantial "divorce" of transfers to customers for services rendered from the very period of provision of these services. The latter, for example, is often relevant for construction organizations.

The report also allows you to determine the effectiveness ofmanagerial decisions in the financial sphere. Adoption of each such decision affects cash flows in the company. So, for example, there may be a reduction or increase in costs, a change in the direction of finance, and so on.

Adoption of long-term management decisionsand involves the appropriate planning of cash flows. Information on the direction of finance, but not information on costs and revenues, is the main criterion that allows implementing certain investment projects. When calculating these, consideration is given to the analysis of the future monetary movement and their discounting. This information is contained in the report on the directions of finance.

In addition, information about the cash flows of analystsoften used in determining the free movement of finance, which is one of the most important indicators used in the formation of the company's value.