Analysis of the Amendments in IAS 7 and IFRS 7 within the Scope of Supplier Finance Arrangements
Supplier finance-reverse factoring transactions have positive effects on supply chain finance and resilience, mainly by lowering the financing costs of suppliers that are mostly small- and medium-sized enterprises. However, these transactions have become one of the focal points of the discussions on...
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Istanbul University Press
2024-03-01
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| Series: | Muhasebe Enstitüsü Dergisi |
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| Online Access: | https://cdn.istanbul.edu.tr/file/JTA6CLJ8T5/B1D6AC1002F24C1584F6962EC324E8F0 |
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| author | Seçil Sigali Reha Memişoğlu |
| author_facet | Seçil Sigali Reha Memişoğlu |
| author_sort | Seçil Sigali |
| collection | DOAJ |
| description | Supplier finance-reverse factoring transactions have positive effects on supply chain finance and resilience, mainly by lowering the financing costs of suppliers that are mostly small- and medium-sized enterprises. However, these transactions have become one of the focal points of the discussions on corporate governance and agency problems due to the lack of transparency in the disclosures and financial reporting issues, leading to the bankruptcies of Carillion and Greensill Capital, and the effects Greensill Capital’s bankruptcy had on the collapse of Credit Suisse in March 2023. On May 25, 2023, International Accounting Standards Board published mandatory disclosures on supplier finance arrangements that would be effective for annual reporting periods beginning on or after January 1, 2024 through its amendments to the International Accounting Standard 7 Statement of Cash Flows and International Financial Reporting Standard 7 Financial Tools. The aim of this study is to analyze these amendments by evaluating the reasons and targets of these changes, which credit rating agencies and auditors insistently request. The amendments are expected to positively impact how the effects of supplier financing are measured on buyer companies’ financial statements and to reduce the manipulative use of supplier finance arrangements by lowering information asymmetry and agency problems, thus increasing the positive effects these transactions have on world trade. |
| format | Article |
| id | doaj-art-0ba6b28dcc8c4f4d93d2a516f5b6b8b7 |
| institution | Kabale University |
| issn | 2667-6982 |
| language | English |
| publishDate | 2024-03-01 |
| publisher | Istanbul University Press |
| record_format | Article |
| series | Muhasebe Enstitüsü Dergisi |
| spelling | doaj-art-0ba6b28dcc8c4f4d93d2a516f5b6b8b72025-08-20T03:52:38ZengIstanbul University PressMuhasebe Enstitüsü Dergisi2667-69822024-03-017011510.26650/MED.1337413123456Analysis of the Amendments in IAS 7 and IFRS 7 within the Scope of Supplier Finance ArrangementsSeçil Sigali0https://orcid.org/0000-0002-8037-6619Reha Memişoğlu1https://orcid.org/0000-0003-1639-8167Dokuz Eylül Üniversitesi, Izmir, TurkiyeDokuz Eylül Üniversitesi, Izmir, TurkiyeSupplier finance-reverse factoring transactions have positive effects on supply chain finance and resilience, mainly by lowering the financing costs of suppliers that are mostly small- and medium-sized enterprises. However, these transactions have become one of the focal points of the discussions on corporate governance and agency problems due to the lack of transparency in the disclosures and financial reporting issues, leading to the bankruptcies of Carillion and Greensill Capital, and the effects Greensill Capital’s bankruptcy had on the collapse of Credit Suisse in March 2023. On May 25, 2023, International Accounting Standards Board published mandatory disclosures on supplier finance arrangements that would be effective for annual reporting periods beginning on or after January 1, 2024 through its amendments to the International Accounting Standard 7 Statement of Cash Flows and International Financial Reporting Standard 7 Financial Tools. The aim of this study is to analyze these amendments by evaluating the reasons and targets of these changes, which credit rating agencies and auditors insistently request. The amendments are expected to positively impact how the effects of supplier financing are measured on buyer companies’ financial statements and to reduce the manipulative use of supplier finance arrangements by lowering information asymmetry and agency problems, thus increasing the positive effects these transactions have on world trade.https://cdn.istanbul.edu.tr/file/JTA6CLJ8T5/B1D6AC1002F24C1584F6962EC324E8F0ias 7ifrs 7supplier financereverse factoringgreensill scandal |
| spellingShingle | Seçil Sigali Reha Memişoğlu Analysis of the Amendments in IAS 7 and IFRS 7 within the Scope of Supplier Finance Arrangements Muhasebe Enstitüsü Dergisi ias 7 ifrs 7 supplier finance reverse factoring greensill scandal |
| title | Analysis of the Amendments in IAS 7 and IFRS 7 within the Scope of Supplier Finance Arrangements |
| title_full | Analysis of the Amendments in IAS 7 and IFRS 7 within the Scope of Supplier Finance Arrangements |
| title_fullStr | Analysis of the Amendments in IAS 7 and IFRS 7 within the Scope of Supplier Finance Arrangements |
| title_full_unstemmed | Analysis of the Amendments in IAS 7 and IFRS 7 within the Scope of Supplier Finance Arrangements |
| title_short | Analysis of the Amendments in IAS 7 and IFRS 7 within the Scope of Supplier Finance Arrangements |
| title_sort | analysis of the amendments in ias 7 and ifrs 7 within the scope of supplier finance arrangements |
| topic | ias 7 ifrs 7 supplier finance reverse factoring greensill scandal |
| url | https://cdn.istanbul.edu.tr/file/JTA6CLJ8T5/B1D6AC1002F24C1584F6962EC324E8F0 |
| work_keys_str_mv | AT secilsigali analysisoftheamendmentsinias7andifrs7withinthescopeofsupplierfinancearrangements AT rehamemisoglu analysisoftheamendmentsinias7andifrs7withinthescopeofsupplierfinancearrangements |