Where the Cash Went
(Cash Flow Statement)
Tracking where the government’s cash came from and how it was spent during the year.
What is it
The Cash Flow Statement is different from other reports. It only shows cash. It does not show cash still owed to the government, or unpaid bills. It shows the real cash that came in and out of government’s wallet during the year. It tells you exactly where the cash came from and where it went.
What does this statement show?
The Cash Flow Statement has three main parts:
illustrative Example
Click on anywhere in the table below to reveal explanations for each section!
Government Entity Annual Financial Statements
Statement of Cash Flows for the year ended 31 March 2026
Illustrative Figures Only
DESCRIPTION
NOTE (S)
2025
2026
What are they?
This part of the Cash Flow Statement shows the cash that comes from the government’s daily services.
How do they arise?
- Cash in – Cash from taxes, service charges, grants, fines, and interest received.
- Cash out – Cash paid for salaries, suppliers, daily costs, and interest paid.
This section is important as it shows if the government makes enough cash for daily expenses.
What do you see in the financial statements?
The report format used is called the “direct method”. It shows all cash receipts and cash payments. You will see a line showing “Net cash flows from or used in operating activities.” This is the cash left over (or short) after collecting taxes, service charges, and grants as well as after paying staff, suppliers, and grants. Extra details in the Notes to the Financial Statements explain any surplus or deficit.
What does it mean?
This number shows if the government’s daily activities bring in enough cash to pay for services.
- A healthy sign (with caution) – A positive number means the government has more cash than it spent. This shows stability, however, it is important to check why there is a positive result. Is it because they collected more money? Or because it spent less than planned?
- A warning sign – A negative number means there is not enough cash to pay bills. This forces the government to dip into savings or take loans. This can be a problem if done for too long.
Note
The government chooses where to show interest received and interest paid in the Cash Flow Statement. Interest received may be shown under operating or investing activities. Interest paid may be shown under operating or financing activities. This must be explained in the government’s rule book (accounting policies). It should stay the same from year to year.
When comparing different years or different government entities, do not assume they used the same method. First read the government’s rule book!
🔗 Let’s connect the dots to other government reports
The Plan: The government needs cash coming in from daily work. This helps it pay salaries and deliver services. It supports the goals in the APP or SDBIP.
The Link: You can check the net cash flow figure in this section of the Cash Flow Statement. It shows if the government has enough cash to meet its service delivery promises in the APP/SDBIP.
The Plan: The cash flow budget shows how much cash should come in and go out during the year. It helps prevent running out of cash.
The Link: Compare the actual cash flows with the cash flow budget. This shows if the government is managing its daily cash well.
Citizen Tip: Ask the Right Questions
This number shows whether government has enough cash to run its day-to-day operations.
Ask yourself:
- Is this number positive most years?
A positive balance usually means government has enough cash to operate and pay for services. It may also mean that the government is not spending its budget.
- What if the number turns negative?
This may mean government is struggling to collect cash or is spending more than it receives. This can lead to delays in services or late payments to suppliers and employees.
- How is government covering the shortfall?
If government is borrowing money, taking loans, or selling assets to fund daily operations, it may point to deeper financial problems. - What does this mean for service delivery?
Ongoing cash shortages can lead to service cuts or delays, such as:- It may also mean that the government is not spending its budget.
- Sewerage spills not being fixed
- Potholes not being repaired
- Interruptions in basic services
What are they?
This part of the Cash Flow Statement shows the cash that comes from the government’s daily services.
How do they arise?
- Cash in – Cash from taxes, service charges, grants, fines, and interest received.
- Cash out – Cash paid for salaries, suppliers, daily costs, and interest paid.
This section is important as it shows if the government makes enough cash for daily expenses.
What do you see in the financial statements?
The report format used is called the “direct method”. It shows all cash receipts and cash payments. You will see a line showing “Net cash flows from or used in operating activities.” This is the cash left over (or short) after collecting taxes, service charges, and grants as well as after paying staff, suppliers, and grants. Extra details in the Notes to the Financial Statements explain any surplus or deficit.
What does it mean?
This number shows if the government’s daily activities bring in enough cash to pay for services.
- A healthy sign (with caution) – A positive number means the government has more cash than it spent. This shows stability, however, it is important to check why there is a positive result. Is it because they collected more money? Or because it spent less than planned?
- A warning sign – A negative number means there is not enough cash to pay bills. This forces the government to dip into savings or take loans. This can be a problem if done for too long.
Note
The government chooses where to show interest received and interest paid in the Cash Flow Statement. Interest received may be shown under operating or investing activities. Interest paid may be shown under operating or financing activities. This must be explained in the government’s rule book (accounting policies). It should stay the same from year to year.
When comparing different years or different government entities, do not assume they used the same method. First read the government’s rule book!
🔗 Let’s connect the dots to other government reports
The Plan: The government needs cash coming in from daily work. This helps it pay salaries and deliver services. It supports the goals in the APP or SDBIP.
The Link: You can check the net cash flow figure in this section of the Cash Flow Statement. It shows if the government has enough cash to meet its service delivery promises in the APP/SDBIP.
The Plan: The cash flow budget shows how much cash should come in and go out during the year. It helps prevent running out of cash.
The Link: Compare the actual cash flows with the cash flow budget. This shows if the government is managing its daily cash well.
Citizen Tip: Ask the Right Questions
This number shows whether government has enough cash to run its day-to-day operations.
Ask yourself:
- Is this number positive most years?
A positive balance usually means government has enough cash to operate and pay for services. It may also mean that the government is not spending its budget.
- What if the number turns negative?
This may mean government is struggling to collect cash or is spending more than it receives. This can lead to delays in services or late payments to suppliers and employees.
- How is government covering the shortfall?
If government is borrowing money, taking loans, or selling assets to fund daily operations, it may point to deeper financial problems. - What does this mean for service delivery?
Ongoing cash shortages can lead to service cuts or delays, such as:- It may also mean that the government is not spending its budget.
- Sewerage spills not being fixed
- Potholes not being repaired
- Interruptions in basic services
What are they?
This section of the Cash Flow Statement shows the cash the government uses to buy or sell its assets that will be used for many years.
How do they arise?
- Cash in – Cash received from selling assets (like old equipment, unused buildings, or land) or from selling or cashing in investments.
- Cash out – Cash spent on new assets (like roads, clinics, or vehicles), or upgrading existing assets, or buying investments.
What do you see in the financial statements?
You will see “Net cash flows from investing activities.” This covers cash spent on or received from buying or selling assets like land and buildings, investments, office equipment, clinics, vehicles, roads, etc.
What does it mean?
This number shows if the government is using cash to buy or improve assets for future service delivery.
- A healthy sign – A large negative number is usually good. It means the government is putting cash in community assets.
- A warning sign – A large positive number may mean the government is selling off its assets instead of building new or improving existing ones. This could limit community growth.
🔗 Let’s connect the dots to other government reports
The Plan: Cash outflows in this section should directly match with the yearly goals set in the APP/SDBIP.
The Link: Cash outflows in this section should directly match with the yearly goals set in the APP/SDBIP.
The Plan: The capital budget shows how much cash was planned for these purchases.
The Link: The Cash Flow Statement shows if cash was available and used for those plans. You can compare the actual cash spending here with the budgeted capital expenditure in the Statement of Comparison of Budget and Actual Amounts.
Citizen Tip: Ask the Right Questions
This section shows how government is investing in the future of your community.
Ask yourself:
- Is government spending cash on assets and upgrades?
Spending on infrastructure, equipment, and improvements is usually a good sign that government is investing in long-term service delivery. - Is government selling assets?
If assets are being sold, ask why. This may be part of a plan—but it could also be a sign of financial pressure. - Is the money being reinvested?
If assets are sold, check whether the cash is being used to support services or invested back into the community.
What are they?
This section of the Cash Flow Statement shows the cash the government uses to buy or sell its assets that will be used for many years.
How do they arise?
- Cash in – Cash received from selling assets (like old equipment, unused buildings, or land) or from selling or cashing in investments.
- Cash out – Cash spent on new assets (like roads, clinics, or vehicles), or upgrading existing assets, or buying investments.
What do you see in the financial statements?
You will see “Net cash flows from investing activities.” This covers cash spent on or received from buying or selling assets like land and buildings, investments, office equipment, clinics, vehicles, roads, etc.
What does it mean?
This number shows if the government is using cash to buy or improve assets for future service delivery.
- A healthy sign – A large negative number is usually good. It means the government is putting cash in community assets.
- A warning sign – A large positive number may mean the government is selling off its assets instead of building new or improving existing ones. This could limit community growth.
🔗 Let’s connect the dots to other government reports
The Plan: Cash outflows in this section should directly match with the yearly goals set in the APP/SDBIP.
The Link: Cash outflows in this section should directly match with the yearly goals set in the APP/SDBIP.
The Plan: The capital budget shows how much cash was planned for these purchases.
The Link: The Cash Flow Statement shows if cash was available and used for those plans. You can compare the actual cash spending here with the budgeted capital expenditure in the Statement of Comparison of Budget and Actual Amounts.
Citizen Tip: Ask the Right Questions
This section shows how government is investing in the future of your community.
Ask yourself:
- Is government spending cash on assets and upgrades?
Spending on infrastructure, equipment, and improvements is usually a good sign that government is investing in long-term service delivery. - Is government selling assets?
If assets are being sold, ask why. This may be part of a plan—but it could also be a sign of financial pressure. - Is the money being reinvested?
If assets are sold, check whether the cash is being used to support services or invested back into the community.
What are they?
This section of the Cash Flow Statement shows money coming in and going to lenders and funders. It shows if the government is taking out new loans, finance leases, or paying back old ones.
How do they arise?
This section shows how the government manages its loans and other borrowings. Cash moves here when the government:
- Takes out a loan to fund a big project (cash in).
- Pays back the loan (cash out).
- Makes “rent-to-own” payments (finance leases) for things like vehicles, office equipment, or specialised machinery.
This tracks the cash used by government to pay for things it is “buying on credit” rather than paying for them in full today.
Note: Any interest on loans is an expense shown in operating or financing activities. This depends on the government’s rule book.
What do you see in the financial statements?
You will see a line called “Net cash flows from financing activities.” This shows loans and other borrowings taken (cash inflows) or loans paid back (cash outflows).
What does it mean?
This number shows the government’s patterns for taking out loans.
A healthy sign:
- Paying back loans – A negative number means more loans were paid back. It is a sign they are committed to reducing their loans and other borrowings.
- Taking out loans wisely – Taking out more loans than you are paying back is okay if the cash is used to build “assets” (like roads, schools, or clinics). Check the Investing Activities section to see if new infrastructure is being built. It means the loan taken out is likely to be an investment in the future.
A warning sign:
- Borrowing to “keep the lights on” – If the government is taking out loans more than it is paying back and it is not building any new infrastructure, they might be using loans just to pay daily bills (like salaries or electricity).
- The “Debt Trap” – If the government is taking out loans to cover losses in their daily operations, it is a sign of financial trouble.
🔗 Let’s connect the dots to other government reports
The Plan: New loans and other borrowings should match capital projects in the APP/SDBIP. These are meant to pay for large investments.
The Link: You can check the inflows here to see how much was for loans and other borrowings. Confirm in the Notes to the Financial Statements and Statement of Financial Position if that loan or other borrowing was used to pay for the specific assets promised in the APP/SDBIP.
The Plan: The capital budget and operating budget show planned loans taken and loans paid back.
The Link: The Cash Flow Statement shows if these plans were followed. The actual loans taken and loans paid back numbers should match those in the planning documents.
Citizen Tip: Ask the Right Questions
This section shows whether government is investing in the future or just trying to keep going.
Ask yourself:
- Is government spending on new assets and projects?
High spending on infrastructure and upgrades is usually a good sign of progress and future service delivery.
- Is government taking on loans?
Borrowing is not always a problem—but it depends on how the money is used.
- What are the loans being used for?
- If loans are used to fund new projects or infrastructure, this can support long-term growth
- If loans are used to cover daily expenses, it may be a sign of financial pressure
What are they?
This section of the Cash Flow Statement shows money coming in and going to lenders and funders. It shows if the government is taking out new loans, finance leases, or paying back old ones.
How do they arise?
This section shows how the government manages its loans and other borrowings. Cash moves here when the government:
- Takes out a loan to fund a big project (cash in).
- Pays back the loan (cash out).
- Makes “rent-to-own” payments (finance leases) for things like vehicles, office equipment, or specialised machinery.
This tracks the cash used by government to pay for things it is “buying on credit” rather than paying for them in full today.
Note: Any interest on loans is an expense shown in operating or financing activities. This depends on the government’s rule book.
What do you see in the financial statements?
You will see a line called “Net cash flows from financing activities.” This shows loans and other borrowings taken (cash inflows) or loans paid back (cash outflows).
What does it mean?
This number shows the government’s patterns for taking out loans.
A healthy sign:
- Paying back loans – A negative number means more loans were paid back. It is a sign they are committed to reducing their loans and other borrowings.
- Taking out loans wisely – Taking out more loans than you are paying back is okay if the cash is used to build “assets” (like roads, schools, or clinics). Check the Investing Activities section to see if new infrastructure is being built. It means the loan taken out is likely to be an investment in the future.
A warning sign:
- Borrowing to “keep the lights on” – If the government is taking out loans more than it is paying back and it is not building any new infrastructure, they might be using loans just to pay daily bills (like salaries or electricity).
- The “Debt Trap” – If the government is taking out loans to cover losses in their daily operations, it is a sign of financial trouble.
🔗 Let’s connect the dots to other government reports
The Plan: New loans and other borrowings should match capital projects in the APP/SDBIP. These are meant to pay for large investments.
The Link: You can check the inflows here to see how much was for loans and other borrowings. Confirm in the Notes to the Financial Statements and Statement of Financial Position if that loan or other borrowing was used to pay for the specific assets promised in the APP/SDBIP.
The Plan: The capital budget and operating budget show planned loans taken and loans paid back.
The Link: The Cash Flow Statement shows if these plans were followed. The actual loans taken and loans paid back numbers should match those in the planning documents.
Citizen Tip: Ask the Right Questions
This section shows whether government is investing in the future or just trying to keep going.
Ask yourself:
- Is government spending on new assets and projects?
High spending on infrastructure and upgrades is usually a good sign of progress and future service delivery.
- Is government taking on loans?
Borrowing is not always a problem—but it depends on how the money is used.
- What are the loans being used for?
- If loans are used to fund new projects or infrastructure, this can support long-term growth
- If loans are used to cover daily expenses, it may be a sign of financial pressure
What is it?
This is the last line at the bottom of the Cash Flow Statement. It shows if the government has more or less cash than it had at the start of the year.
How does it arise?
It comes from adding all the cash flows from Operating, Investing and Financing Activities. This gives the “net movement in cash.” When this is added to the opening balance, it shows the closing cash balance.
What do you see in the financial statements?
At the bottom of the Cash Flow Statement, you will see:
- Opening cash and cash equivalents balance (start of the year).
- Net change in cash during the year (increase or decrease).
- Closing cash and cash equivalents balance (end of the year). This should match the “Cash and Cash Equivalents” amount in the Statement of Financial Position.
What does it mean?
The three sections explain how cash moved. The final line shows if the government ended with more or less cash than at the start of the year. A positive movement means more cash available. A negative movement means using up saved up reserves.
🔗 Let’s connect the dots to other government reports
The Plan: The cash balance shows if the government can keep its promises, repay debts, and cover costs for the year.
The Link: This closing cash balance shows how much is available to pay for the next year’s APP/SDBIP activities. If it is low, future plans might be delayed.
The Plan: The budget shows how much cash government planned to receive and how much they planned to spend during the year.
The Link: The closing cash balance helps to understand if actual cash position at year-end matches what was originally planned. It should be close to the Cash and Cash Equivalents amount shown in the Statement of Financial Position. This closing balance becomes the opening balance in next year’s financial statements and Cash Flow Budget.
A higher or lower balance than planned does not always mean good or bad performance. It must be read together with:
The Budget vs Actual report.
The Statement of Financial Performance.
The Statement of Financial Position (look, for example, for assets acquired or debts that are reduced).
The service delivery results.
When these reports are read together you can understand if government had enough cash and if they used it to deliver what was promised.
Citizen Tip: Ask the Right Questions
This number shows whether government has enough cash to run its day-to-day operations.
Ask yourself:
- Is this number positive most years?
A positive balance usually means government has enough cash to operate and pay for services. - What if the number turns negative?
This may mean government is struggling to collect cash or is spending more than it receives. This can lead to delays in services or late payments to suppliers and employees. - How is government covering the shortfall?
If government is borrowing money, taking loans, or selling assets to fund daily operations, it may point to deeper financial problems. - What does this mean for service delivery?
- Ongoing cash shortages can lead to service cuts or delays, such as:
- Sewerage spills not being fixed
- Potholes not being repaired
- Interruptions in basic services
What is it?
This is the last line at the bottom of the Cash Flow Statement. It shows if the government has more or less cash than it had at the start of the year.
How does it arise?
It comes from adding all the cash flows from Operating, Investing and Financing Activities. This gives the “net movement in cash.” When this is added to the opening balance, it shows the closing cash balance.
What do you see in the financial statements?
At the bottom of the Cash Flow Statement, you will see:
- Opening cash and cash equivalents balance (start of the year).
- Net change in cash during the year (increase or decrease).
- Closing cash and cash equivalents balance (end of the year). This should match the “Cash and Cash Equivalents” amount in the Statement of Financial Position.
What does it mean?
The three sections explain how cash moved. The final line shows if the government ended with more or less cash than at the start of the year. A positive movement means more cash available. A negative movement means using up saved up reserves.
🔗 Let’s connect the dots to other government reports
The Plan: The cash balance shows if the government can keep its promises, repay debts, and cover costs for the year.
The Link: This closing cash balance shows how much is available to pay for the next year’s APP/SDBIP activities. If it is low, future plans might be delayed.
The Plan: The budget shows how much cash government planned to receive and how much they planned to spend during the year.
The Link: The closing cash balance helps to understand if actual cash position at year-end matches what was originally planned. It should be close to the Cash and Cash Equivalents amount shown in the Statement of Financial Position. This closing balance becomes the opening balance in next year’s financial statements and Cash Flow Budget.
A higher or lower balance than planned does not always mean good or bad performance. It must be read together with:
The Budget vs Actual report.
The Statement of Financial Performance.
The Statement of Financial Position (look, for example, for assets acquired or debts that are reduced).
The service delivery results.
When these reports are read together you can understand if government had enough cash and if they used it to deliver what was promised.
Citizen Tip: Ask the Right Questions
This number shows whether government has enough cash to run its day-to-day operations.
Ask yourself:
- Is this number positive most years?
A positive balance usually means government has enough cash to operate and pay for services. - What if the number turns negative?
This may mean government is struggling to collect cash or is spending more than it receives. This can lead to delays in services or late payments to suppliers and employees. - How is government covering the shortfall?
If government is borrowing money, taking loans, or selling assets to fund daily operations, it may point to deeper financial problems. - What does this mean for service delivery?
- Ongoing cash shortages can lead to service cuts or delays, such as:
- Sewerage spills not being fixed
- Potholes not being repaired
- Interruptions in basic services
What is it?
This is the last line at the bottom of the Cash Flow Statement. It shows if the government has more or less cash than it had at the start of the year.
How does it arise?
It comes from adding all the cash flows from Operating, Investing and Financing Activities. This gives the “net movement in cash.” When this is added to the opening balance, it shows the closing cash balance.
What do you see in the financial statements?
At the bottom of the Cash Flow Statement, you will see:
- Opening cash and cash equivalents balance (start of the year).
- Net change in cash during the year (increase or decrease).
- Closing cash and cash equivalents balance (end of the year). This should match the “Cash and Cash Equivalents” amount in the Statement of Financial Position.
What does it mean?
The three sections explain how cash moved. The final line shows if the government ended with more or less cash than at the start of the year. A positive movement means more cash available. A negative movement means using up saved up reserves.
🔗 Let's connect the dots to other government reports
The Plan: The cash balance shows if the government can keep its promises, repay debts, and cover costs for the year.
The Link: This closing cash balance shows how much is available to pay for the next year’s APP/SDBIP activities. If it is low, future plans might be delayed.
The Plan: The budget shows how much cash government planned to receive and how much they planned to spend during the year.
The Link: The closing cash balance helps to understand if actual cash position at year-end matches what was originally planned. It should be close to the Cash and Cash Equivalents amount shown in the Statement of Financial Position. This closing balance becomes the opening balance in next year’s financial statements and Cash Flow Budget.
A higher or lower balance than planned does not always mean good or bad performance. It must be read together with:
The Budget vs Actual report.
The Statement of Financial Performance.
The Statement of Financial Position (look, for example, for assets acquired or debts that are reduced).
The service delivery results.
When these reports are read together you can understand if government had enough cash and if they used it to deliver what was promised.
Citizen Tip: Ask the Right Questions
This number shows whether government has enough cash to run its day-to-day operations.
Ask yourself:
- Is this number positive most years?
A positive balance usually means government has enough cash to operate and pay for services. - What if the number turns negative?
This may mean government is struggling to collect cash or is spending more than it receives. This can lead to delays in services or late payments to suppliers and employees. - How is government covering the shortfall?
If government is borrowing money, taking loans, or selling assets to fund daily operations, it may point to deeper financial problems. - What does this mean for service delivery?
- Ongoing cash shortages can lead to service cuts or delays, such as:
- Sewerage spills not being fixed
- Potholes not being repaired
- Interruptions in basic services
What are they?
This section of the Cash Flow Statement shows money coming in and going to lenders and funders. It shows if the government is taking out new loans, finance leases, or paying back old ones.
How do they arise?
This section shows how the government manages its loans and other borrowings. Cash moves here when the government:
- Takes out a loan to fund a big project (cash in).
- Pays back the loan (cash out).
- Makes “rent-to-own” payments (finance leases) for things like vehicles, office equipment, or specialised machinery.
This tracks the cash used by government to pay for things it is “buying on credit” rather than paying for them in full today.
Note: Any interest on loans is an expense shown in operating or financing activities. This depends on the government’s rule book.
What do you see in the financial statements?
You will see a line called “Net cash flows from financing activities.” This shows loans and other borrowings taken (cash inflows) or loans paid back (cash outflows).
What does it mean?
This number shows the government’s patterns for taking out loans.
A healthy sign:
- Paying back loans – A negative number means more loans were paid back. It is a sign they are committed to reducing their loans and other borrowings.
- Taking out loans wisely – Taking out more loans than you are paying back is okay if the cash is used to build “assets” (like roads, schools, or clinics). Check the Investing Activities section to see if new infrastructure is being built. It means the loan taken out is likely to be an investment in the future.
A warning sign:
- Borrowing to “keep the lights on” – If the government is taking out loans more than it is paying back and it is not building any new infrastructure, they might be using loans just to pay daily bills (like salaries or electricity).
- The “Debt Trap” – If the government is taking out loans to cover losses in their daily operations, it is a sign of financial trouble.
🔗 Let's connect the dots to other government reports
The Plan: New loans and other borrowings should match capital projects in the APP/SDBIP. These are meant to pay for large investments.
The Link: You can check the inflows here to see how much was for loans and other borrowings. Confirm in the Notes to the Financial Statements and Statement of Financial Position if that loan or other borrowing was used to pay for the specific assets promised in the APP/SDBIP.
The Plan: The capital budget and operating budget show planned loans taken and loans paid back.
The Link: The Cash Flow Statement shows if these plans were followed. The actual loans taken and loans paid back numbers should match those in the planning documents.
Citizen Tip: Ask the Right Questions
This section shows whether government is investing in the future or just trying to keep going.
Ask yourself:
- Is government spending on new assets and projects?
High spending on infrastructure and upgrades is usually a good sign of progress and future service delivery.
- Is government taking on loans?
Borrowing is not always a problem—but it depends on how the money is used.
- What are the loans being used for?
- If loans are used to fund new projects or infrastructure, this can support long-term growth
- If loans are used to cover daily expenses, it may be a sign of financial pressure
What are they?
This section of the Cash Flow Statement shows the cash the government uses to buy or sell its assets that will be used for many years.
How do they arise?
- Cash in – Cash received from selling assets (like old equipment, unused buildings, or land) or from selling or cashing in investments.
- Cash out – Cash spent on new assets (like roads, clinics, or vehicles), or upgrading existing assets, or buying investments.
What do you see in the financial statements?
You will see “Net cash flows from investing activities.” This covers cash spent on or received from buying or selling assets like land and buildings, investments, office equipment, clinics, vehicles, roads, etc.
What does it mean?
This number shows if the government is using cash to buy or improve assets for future service delivery.
- A healthy sign – A large negative number is usually good. It means the government is putting cash in community assets.
- A warning sign – A large positive number may mean the government is selling off its assets instead of building new or improving existing ones. This could limit community growth.
🔗 Let's connect the dots to other government reports
The Plan: Cash outflows in this section should directly match with the yearly goals set in the APP/SDBIP.
The Link: Cash outflows in this section should directly match with the yearly goals set in the APP/SDBIP.
The Plan: The capital budget shows how much cash was planned for these purchases.
The Link: The Cash Flow Statement shows if cash was available and used for those plans. You can compare the actual cash spending here with the budgeted capital expenditure in the Statement of Comparison of Budget and Actual Amounts.
Citizen Tip: Ask the Right Questions
This section shows how government is investing in the future of your community.
Ask yourself:
- Is government spending cash on assets and upgrades?
Spending on infrastructure, equipment, and improvements is usually a good sign that government is investing in long-term service delivery. - Is government selling assets?
If assets are being sold, ask why. This may be part of a plan—but it could also be a sign of financial pressure. - Is the money being reinvested?
If assets are sold, check whether the cash is being used to support services or invested back into the community.
What are they?
This part of the Cash Flow Statement shows the cash that comes from the government’s daily services.
How do they arise?
- Cash in – Cash from taxes, service charges, grants, fines, and interest received.
- Cash out – Cash paid for salaries, suppliers, daily costs, and interest paid.
This section is important as it shows if the government makes enough cash for daily expenses.
What do you see in the financial statements?
The report format used is called the “direct method”. It shows all cash receipts and cash payments. You will see a line showing “Net cash flows from or used in operating activities.” This is the cash left over (or short) after collecting taxes, service charges, and grants as well as after paying staff, suppliers, and grants. Extra details in the Notes to the Financial Statements explain any surplus or deficit.
What does it mean?
This number shows if the government’s daily activities bring in enough cash to pay for services.
- A healthy sign (with caution) – A positive number means the government has more cash than it spent. This shows stability, however, it is important to check why there is a positive result. Is it because they collected more money? Or because it spent less than planned?
- A warning sign – A negative number means there is not enough cash to pay bills. This forces the government to dip into savings or take loans. This can be a problem if done for too long.
Note
The government chooses where to show interest received and interest paid in the Cash Flow Statement. Interest received may be shown under operating or investing activities. Interest paid may be shown under operating or financing activities. This must be explained in the government’s rule book (accounting policies). It should stay the same from year to year.
When comparing different years or different government entities, do not assume they used the same method. First read the government’s rule book!
🔗 Let's connect the dots to other government reports
The Plan: The government needs cash coming in from daily work. This helps it pay salaries and deliver services. It supports the goals in the APP or SDBIP.
The Link: You can check the net cash flow figure in this section of the Cash Flow Statement. It shows if the government has enough cash to meet its service delivery promises in the APP/SDBIP.
The Plan: The cash flow budget shows how much cash should come in and go out during the year. It helps prevent running out of cash.
The Link: Compare the actual cash flows with the cash flow budget. This shows if the government is managing its daily cash well.
Citizen Tip: Ask the Right Questions
This number shows whether government has enough cash to run its day-to-day operations.
Ask yourself:
- Is this number positive most years?
A positive balance usually means government has enough cash to operate and pay for services. It may also mean that the government is not spending its budget.
- What if the number turns negative?
This may mean government is struggling to collect cash or is spending more than it receives. This can lead to delays in services or late payments to suppliers and employees.
- How is government covering the shortfall?
If government is borrowing money, taking loans, or selling assets to fund daily operations, it may point to deeper financial problems. - What does this mean for service delivery?
Ongoing cash shortages can lead to service cuts or delays, such as:- It may also mean that the government is not spending its budget.
- Sewerage spills not being fixed
- Potholes not being repaired
- Interruptions in basic services