Accountants will not be the only ones relying on tables to explain financial data, if the Financial Accounting Standards Board’s (FASB) liquidity disclosure proposal moves forward. CFOs and CEOs of nonfinancial companies will have to use more of them in their company’s financial reporting.
FASB asked for comments on June 27 regarding its plan to improve financial reporting, specifically regarding liquidity risk for nonfinancial institutions. Under the plan, all nonfinancial companies would have to disclose their expected cash-flow obligations in a table that is segregated according to expected maturity. At the same time, they would not have to include financial assets in the table.
In another requirement, nonfinancial companies would have to provide their available liquid funds in a table, as financial companies currently do. Those assets include unencumbered cash, high-quality liquid assets, and borrowing availability. And both financial and nonfinancial companies would also have to be prepared to discuss significant changes in the quantitative table — in particular, how they managed those changes during the current period.