Disclosure of Supplier Finance Program Obligations
Last updated on July 26, 2022. Please refer to the Current Technical Plan for information about the expected release dates of exposure documents and final standards.
(Sections updated on the date above are indicated with an asterisk *)
No explicit requirements currently exist in the Codification to disclose information about supplier finance programs. In some circumstances, the U.S. Securities and Exchange Commission (SEC) staff has encouraged companies to consider disclosing information about those programs under Regulation S-K, Rule 303, Management’s Discussion and Analysis of Financial Condition and Results of Operations.
The Board made the following decisions and completed its redeliberations:
Key Terms
The Board decided that an entity should disclose information about the key terms of a supplier finance program, including a general description of the payment terms (including payment timing and basis for its determination) and the assets pledged as security or other forms of guarantees provided for the committed payment to the finance provider or intermediary.
Nonpublic Entity Considerations
The Board decided that all entities that use supplier finance programs in connection with the purchase of goods and services should apply all of the amendments in the final Update.
Transition and Effective Date
The Board decided that the amendments in the final Update should be applied retrospectively to all periods in which a balance sheet is presented, except for the amendment on rollforward information, which should be applied prospectively.
The Board decided that public business entities should adopt (1) the amendments in the final Update, except for the amendment on rollforward information, for fiscal years beginning after December 15, 2022, including interim periods within those fiscal years and (2) the amendment on rollforward information for fiscal years beginning after December 15, 2023. The Board decided that all other entities should be subject to the same effective dates as those for public business entities. Early adoption will be permitted.
The Board decided that an entity should disclose information about the key terms of the programs and the balance sheet presentation of the program obligations, when the amount of the obligation outstanding is disclosed in the first interim reporting period during the year of adoption.
Cost-Benefit Analysis
The Board concluded that it has received sufficient information and analysis to make an informed decision on the expected costs of applying the amendments in the final Update and that the expected benefits of those amendments would justify the expected costs.
Permission to Ballot
The Board concluded that it has received sufficient information and analysis to make informed decisions and directed the staff to draft a final Accounting Standards Update for vote by written ballot.
A summary of decisions reached to date can be found here.
Last updated on July 26, 2022. Please refer to the Current Technical Plan for information about the expected release dates of exposure documents and final standards.
(Sections updated on the date above are indicated with an asterisk *)
Objective:
The objective of this project is to develop disclosure requirements that enhance transparency about the use of supplier finance programs.Background:
Many financial statement users, including analysts and ratings agencies, have advocated for increased disclosure of qualitative and quantitative information about about supplier finance program obligations. The Board also received an agenda request from the Big Four accounting firms on aspects of the accounting and disclosure for supplier finance programs.Exposure Draft(s):
On December 20, 2021, the Board issued a proposed Accounting Standards Update, Liabilities—Supplier Finance Programs (Subtopic 405-50): Disclosure of Supplier Finance Program Obligations. The due date for comment letters was March 21, 2022.- Download the proposed Accounting Standards Update, Liabilities—Supplier Finance Programs (Subtopic 405-50): Disclosure of Supplier Finance Program Obligations
Read the press release on the proposed Accounting Standards Update.
Decisions Reached at Last Meeting (July 20, 2022):
The Board made the following decisions and completed its redeliberations:
Key Terms
The Board decided that an entity should disclose information about the key terms of a supplier finance program, including a general description of the payment terms (including payment timing and basis for its determination) and the assets pledged as security or other forms of guarantees provided for the committed payment to the finance provider or intermediary.
Nonpublic Entity Considerations
The Board decided that all entities that use supplier finance programs in connection with the purchase of goods and services should apply all of the amendments in the final Update.
Transition and Effective Date
The Board decided that the amendments in the final Update should be applied retrospectively to all periods in which a balance sheet is presented, except for the amendment on rollforward information, which should be applied prospectively.
The Board decided that public business entities should adopt (1) the amendments in the final Update, except for the amendment on rollforward information, for fiscal years beginning after December 15, 2022, including interim periods within those fiscal years and (2) the amendment on rollforward information for fiscal years beginning after December 15, 2023. The Board decided that all other entities should be subject to the same effective dates as those for public business entities. Early adoption will be permitted.
The Board decided that an entity should disclose information about the key terms of the programs and the balance sheet presentation of the program obligations, when the amount of the obligation outstanding is disclosed in the first interim reporting period during the year of adoption.
Cost-Benefit Analysis
The Board concluded that it has received sufficient information and analysis to make an informed decision on the expected costs of applying the amendments in the final Update and that the expected benefits of those amendments would justify the expected costs.
Permission to Ballot
The Board concluded that it has received sufficient information and analysis to make informed decisions and directed the staff to draft a final Accounting Standards Update for vote by written ballot.
Tentative Board Decisions Reached to Date (as of July 20, 2022):
A summary of decisions reached to date can be found here.
The Board meeting minutes, handouts, and videos are provided for the information and convenience of constituents who want to follow the Board’s deliberations. All of the conclusions reported are tentative and may be changed at future Board meetings. Decisions become final only after a formal written ballot to issue a final standard.
The following are links to the minutes for each meeting. To view Board meetings and handouts from the past 90 days, click here.
The following are links to the minutes for each meeting. To view Board meetings and handouts from the past 90 days, click here.
| July 20, 2022* | Board Meeting—The Board completed its redeliberations on the disclosures of supplier finance program obligations and directed the staff to draft a final Accounting Standards Update for vote by written ballot.
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| June 22, 2022 | Board Meeting—Board Meeting–The Board met to begin redeliberations on disclosures of supplier finance program obligations.
The Board directed the staff to identify and develop examples of key terms (such as payment terms) for the disclosure requirement on the key terms of a supplier finance program. |
| September 22, 2021 | Board Meeting—The Board concluded initial deliberations on potential disclosures and transition guidance.
The Board directed the staff to draft a proposed Accounting Standards Update for vote by written ballot. |
| June 30, 2021 | Board Meeting—The Board began initial deliberations and made decisions related to scope and disclosures required of the buyer party in the programs.
The Board directed the staff to perform limited outreach with users on one aspect of the disclosures. |
| October 21, 2020 | Board Meeting—The Board added the project to the technical agenda. |
The Board directed the staff to draft a final Accounting Standards Update for vote by written ballot.
Lucy Cheng
Project Manager
lcheng@fasb.org
Julie Um
Project Manager
jcum@fasb.org
Dylan Ehrnst
Postgraduate Technical Assistant
dehrnst@fasb.org
Sarah Suber
Postgraduate Technical Assistant
ssuber@fasb.org
Project Manager
lcheng@fasb.org
Julie Um
Project Manager
jcum@fasb.org
Dylan Ehrnst
Postgraduate Technical Assistant
dehrnst@fasb.org
Sarah Suber
Postgraduate Technical Assistant
ssuber@fasb.org
The staff has prepared this summary for information purposes only. Any Board decisions are tentative and do not change current accounting. Official positions of the FASB are determined only after extensive due process and deliberations.