18/07/2023 - EFRAG seek comments on its Draft Endorsement Advice on Supplier Finance Arrangements (Amendments to IAS 7 and IFRS 7)

EFRAG has issued a draft endorsement advice letter and a separate invitation to comment relating to the endorsement for use in the EU of the Amendments. 

The objective of the Amendments is to enhance the transparency of supplier finance arrangements and their effects on a company’s liabilities, cash flows and exposure to liquidity risk through additional disclosure requirements. 

The Amendments shall be applied for annual periods beginning on or after 1 January 2024, with earlier application permitted. However, there are some transition provisions that provide relief for the first year of application. 

EFRAG's overall preliminary assessment is that the Amendments satisfy the criteria for endorsement for use in the EU and therefore recommends its endorsement. EFRAG is seeking comments on all aspects of its analysis supporting its preliminary conclusions. 

Nonetheless, EFRAG is conducting limited outreach activities in parallel to this consultation due to the concern from some constituents about the challenges for an entity to disclose the information required under paragraph 44H(b)(ii) of the Amendments (the disclosure of the carrying amount of financial liabilities that are part of SFAs for which suppliers have already received payment). The result of the outreach will be considered in the endorsement advice letter to be submitted to the European Commission. 

EFRAG's draft endorsement advice letter is available here. 

You are asked to provide your comments on the draft endorsement advice letter by downloading the invitation to comment (here), filling in the comments and submitting the response by clicking on the ‘Comment publication’ link below .

Comments are requested by 11 September 2023. 

For your information, EFRAG has also updated its Endorsement Status Report, which is available here.