SOCPA Shares its Remarks on the Preliminary Decision of the IFRS Interpretations Committee on Arrangements for the Transfer of Debt by the Debtor.
SOCPA shared its remarks on IFRS Interpretations Committee preliminary decision “Supply Chain Financing Arrangements—Reverse Factoring”, whereby the the committee preliminary decided that current standard requirements are satisfactory. The committee requested feedback from subject matter experts on the matter.
It is the opinion of SOCPA, in response to the preliminary decision, when an entity transfers suppliers’ due amounts to a financing entity, it derecognizes such amounts for trade debtors and recognizes the same amounts for the financing entity, which clearly renders said amounts subject to the IFRS 7 risks and disclosure requirements.