Company: HFFG
Filing Date: 2025-03-05
Form Type: CORRESP
Source: 0001680873-25-000004
Chunk: 2

Company: HF Foods Group Inc.
Filing Date: 2025-03-05
Form: CORRESP
Chunk 2
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 debits. Accordingly, when vendor checks are presented for payment, the amount presented becomes payable under the Company’s line of credit. Additionally, vendor checks that the Company issued but that have yet been presented for payment result in book overdrafts.

In light of the Company’s bank account structure, the Company considered guidance published by PwC in their US Financial Statement Presentation Guide—Chapter 6: Statement of Cash Flows—updated March 2024 to determine the cash flow classification of the changes in the balances of the Company’s book overdrafts. Section 6.5.1.2 of this guide states that changes in book overdrafts should be presented as financing activities in the statement of cash flows if “a zero balance account is linked to a bank overdraft credit facility and checks presented for payment are immediately payable under the credit facility.” These book overdrafts would in substance be considered bank overdrafts.

As the Company’s book overdrafts resulted from a similar fact pattern and bank account structure presented in Section 6.5.1.2 of the PwC guide, the Company’s book overdrafts are in substance bank overdrafts and presented as financing activities in the statement of cash flows.

We acknowledge that there is diversity in practice regarding the presentation of changes in book overdrafts in the statement of cash flows. In reaching this conclusion, the Company also considered the following guidance:

• AICPA Technical Q&As Section 1300.15 which addresses overdrafts and states “The net change in bank overdrafts during the period is a financing activity in the statement of cash flows.”

• Deloitte’s Roadmap: Statement of Cash Flows (August 2024). Section 4.2.2 which states “we believe that if an entity is in a book overdraft position, it is acceptable for the entity to show the net change in the liability related to the book overdraft as either an operating or a financing activity in the statement of cash flows… The presentation of book overdrafts as either operating or financing is an accounting policy decision that the entity should apply consistently.”

• KPMG’s Statement of Cash Flows Handbook (September 2024) which states “an entity may elect to include changes in a book overdraft position as a reconciling item in the

Securities and Exchange Commission

March 5, 2025

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reconciliation of net income to net cash flows from operating activities instead of cash flows from financing activities.”