FASB issues ASU for supplier finance obligations disclosures

The ASU intends to enhance transparency of supplier finance programs to understand the effect of those programs on an entity’s working capital, liquidity and cash flows.  

Applicability

• ASU 2022-04
• All entities that use supplier finance programs in connection with the purchase of goods and services
  

Relevant dates

Key impacts

• The amendments do not affect the recognition, measurement or financial statement presentation of obligations covered by supplier finance programs.
  
• An entity should disclose qualitative and quantitative information about its supplier finance programs, such as key terms and the obligation amount that the entity has confirmed as valid to the finance provider or intermediary. An entity should disclose:
  
  • the outstanding confirmed amount;
    
  • a description of where the obligations are presented in the balance sheet; and
    
  • a rollforward of those obligations during the annual period, including amount of obligation confirmed and amount of obligation subsequently paid.
    
• The obligation amount outstanding is disclosed in each interim and annual reporting period.
• The amendments should be applied retrospectively – except for the amendment on rollforward information, which should be applied prospectively.

Report contents

• Applicability
• Fast facts, impacts, actions
• Background
• Amendments will add a subtopic
• Effective dates and transition 
  

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