NAS 9 Cash Flow Statement: Requirements and Practice in Uzbekistan

Who prepares the statement and when

The standard applies to business entities other than budget organisations and non-bank credit institutions (NAS 9, para. 2). The cash flow statement is prepared under the standard and presented as a component of the financial statements for each reporting period (para. 4).

The composition of annual NAS statements is set by Regulation 3567: balance sheet, statement of financial results, statement of equity, cash flow statement (Appendix 4 to the Regulation, hence the common name "Form No. 4") and notes (para. 9). Micro-firms and small enterprises present only the balance sheet and the statement of financial results in their annual report (para. 10).

Annual NAS statements are due no later than 1 March of the year following the reporting year; IFRS statements no later than 1 May (Regulation 3567, para. 7). Companies that report under IFRS do not submit NAS statements (para. 12).

Key definitions

• Cash — cash on hand and demand deposits, plus funds in settlement, currency and other bank accounts (para. 3).
• Cash equivalents — short-term (3 months or less), highly liquid investments that are readily convertible to a known amount of cash and subject to an insignificant risk of changes in value (para. 3).
• Cash flows — inflows and outflows of cash and cash equivalents (para. 3).
• Movements between cash and cash equivalents (for example, placing a surplus balance on a deposit of up to 3 months) are excluded from the statement; this is cash management, not a cash flow (para. 8).
• A bank overdraft repayable on demand forms part of cash and cash equivalents if it is an integral part of the company's cash management (para. 7).

Three activities: classifying receipts and payments

All receipts and payments fall into three categories: operating, investing and financing activities (para. 6). Correct classification drives the key conclusion a reader draws: whether cash from the core business is enough to repay debts, maintain capacity and pay dividends without new borrowing (para. 10).

• Operating activities — cash from sales of goods, work and services, royalties and commissions, payments to suppliers, payments to and on behalf of employees, taxes relating to operations (para. 11).
• Selling property, plant and equipment is an investing activity. But where a company produces or buys assets to lease out and later sell, those payments and receipts stay operating (para. 11).
• Investing activities — purchase and sale of fixed assets, intangible and other long-term assets, equity and debt instruments of other entities, loans made to other organisations (para. 13).
• Financing activities — proceeds from issuing shares and bonds, bank loans and borrowings received, their repayment, finance lease payments (paras. 7, 14).

Direct and indirect method, net presentation

Operating cash flows are presented using one of two methods (para. 15). Under the direct method the major classes of gross receipts and payments are disclosed; the data comes from the accounting records or from adjusting revenue and cost of sales for changes in inventories and current receivables and payables (para. 16). Under the indirect method net operating cash flow is derived by adjusting profit or loss for changes in inventories and working capital, non-cash items (depreciation, provisions, deferred taxes, unrealised exchange differences) and items relating to investing or financing activities (para. 17).

The form in Appendix 4 to Regulation 3567 follows the direct method: lines 010–040 cover cash from sales, payments to suppliers, payments to employees and other operating flows; line 050 is the operating total.

Gross receipts and payments from investing and financing activities are shown separately (para. 18). Net presentation is allowed in only two cases: cash received and paid on behalf of customers that reflects their activity rather than the company's, and items with quick turnover, large amounts and short maturities (para. 19).

Foreign currency, interest, dividends and taxes

• Foreign currency flows are translated into soums at the Central Bank rate on the transaction date (para. 20).
• Unrealised exchange gains and losses are not cash flows; the effect of rate changes on currency balances is shown on a separate line to reconcile opening and closing balances (para. 22). On the form this is line 221, "net exchange differences".
• Interest and dividends received and paid are disclosed separately and classified consistently from period to period (para. 23); the form places them in financing activities (lines 110 and 120).
• Cash flows from income taxes are disclosed separately (para. 26). The form has a separate "Taxation" block: income tax paid (line 190) and other taxes paid (line 200).

Non-cash transactions and reconciliation with the balance sheet

Investing and financing transactions that do not use cash are excluded from the statement (para. 30). Examples in the standard: acquiring an asset by assuming a liability or under a finance lease, acquiring an entity in exchange for equity instruments, converting debt into equity. They are disclosed in the notes so that the reader sees all significant investing and financing decisions.

The company shows the components of cash and cash equivalents and reconciles the amounts in the statement with the related balance sheet items (para. 31). In practice the closing balance in the statement (line 240 of the form) must equal cash in the balance sheet; a difference almost always means a missed currency revaluation or a classification error.

Common mistakes

• Working from the 1998 text of NAS 9, which ceased to apply on 1 January 2025.
• A bank loan received is shown in operating activities, although the standard treats it as financing (para. 7).
• Proceeds from selling retired equipment are shown as operating revenue instead of investing (para. 11).
• Moving cash to a short-term deposit of up to 3 months is shown as an outflow (para. 8).
• Revaluation of a currency account is added to receipts instead of a separate line (para. 22).
• Acquiring an asset under a finance lease is shown as a cash payment, although it is a non-cash transaction (para. 30).