FASB issues ASU for supplier finance obligations disclosures
Defining Issues | September 2022
A buyer of goods and services should disclose information about its supplier finance program obligations.
The ASU intends to enhance transparency of supplier finance programs to understand the effect of those programs on an entity’s working capital, liquidity and cash flows.
Applicability
- ASU 2022-04
- All entities that use supplier finance programs in connection with the purchase of goods and services
Relevant dates
Annual and interim periods – Fiscal years beginning after | December 15, 2022, except for the rollforward disclosure, which is effective for fiscal years beginning after December 15, 2023. |
Early adoption permitted? | Yes |
Transition requirements | During the first year of adoption, the information regarding the key terms of the programs and the balance sheet presentation are to be disclosed in each interim period even though this information will only be part of annual disclosures thereafter. The amendments in this ASU are to be applied retrospectively to each period in which a balance sheet is presented, except for the amendment on rollforward information, which is to be applied prospectively. |
Key Impacts:
- The amendments do not affect the recognition, measurement or financial statement presentation of obligations covered by supplier finance programs.
- An entity should disclose qualitative and quantitative information about its supplier finance programs, such as key terms and the obligation amount that the entity has confirmed as valid to the finance provider or intermediary. An entity should disclose:
- the outstanding confirmed amount;
- a description of where the obligations are presented in the balance sheet; and
- a rollforward of those obligations during the annual period, including amount of obligation confirmed and amount of obligation subsequently paid.
- the outstanding confirmed amount;
- The obligation amount outstanding is disclosed in each interim and annual reporting period.
- The amendments should be applied retrospectively – except for the amendment on rollforward information, which should be applied prospectively.
Report contents
- Applicability
- Fast facts, impacts, actions
- Background
- Amendments will add a subtopic
- Effective dates and transition
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FASB issues ASU
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