While this will increase The lease liability of Topic 842, the adoption of such a directive by asset class may be worth the effectiveness of accounting for these leases. – Stephen G. Austin, CPA, MBA, is Managing Partner, and Joel C. Colbourn, MBA, is an Accountant, both of Swenson Advisers LLP in San Diego. Kristen Gibbons is a senior partner at KSDT and Company in Miami. To comment on this article or to suggest an idea for another article, contact Ken Tysiac, JofA Editorial Director, at Kenneth.Tysiac@aicpa-cima.com or 919-402-2112. The FRC called on the reports to clarify the accounting of complex supplier agreements, which include supply chain financing and pay-to-stay royalties. In early December, the Financial Reporting Council (FRC) asked retailers, suppliers and other businesses to include sufficient information in their financial statements about their accounting methods, judgments and estimates arising from their complex supplier agreements. The FRC found that the amounts associated with these agreements are often significant for operating margins and other performance indicators of different companies, and that investors therefore need sufficiently clear and relevant information to be able to assess a company`s performance and financial position. To this end, the FRC expects quality information on these agreements in future annual reports and financial statements and will focus on this area of closure when reviewing audits and accounts in 2015. The FRC will likely focus on large retailers such as supermarkets and clothing stores, which appear to be heavily involved in complex supplier agreements. Complex Supplier Agreements Complex supplier agreements are a broad category that includes a set of regular features of supplier contracts in different sectors, including retail, such as fees, contributions, rebates, multiple offers and quantity discounts.
An example of similar regulation is the so-called “pay to stay” or “slotting” fee, where existing suppliers of a large retailer must pay a fee to put their products on the retailer`s shelves or to remain on the supplier list. Another type of agreement that should lead to significant inconsistencies in accounting practices is the supply chain finance (SCF).