Cash Flow Statements

The sector is in the process of repositioning itself toward the Sustainable Development Goals (SDGs). Under the Millennium Development Goals (MDGs) the international focus of the water sector was predominantly on increasing access to water supply and sanitation (WSS). With the advent of the SDGs the agenda is much broader covering all aspects of water (WSS, water resource management [WRM], and irrigation) and their sustainability. The SDGs come with new and very significant financing needs. For WSS they have been estimated at US$1.7 trillion, or three times the amount historically invested in the sector (Hutton and Varughese 2016). For irrigation, the International Food and Agriculture Organization (FAO) estimates that some US$960 billion will be required between 2005/07 and 2050 to ensure water for agricultural production in 93 developing countries (Koohafkan, Salman, and Casarotto 2011). No WRM estimate is available but failure to address WRM could diminish national growth rates by as much as 6 percent of GDP by 2050. These amounts are all well above historic allocations. The water sector is not well equipped to face these new financing challenges. The sector has historically relied on public financing to meet its investment needs-through domestic and development partner concessional funds and/or lending. Institutionally many parts of the sector are government departments where mobilizing private finance is almost non-existent. Even when they are established as corporate entities, such as some WSS providers, it is rare for them to borrow from commercial lenders due to weak incentives and/or poor creditworthiness. Mobilizing additional concessional funds will helpbut will not be sufficient. New sources of concessional finance might be tapped (e.g., climate finance) but the gap cannot be filled simply by increasing the volume of concessional funds and lending from governments or development partners. A new sector financing paradigm is required based on four broad themes. The sector has to realign itself around actions that (a) improve sector governance and efficiency (i.e., improving creditworthiness), (b) crowd in or blend private finance (i.e., leveraging capital), (c) allocate sector resources more effectively to deliver the maximum benefit for every dollar invested (i.e., targeting capital), and (d) improve sector capital planning to reduce unit capital costs (i.e., minimizing capital requirements).

The objective of this paper is to appraise the UK regulatory framework by focusing on the statutory ®nancial audit and its role in testing companies' (non-)compliance with a new ®nancial reporting standard (FRS1). The analysis is based on a large-scale survey of the cash¯ow statements required by FRS1 in company accounts along with the audit reports of each company. The survey reveals that signi®cant variations in the standard format for cash ow statements were allowed without any audit comment. The study concludes by raising causes for concern about the UK regulatory framework, and arguing that the objective of FRS1 was not fully achieved because of the wide variations in the standard format produced by companies. It suggests that a solution to the concerns raised is to increase the use of comments in audit reports by restoring the`emphasis of matter' principle.

This Note is a partial response to the above mentioned 2010 IEG Evaluation. It covers the specific issues to be addressed in the WSS sector and in the irrigation sector in two distinct parts, because if WSS and Irrigation have some common features, there are many distinctions to be made. Among the various water-using sectors, that include navigation, fisheries, hydropower, rain fed agriculture, irrigated agriculture, WSS, and more generally "the environment", cost recovery issues are of primary concern, and are the focus for this Note, in the WSS and irrigation sectors.4 Here, though, the primary focus is on WSS and irrigation, and though the sectors increasingly 3And by no means new... in colonial times income generation and profitability were central concerns in irrigation investments by the British in Sudan, Egypt, India and Sri Lanka, and questions of who was to finance the infrastructure (local revenue, the Crown, or private interests), whether and how a water fee should be levied, what its impact on different categories of people would be, whether it could influence crop choice or water use behavior, to cite a few examples, were fiercely debated. 4 In passing it should be noted that there are potential financial linkages to other sectors: payment for environmental services provides compensation to users in one location for reducing abstractions and thus releasing water for environmental purposes;; in South Africa, all "runoff reducing activities" are treated as chargeable, so that commercial foresters are expected to pay for the incremental evapotranspiration resulting from their activities; and more directly, in the case of multipurpose facilities (irrigation, hydropower and flood control), the potential sources of revenue are also multi-sectoral.

A treasury single account (TSA) is an essential tool for consolidating and managing governments' cash resources, thus minimizing borrowing costs. In countries with fragmented goverment banking arrangements, the establishment of a TSA should receive priority in the public financial management reform agenda. Drawing on the lessons of the Fund's work in several countries in establishing a TSA, this paper explains its concept, essential features, and potential benefits. It also presents alternative models and approaches for designing a TSA that take into account specific country contexts as well as the preconditions and desirable sequencing for its successful implementation. Finally, the paper includes country examples from different regions in support of the analysis and recommendations. This Working Paper should not be reported as representing the views of the IMF.

Research indicates that the direct method of preparing the statement of cash flows is preferred by users (Broome 2004; Knutson 1993). SFAS No. 95 expresses a preference for the direct method, but allows firms to use the indirect method (FASB 1987). This compromise was the result of a concerted lobbying effort by companies who argued the direct method would require costly modifications to their accounting information systems. While this may have been true in the 1980s, technological advances do not justify the continued use of the indirect method when users clearly prefer the direct method.However, currently available accounting information systems do not generally provide an efficient way to generate a statement of cash flows using the direct method. This article illustrates a work around for preparing the direct method statement using current accounting software, discusses some of the difficulties in using the work around, and suggests some modest changes that software developers c...