Companies Told to ‘Shine the Light’ on Hidden Financing Tools

Companies won’t be able to pad their cash flows without telling investors and analysts how they’re using a special form of financing to do so, US accounting rulemakers agreed Wednesday.

The Financial Accounting Standards Board unanimously finalized a plan requiring companies that enter into supply chain financing arrangements to reveal that they use this type of funding and explain how it affects their bottom lines.

“There is almost no disclosure out there,” FASB member Gary Buesser said. “This will make them shine the light so I can get the liquidity risks, the magnitude of the program. That’s a win-win.” ...