"ACCOUNTANCY13shall report all these cash receipts which are connected with the beneficial interestwould be reported as an inflow from the investing activities.As far as the views of the people are concerned, the people stated the following:? materiality is viewed as the key to improving the quality of disclosures and thereadability of the financial statements ? it will be a useful tool when discussing materiality with their auditors ? Materiality is already part of IFRS Standards through IAS 1 Presentation of FinancialStandards and IAS 8 Accounting Policies, Changes in Accounting Estimates andErrors. They recognised that the Practice Statement is not a new requirement but anexpansion on the principles in the Standards aimed at guiding preparers when makingmateriality judgements. Some respondents noted that it is regrettable that the Board isnot in a position to make the guidance mandatory, but given the internationalapplication of IFRS Standards this may not be possible. They considered the PracticeStatement to be a good compromise. ? There is a need for educational material rather than a Practice Statement. ? Guidance on materiality would not be sufficient on its own to address the difficultieshighlighted without first reconsidering the existing disclosure requirements andobjectives in Standards.The IASB acknowledges that addressing both aspects are important, but notedthat thisneed not occur simultaneously. The IASB will consider reviewing theDisclosure requirements and objectives in existing Standards as part of its widerDisclosure Initiative project. The IASB also observed that guidance on theapplicationof materiality could be issued more quickly than the changesresulting from thatreview and would help to clarify the role of materiality when applying disclosurerequirements in Standards.Deloitte views:In this regard, one of the major auditors in the world stated that the update lacked theguidance on the reporting of the cash receipts being associated with the beneficial interests inthe securitization transactions. As the result of this, the entities have either reported thesecash inflows from the operating activities or from the investing activity. But there is muchdifference in the practices being followed. ACCOUNTANCY14Further, the update is much more than the cash flows. ASC 230 states that there are many ofthe cash inflows and the outflows that may be just more than cash flows and further statesthat the appropriate classification would be decided on the basis of the source of the cashflow of an item. Though ASC 230 contains various diffrent examples but still many entitieswould face the problem of applying this guidance.EY views:The application of these principles would mean that there are many of the cash receipts andpayments that could have more aspects of being more than just one class of the cash flows.The new update has successfully clarified that the entity shall apply the relevance of theguidance and other such available topics first. In the absence of any guidance, the entity shalldetermine the identifiable source of use and the classification of various receipts or thepayment somewhat based upon the nature of the cash flows. In the case of the receipt or thepayments, there would be more than just one class of the cash flows and that cannot beseparated. And hence, the classification would depend upon the source of its use. Judgementis still of an utmost importance even in the presence of this new update.BKD views:There are many of the cash flows that are not capable of being separated on the basis of theirnature, classification and that would be based upon the source of the use of the cash flows foran item. The entity would keep in mind many of the factors that helps in determining thesource of the use of cash and involves the use of the historical cash approach or the projectedcash flows. There is a restricted cash. There is still a restriction on the cash in the statement ofthe cash flows and that would lack the definition of the restricted cash under GAAP. ACCOUNTANCY15This update aims to reduce the diversity in the practice wherein the current US GAAP is notclear or does not provide the guidance on the transactions contained din the transactions ofthe cash flows. Judgement would still be required to be exercised. "