The Financial Accounting Standards Board (FASB) has issued its long-awaited Accounting Standards Update (ASU) covering the disclosure of supplier finance programmes.
Under the newly-published rules, a company that uses a supplier finance program will be required to disclose sufficient information about the program, 'To allow a user of financial statements to understand the programme’s nature, activity during the period, changes from period to period, and potential magnitude.'
Specifically, a buyer will be required to provide the following qualitative and quantitative information:
'The new ASU responds to requests from investors for greater transparency around a buyer’s use of supplier finance programs,', said FASB Chair Richard R. Jones. 'It enhances transparency by requiring new disclosures intended to help them better consider the effect of these programs on a company’s working capital, liquidity, and cash flows over time.'
The new rules will apply to fiscal years beginning after December 15, 2022.
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