The FRC defines ‘complex supplier arrangements’ as consisting of fees, contributions, discounts, multiple offers and volume rebates – all of which require significant management judgement when estimating amounts to be included in accounts receivable and payable for both annual and interim reporting.

The FRC comments

Complex supplier arrangements such as fees and discounts may have a significant impact on the reported margins and other results of a company and on investors’ views of its performance.  Where this is the case, it is essential that investors are able to understand the basis and extent of judgement and estimation involved and the potential uncertainties affecting the accounts and future prospects.  Today’s announcement is a reminder to Boards of retail companies in particular of what they should consider and encourages them to review their reporting in this area as many have already announced.

The announcement follows a recent Financial Reporting Lab report which called on companies to provide additional disclosures to investors on how companies account for their material transactions and business streams.

The FRC indicates that their Conduct Committee will expect to see such high quality disclosure in the forthcoming annual and interim reports and accounts and will include the quality of such reporting as an area of focus when it reviews audits and accounts in 2015.

The full press release can be found on the FRC website.