Background

In September 2023, the Financial Reporting Council (FRC) published Financial Reporting Exposure Draft (FRED) 84 'Draft amendments to FRS 102 The Financial Reporting Standard applicable in the UK and Republic of Ireland – Supplier Finance arrangements ("FRED 84) which proposed to introduce new disclosure requirements to provide users of financial statements with additional information about an entity's use of supplier finance arrangements and the effect of such arrangements on the entity's financial position and cash flows.

In May 2023, the International Accounting Standards Board (IASB) published Supplier Finance Arrangements (Amendments to IAS 7 and IFRS 7), which added disclosure requirements in respect of supplier finance arrangements to both IAS 7 Statement of Cash Flows and IFRS 7 Financial Instruments:Disclosures.  

The FRC considered whether similar proposals were appropriate for FRS 102, particularly Section 7 Statement of Cash Flows, and developed FRED 84 based on the IASB's amendments to IAS 7. No disclosure requirements based on those introduced into IFRS 7 were proposed as they relate to the requirements on liquidity risk, a topic which is not specifically addressed in FRS 102 other than for financial institutions.  

It was proposed that the amendments would be effective for accounting periods beginning on or after 1 January 2025, with early application permitted.

Status of the project

In March 2024, the FRC published Amendments to FRS 102 The Financial Reporting Standard applicable in the UK and Republic of Ireland and other FRSs – Periodic Review 2024’ which contains the changes to FRS 102 and other UK and Republic of Ireland financial reporting standards as a result of the second periodic review of the standard.  The changes introduce new disclosure requirements about supplier finance arrangements within Section 7 Statement of Cash Flows.