Reporting Requirements for Annual Financial Reports of State Agencies and Universities

General Accounting

Statement of Cash Flows
Content and Form of the Statement of Cash Flows

Net Change in Cash and Cash Equivalents

A statement of cash flows reports net cash provided or used in each of the four categories of classifying cash transactions. It also reports the net effect of these flows on cash and cash equivalents during the fiscal year in a manner that reconciles beginning and ending cash and cash equivalents for the year.

The ending cash and cash equivalents must tie to the total of cash and cash equivalent line items (including restricted) reported on the statement of net position.

Direct Method of Presenting Cash Flow Information

The direct method of presenting cash flows has the advantage of reporting operating cash inflows separately from operating cash outflows and can be useful in estimating future cash flows. In using the direct method, the operating cash outflows are deducted from the operating cash inflows to determine the net cash flow from operating activities. That is, the operating activities are presented on a cash basis.

Major classes of operating cash receipts and payments:

• Cash receipts from customers
• Cash receipts from quasi-external operating transactions
• Other operating cash receipts (if any)
• Cash payments to suppliers of goods and services
• Cash payments to employees for services
• Cash payments for quasi-external operating transactions
• Other operating cash payments (if any)

Reconciliation

Agencies must prepare a reconciliation of operating income to net cash flows from operating activities. The reconciliation is shown on the face of the statement of cash flows in a separate schedule. The amount of net cash flows from operating activities is computed by adding or subtracting amounts that appear on the statement of revenues, expenses and changes in net position but do not provide or use cash.

For example, depreciation expense is presented on the statement of revenues, expenses and changes in net position but is not a cash flow — therefore, depreciation expense is added back to operating income. Cost allocations, deferrals and accruals must be added to or subtracted from operating income in order to convert operating income to net cash flow from operating activities.

GASB Implementation Guide No. 2017-1 requires agencies to present the following defined benefit plan accounts separately:

• Employer’s liability to employees for defined benefit pensions or defined benefit other postemployment benefits other than pensions (OPEB)
• Employer’s deferred outflows of resources related to pensions or OPEB
  –AND–
• Employer’s deferred inflows of resources related to pensions or OPEB

Agencies are responsible for providing explanations to support the increase/decrease numbers in the reconciliation section and significant fluctuations. Be sure to include numbers in the same categories as last year. If something is in a different account this year than last year, disclose that information in the SOCF Reconciliation template submitted through the ONDSS web application.

Non-Cash Investing, Capital and Financing Activities

Report information about investing, capital and financing activities that affect assets and liabilities but do not result in cash receipts or cash payments in the period. Present this information with the statement of cash flows in the section titled “non-cash transactions.”

Include line items in the non-cash transaction section of the statement of cash flows for:

• Net change in fair value of investments
• Donation of capital assets
• Borrowing under a lease purchase
• Other such as:
  • The acquisition of assets by assuming directly-related liabilities
  • Exchanging non-cash assets or liabilities for other non-cash assets or liabilities

When transactions are part cash and part non-cash, report only the cash portion within the statement of cash flows. Report the non-cash portion in the non-cash transaction section supplemental to the statement of cash flows.