Region

Jurisdiction

Regulator

2026-04-16

Sharpening Focus on Cash Flow Statements Together

The Dutch Authority for the Financial Markets (AFM) issued this notice following an inspection of thirty listed companies and six audit firms, revealing that while most 2024 cash flow statements comply with IAS 7, recurring errors require targeted improvements. The regulator mandates that listed companies actively complete a provided self-assessment to implement concrete corrective measures, while audit firms must explicitly reflect on the findings and adapt their quality management and audit methodologies accordingly. The AFM will closely monitor compliance across the reporting and audit chain and may impose additional supervisory measures if stakeholders fail to adequately address the identified shortcomings.

Netherlands

Autoriteit Financiele Markten

News

16/04/26

A reliable cash flow statement forms an essential part of the annual report and is of great importance for investors' decision-making. The company is responsible for preparing the annual report; the external auditor is responsible for auditing it. Recent research by the AFM into cash flow statements and accompanying notes has led to concrete points of attention that help companies and audit firms work together to sharpen their focus on cash flow statements. We expect them to use these findings to critically reflect, implement targeted improvement measures, and embed them in their processes.

In brief

Research on listed companies and audit firms

Quality of cash flow statements generally sufficient, but with clear points of attention

The AFM expects reflection and concrete follow-up

Scope and follow-up in supervision

Research on listed companies and audit firms

We conducted research on thirty listed companies under our reporting supervision regarding the quality of the cash flow statement in the 2024 annual report. Additionally, we examined how the six audit firms with an OOB license structured and performed their audits of cash flow statements. The research was conducted from both reporting supervision and audit firm supervision perspectives, viewing the entire chain from preparation to audit. The research stems from recurring findings regarding cash flow statements in reporting supervision and provides insight into the quality of the cash flow statement and its audit, including where errors occur, to what extent they are identified and corrected, and what patterns are visible in this regard.

Quality of cash flow statements generally sufficient, but with clear points of attention

The research shows that most cash flow statements and accompanying notes comply with IAS 7 (Statement of Cash Flows). At the same time, errors were identified that were not always recognized or correctly handled by the audit, necessitating further improvements. We have identified five points of attention for companies to improve the application of IAS 7 ( Appendix A ). The corresponding self-assessment ( Appendix B ) directly aligns with this and is used to systematically evaluate how the cash flow statement is prepared and to what extent its quality is secured. For audit firms, we have formulated ten points of attention for quality management and audit activities regarding the cash flow statement ( Appendix C ).

The AFM expects reflection and concrete follow-up

Listed companies under our reporting supervision will receive a letter containing the five points of attention and the self-assessment. We expect companies to actively use the self-assessment and translate the results into concrete improvement measures. Furthermore, the AFM expects audit firms to explicitly reflect on the research findings and translate the points of attention into their quality management and audit approach. In doing so, we expect them to clarify which measures have already been taken and which additional measures are needed to adequately and timely address these points of attention. We will follow up on this in an appropriate manner.

Scope and follow-up in supervision

The AFM calls on a broader group of stakeholders to take note of this research and apply the points of attention and the self-assessment. This includes, among others, IFRS-reporting companies, executives and members of audit committees, as well as individual auditors and audit firms with a regular license. We will continue to closely monitor in supervision how companies and audit firms address the points of attention and translate them into practice. Based on this, we will assess whether additional supervisory measures are necessary. See below this post for all appendices.