Accounting for Receivables Factoring: A Practical Overview (Course Id 2513)

• Who is this course for?
  This course is designed for anyone needing Continuing Professional Education (CPE), particularly CPAs and accounting professionals seeking to understand receivables factoring.

• What is this course about or what problem does this course solve?
  The course provides a high-level overview of accounting and reporting considerations for accounts receivable factoring, helping learners determine whether a transfer qualifies as a “true sale” or should be treated as a secured borrowing.

• How can the knowledge from this course be used?
  The knowledge can be used to correctly apply U.S. GAAP standards in evaluating and accounting for factoring arrangements in financial statements.

• Why is this course important to a CPA, Accountant, or IRS Enrolled Agent?
  It is important because it enhances the accountant’s ability to accurately report transactions involving receivables factoring, thereby ensuring compliance and reliability in financial reporting.

• When is this course relevant or timely?
  This course is relevant for the 2025 reporting period and is especially timely for professionals working with or auditing businesses that utilize receivables factoring.

• How is a course like this consumed or used?
  The course is delivered as a QAS Self Study text-based format, which includes reading material, review questions, and a final exam that must be completed within one year for CPE credit.

Factoring involves selling customer receivables to a financial intermediary, which then collects payment directly from the customers. This strategy is commonly used to accelerate cash flow. This course offers a high-level overview of the accounting and reporting considerations for accounts receivable factoring, focusing on the criteria for determining whether the transfer qualifies as a “true sale” or should be accounted for as a secured borrowing. 

NASBA QAS - Text - NASBA Registry - 2513

Course Learning Objectives

• Identify key areas in U.S. GAAP where accounting estimates are required
• Recognize the potential risks and challenges associated with accounting estimates
• Differentiate between the proper use of estimates and instances of misuse or manipulation
• Determine the impact of inaccurate accounting estimates on financial statements

Chapter 1 - Accounting for Receivables Factoring: A Practical Overview

Course Learning Objectives

Course Overview

Introduction

Factoring Purposes

Factoring Considerations

Applicable U.S. GAAP

Sale Condition Requirements

Sale Condition #1 – Legal Isolation of the Assets

True Sale Opinion

Review Questions

Sale Condition #2 – Right to Pledge or Exchange

Sale Condition #3 – Effective Control

Factoring Arrangements That Qualify as a Sale

Re-Recognition Events

Factoring Arrangements Not Qualifying as a Sale

Conclusion

Review Questions

Glossary of Key Terms