In a joint submission, CPA Australia and CA ANZ have not supported the IASB’s proposals to introduce complex and prescriptive disclosures for supplier financing arrangements, set out in IASB ED 2021/10 Supplier Finance Arrangements. The proposals  were developed in response to international and domestic concerns about the inadequacy of disclosure of these arrangements. These disclosure concerns were initially raised with IFRIC, seeking additional guidance on the appropriate application of IFRS to these arrangements.

IFRIC published an Agenda Decision in December 2020 which concluded that, while these arrangements are not explicitly referenced in IFRS, a proper application of the existing requirements would require more adequate disclosure than was currently occurring. While the IASB approved the publication of the Agenda Decision, it subsequently decided to conduct a standard-setting project to develop explicit requirements in response to further feedback from users concerned that their needs were not being met. 

The joint submission supports the need to ensure that the risks posed by an entity’s involvement  in supplier financing arrangements are properly identified and disclosed.  However, we believe the ED’s proposals are too prescriptive and narrow in scope, and that stakeholders would be better served by:

• Providing more expansive and broadly applicable guidance and educative material building on the IFRIC Agenda Decision, and/or
• Considering whether there is evidence for a standard-setting project dealing with working capital arrangements more broadly, rather than a narrow focus on just some types of supplier finance arrangements.

The submission also shares our concerns over some specific aspects of the proposals as further evidence of their prescriptive nature and the implementation difficulties that will likely be faced by preparers and auditors if these proposals go ahead.