Overview

At its meeting on June 23, 2021, the Board decided to add a narrow-scope standard-setting project to its work plan on supplier finance arrangements. At a future meeting the Board will discuss the transition requirements for the proposed amendments, as well as the Board’s compliance with applicable due process steps.

• Disclosure scope, objectives and requirements

The Board tentatively decided that the project would develop disclosure requirements for supplier finance arrangements, but not go beyond such arrangements (that is, the project would not develop requirements for arrangements an entity enters into to fund either receivables from customers or inventories).

The Board tentatively decided to explain the type of arrangements to be included within the project’s scope, instead of proposing detailed definitions.   

The Board tentatively decided to propose amending IAS 7, Statement of Cash Flows to add: 

• an overall disclosure objective: to help users of financial statements understand the nature, timing, and uncertainty of cash flows arising from supplier finance arrangements; and
• specific disclosure objectives:
• to provide quantitative information that helps users of financial statements determine the effects of supplier finance arrangements on an entity’s financial position and cash flows; and
• to provide qualitative information to help users of financial statements understand the risks that arise from supplier finance arrangements.

The Board tentatively decided to propose that, to meet the proposed disclosure objectives, entities be required to disclose:

• the key terms and conditions of a supplier finance arrangement; and
• at the start and end of the reporting period:
• the aggregate amount of payables that are part of the arrangement;
• the aggregate amount of the payables disclosed under (i) for which suppliers have already received payment from the finance provider;
• the range of payment terms, expressed in time, of payables disclosed under (i); and
• the range of payment terms, expressed in time, of trade payables that do not form part of the arrangement.

The Board tentatively decided to propose adding supplier finance arrangements as an example within the liquidity risk disclosure requirements in IFRS 7, Financial Instruments: Disclosures.

On May 25, 2023, the IASB issued the final amendments to IAS 7 and IFRS 7 which address the disclosure requirements to enhance the transparency of supplier finance arrangements and their effects on a company’s liabilities, cash flows and exposure to liquidity risk.

Supplier finance arrangements are often referred to as supply chain finance, trade payables finance or reverse factoring arrangements.

The amendments supplement requirements already in the IFRS Accounting Standards and require a company to disclose:

• the terms and conditions;
• the amount of the liabilities that are part of the arrangements, breaking out the amounts for which the suppliers have already received payment from the finance providers, and stating where the liabilities sit on the balance sheet;
• ranges of payment due dates; and
• liquidity risk information.

On August 1, 2023, the AcSB issued the amendments to IAS 7 Statement of Cash Flows, and to IFRS 7 Financial Instruments: Disclosures to Part I of the CPA Canada Handbook - Accounting.

For further details refer to the IASB’s press release and IASB project page.

Other De­vel­op­ments

August 2023

On August 1, 2023, the AcSB issued the amendments to IAS 7 Statement of Cash Flows, and to IFRS 7 Financial Instruments: Disclosures to Part I of the CPA Canada Handbook - Accounting.

May 2023

On May 25, 2023, the IASB ASB issued the amendments to IAS 7 Statement of Cash Flows and IFRS 7 Financial Instruments: Disclosures.

March 2023

On March 27, 2023,  the IASB staff updated the work plan to indicate that the Board plans to issue the amendments to its IFRSs in May 2023.

December 2022

On December 19, 2022, the IASB staff updated the work plan to indicate that the Board plans to issue the amendments to its IFRSs in Q2/2023.  

September 2022

On September 26, 2022, the IASB staff updated the work plan to indicate that the Board plans to decide the project direction in November 2022.

July 2022

On July 25, 2022, the IASB staff updated the Work Plan to indicate that the Board plans to decide the project direction in Q4/2022.

May 2022

On May 30, 2022, the IASB staff updated the Work Plan to indicate that the Board plans to d review the Exposure Draft Feedback in July 2022.

April 2022

On April 29, 2022, the IASB staff updated the Work Plan to indicate that the Board plans to review the Exposure Draft Feedback in June 2022.

January 2022

On January 28, 2022, the IASB staff updated the Work Plan to indicate that the Board plans to review the Exposure Draft Feedback in Q2 2022.

December 2021

On December 14, 2021, the AcSB issued its Exposure Draft that corresponds to the IASB’s Exposure Draft on this topic. The AcSB will not be submitting a response letter to the IASB. However, this decision will be reviewed throughout the comment period and reconsidered based on stakeholder feedback. As a result, stakeholders are encouraged to reply to the AcSB prior to February 28, 2022, to support their ongoing discussions.

November 2021

On November 26, 2021, the IASB published the exposure draft Supplier Finance Arrangements (Proposed amendments to IAS 7 and IFRS 7) to add disclosure requirements, and "signposts" within existing disclosure requirements, that would ask entities to provide qualitative and quantitative information about supplier finance arrangements. Comments are requested by March 28, 2022.

September 2021

On September 27, 2021, the IASB staff updated the Work Plan to indicate that the Board plans to issue an Exposure Draft in November 2021.

July 2021

On July 23, 2021, the IASB staff updated the Work Plan to indicate that the Board plans to issue an Exposure Draft in October 2021.

June 2021

At its meeting on June 23, 2021, the Board decided to add a narrow-scope standard-setting project to its work plan on supplier finance arrangements.