Register / AASB 107 Statement of Cash Flows / AASB 107 paragraph Aus20.2
Reconcile operating cash flows to net cost of services where that measure is highlighted
The complete set of financial statements includes a reconciliation from cash flows arising from operating activities to the net cost of services reported in the statement of comprehensive income or profit or loss.
Why the paragraph exists
A not-for-profit reader often sees the net cost of services as the headline result. The reconciliation connects that measure to cash.
In practice
The duty needs the direct method and a highlighted net cost of services. Check both before adding the reconciliation, because an indirect method reporter does not have this duty.
Reconcile to the measure as reported, not to a management version. The paragraph names the statement of comprehensive income or profit or loss.
The mistake to avoid
The common mistake is to prepare the reconciliation to a net cost figure that is not the one in the statement.
Who it binds
A not-for-profit entity that uses the direct method and highlights the net cost of services in its statement of comprehensive income or profit or loss.
What to do before the date
- Confirm the entity falls in this group: NFP private sector, NFP public sector and NFP higher education provider.
- Put the requirement into the financial statements preparation plan: reconcile operating cash flows to net cost of services where that measure is highlighted.
- Open a workpaper for the first evidence item: The reconciliation from operating cash flows to net cost of services, with each reconciling item identified.
Evidence an auditor will ask for
Dates
| Date | What it means | Applies to |
|---|---|---|
| 2027-12-31 | The instrument commences for this paragraph | NFP private, NFP public sector, NFP higher education |
| 2028-01-01 | First annual periods beginning on or after this date apply the Standard | NFP private, NFP public sector, NFP higher education |
Commencement and application are separate tests.
Cross-references
- AASB 107 paragraph 18(a)
- AASB 1054 paragraph 16
Record note
The duty needs three facts together: a not-for-profit entity, the direct method, and a highlighted net cost of services.
Questions
What does AASB 107 paragraph Aus20.2 require in practice?
The duty needs the direct method and a highlighted net cost of services. Check both before adding the reconciliation, because an indirect method reporter does not have this duty.
What is the common mistake under AASB 107 paragraph Aus20.2?
The common mistake is to prepare the reconciliation to a net cost figure that is not the one in the statement.
What evidence should be kept?
At least: The reconciliation from operating cash flows to net cost of services, with each reconciling item identified.; The statement showing the highlighted net cost of services and the note cross-reference to the reconciliation. The kit carries each one as a row with an owner column to complete.
Source
This page is our statement of the paragraph, cited so you can check it. Read F2026L01162 on legislation.gov.au.
Source pointer: AASB 107 paragraph Aus20.2. Record retrieved 2026-10-20.