SAS 7 (Revised) : cash flow statements.
The revised Statement of Accounting Standard (SAS) 7 ‘'Cash Flow Statements” was introduced in Singapore in August 1994. This is in line with the trend in other countries where Cash Flow Statements have been adopted in favour of Funds Statements. Motivated by the growing importance of cash flow...
| Main Authors: | , , |
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| Other Authors: | |
| Format: | Final Year Project (FYP) |
| Language: | English |
| Published: |
2013
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| Subjects: | |
| Online Access: | http://hdl.handle.net/10356/51213 |
| _version_ | 1811690663953039360 |
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| author | Chia, Siang Huey. Ong, Sor Hong. Tan, Lay Mui. |
| author2 | Nanyang Business School |
| author_facet | Nanyang Business School Chia, Siang Huey. Ong, Sor Hong. Tan, Lay Mui. |
| author_sort | Chia, Siang Huey. |
| collection | NTU |
| description | The revised Statement of Accounting Standard (SAS) 7 ‘'Cash Flow Statements” was introduced in Singapore in August 1994. This is in line with the trend in other countries where Cash Flow Statements have been adopted in favour of Funds Statements. Motivated by the growing importance of cash flow information, this Applied Research Project seeks to provide some insight to the preparation and interpretation of Cash Flow Statements prescribed by the new standard.
To provide some theoretical background, the report outlines the historical development from the Funds Statement to the Cash Flow Statement; discusses the benefits and criticisms associated with the new statement and explains the rationale behind some of the provisions of SAS 7 (Revised). In addition, comparison is made with SFAS No.95, FRS 1 and AAS 28 to determine the extent of influence these earlier standards have on IAS 7 (Revised) and thus, SAS 7 (Revised). Comparison is also made between SAS 7 and SAS 7 (Revised) to highlight any “improvements” incorporated in the revised standard.
Empirical evidence in the United States and Singapore revealed that variations in disclosure method, classification of transactions and other instances of non-compliance with SFAS No.95 have caused the Cash Flow Statement to be no more comparable than the previous Statement of Changes in Financial Position. Replicating the methodology used by Kintzele and Kwiatkowski on 52 Singapore public listed companies producing Cash Flow Statements in 1994, the authors conducted a similar compliance study. To determine the extent of voluntary compliance with SAS 7 (Revised), the cash and cash equivalent policy adopted, reporting format, classification of interest, dividend, extraordinary as well as other requirements stipulated by the standard were examined. Results showed that the statements are generally in accordance with the disclosure guidelines laid out in SAS 7 (Revised) except for some discrepancies. Thus, our findings are in line with earlier researches in the United States and Singapore.
Among the sample examined, Hotel Royal Ltd was found to display close adherence to the standard. Using Hotel Royal Ltd’s 1992 to 1994 financial statements, a study using common-size statement and ratio analysis was done to illustrate how a ‘good’ Cash Flow Statement could be used to evaluate the financial health of the company.
The standard on Cash Flow Statement is a recent development in the accounting arena. Results of our studies showed that inadequacies exist in the prescriptions of the standard as well as in the use of the Statement as an analytical tool. Hence, much work need to be done by both practitioners and academicians before the new standard can become a success in Singapore. |
| first_indexed | 2024-10-01T06:07:35Z |
| format | Final Year Project (FYP) |
| id | ntu-10356/51213 |
| institution | Nanyang Technological University |
| language | English |
| last_indexed | 2024-10-01T06:07:35Z |
| publishDate | 2013 |
| record_format | dspace |
| spelling | ntu-10356/512132023-05-19T05:44:57Z SAS 7 (Revised) : cash flow statements. Chia, Siang Huey. Ong, Sor Hong. Tan, Lay Mui. Nanyang Business School Pang Yang Hoong DRNTU::Business::Accounting The revised Statement of Accounting Standard (SAS) 7 ‘'Cash Flow Statements” was introduced in Singapore in August 1994. This is in line with the trend in other countries where Cash Flow Statements have been adopted in favour of Funds Statements. Motivated by the growing importance of cash flow information, this Applied Research Project seeks to provide some insight to the preparation and interpretation of Cash Flow Statements prescribed by the new standard. To provide some theoretical background, the report outlines the historical development from the Funds Statement to the Cash Flow Statement; discusses the benefits and criticisms associated with the new statement and explains the rationale behind some of the provisions of SAS 7 (Revised). In addition, comparison is made with SFAS No.95, FRS 1 and AAS 28 to determine the extent of influence these earlier standards have on IAS 7 (Revised) and thus, SAS 7 (Revised). Comparison is also made between SAS 7 and SAS 7 (Revised) to highlight any “improvements” incorporated in the revised standard. Empirical evidence in the United States and Singapore revealed that variations in disclosure method, classification of transactions and other instances of non-compliance with SFAS No.95 have caused the Cash Flow Statement to be no more comparable than the previous Statement of Changes in Financial Position. Replicating the methodology used by Kintzele and Kwiatkowski on 52 Singapore public listed companies producing Cash Flow Statements in 1994, the authors conducted a similar compliance study. To determine the extent of voluntary compliance with SAS 7 (Revised), the cash and cash equivalent policy adopted, reporting format, classification of interest, dividend, extraordinary as well as other requirements stipulated by the standard were examined. Results showed that the statements are generally in accordance with the disclosure guidelines laid out in SAS 7 (Revised) except for some discrepancies. Thus, our findings are in line with earlier researches in the United States and Singapore. Among the sample examined, Hotel Royal Ltd was found to display close adherence to the standard. Using Hotel Royal Ltd’s 1992 to 1994 financial statements, a study using common-size statement and ratio analysis was done to illustrate how a ‘good’ Cash Flow Statement could be used to evaluate the financial health of the company. The standard on Cash Flow Statement is a recent development in the accounting arena. Results of our studies showed that inadequacies exist in the prescriptions of the standard as well as in the use of the Statement as an analytical tool. Hence, much work need to be done by both practitioners and academicians before the new standard can become a success in Singapore. ACCOUNTANCY 2013-03-06T09:17:20Z 2013-03-06T09:17:20Z 1996 1996 Final Year Project (FYP) http://hdl.handle.net/10356/51213 en Nanyang Technological University 169 p. application/pdf |
| spellingShingle | DRNTU::Business::Accounting Chia, Siang Huey. Ong, Sor Hong. Tan, Lay Mui. SAS 7 (Revised) : cash flow statements. |
| title | SAS 7 (Revised) : cash flow statements. |
| title_full | SAS 7 (Revised) : cash flow statements. |
| title_fullStr | SAS 7 (Revised) : cash flow statements. |
| title_full_unstemmed | SAS 7 (Revised) : cash flow statements. |
| title_short | SAS 7 (Revised) : cash flow statements. |
| title_sort | sas 7 revised cash flow statements |
| topic | DRNTU::Business::Accounting |
| url | http://hdl.handle.net/10356/51213 |
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