We have published our comment letter on 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.

We welcome the opportunity to respond to FRED 84.

We commend the Financial Reporting Council (FRC) for acting promptly to address this issue and appreciate that the proposals in FRED 84 are consistent with our request in our response to FRED 82.

We support the FRC’s overall approach to improve the disclosures an entity provides about its supplier financing arrangements. However, we believe that these disclosures will also be relevant to the users of a qualifying entity and propose to expand the scope of these requirements to those entities as well, unless equivalent disclosures are included in the consolidated financial statements of the group in which the entity is consolidated. We also believe that financial institutions reporting under FRS 102 should be providing similar disclosures to financial institutions reporting under IFRS Accounting Standards. We propose that the FRC clarifies in the ‘Basis for Conclusions’ to FRS 102 that the principles in FRS 102 related to liquidity risk disclosures are based on requirements and application guidance under IFRS Accounting Standards. Lastly, we do not support the proposal that an entity that enters into supplier finance arrangements should disclose the carrying amount of financial liabilities for which the suppliers have already been paid by finance providers.

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