Optimize Cash Flow Through Receivables Factoring (Course Id 2088)

• Who is this course for?
  This course is intended for anyone needing Continuing Professional Education (CPE), particularly CPAs and accounting professionals.

• What is this course about or what problem does this course solve?
  The course explains the accounting and reporting requirements of receivables factoring, helping professionals understand how to correctly classify these transactions under U.S. GAAP.

• How can the knowledge from this course be used?
  Learners can use the knowledge to recognize valid factoring arrangements, determine when a transaction qualifies as a true sale, and understand the implications of misclassification.

• Why is this course important to a CPA, Accountant, or IRS Enrolled Agent?
  It is important because accurate handling of receivables factoring can impact financial statements, compliance, and cash flow reporting, all of which are critical for professional practice.

• When is this course relevant or timely?
  The course is especially relevant for professionals dealing with cash flow management or preparing financial statements, particularly since it was most recently revised in March 2024.

• How is a course like this consumed or used?
  This is a QAS Self Study course delivered in text format, requiring participants to complete a final exam with a passing score of at least 70% to earn CPE credit.

Factoring is a type of transaction where an entity sells it customer receivables to a financial intermediary who then in turn collects payment from the entity’s customers.  Many entities employ this strategy to accelerate cash collection.  This course provides an overview of the accounting and reporting requirements with respect to accounts receivable factoring programs as well as the conditions that must be met in order to recognize the transfer of these financial assets as a “true sale” instead of a secured borrowing. 

NASBA QAS - Text - NASBA Registry - 2088

Course Learning Objectives

• Recognize key characteristics as well as advantages/disadvantages of factoring arrangements
• Identify the U.S. GAAP area applicable to factoring arrangements
• List the three specific conditions that must be met for a factoring arrangement to qualify as a sale
• Recognize key evaluation considerations relating to true sale opinions
• Identify examples of continuing involvement
• Recognize the impact from a failed sale in a factoring arrangement

Chapter 1 - Optimize Cash Flow Through Receivables Factoring

Course Learning Objectives

Course Overview

Introduction

Overview of Factoring Arrangements

Advantages & Disadvantages of Factoring

Where Do I Look to in U.S. GAAP?

Review Questions

Transfers Within Scope of ASC 860

Overall Conditions for Sale Accounting

Three Specific Conditions for Sale Accounting

Sale Condition #1 � Legal Isolation

True Sale Opinion

Review Questions

Sale Condition #2 � Right to Pledge or Exchange

Continuing Involvement

Assessment of Constraints

Sale Condition #3 � Effective Control

Factoring Arrangements Qualifying as a Sale

Re-Recognition Events

Factoring Arrangements Not Qualifying as a Sale

Review Questions

Glossary of Key Terms