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The International Accounting Standards Board (IASB) is redeliberating proposals in the Exposure Draft Regulatory Assets and Regulatory Liabilities.

The Exposure Draft, published in January 2021, sets out the IASB’s proposals for a model to account for regulatory assets and regulatory liabilities. If issued as a new IFRS Accounting Standard, the proposals would replace IFRS 14 Regulatory Deferral Accounts. 

The IASB discussed feedback on the Exposure Draft in October and November 2021. 

IASB® Update July 2022

The IASB met on 18 and 21 July 2022 to redeliberate the proposals in its Exposure Draft Regulatory Assets and Regulatory Liabilities on total allowed compensation. In particular, the IASB discussed:

  • components of total allowed compensation (Agenda Paper 9A); and
  • regulatory returns on an asset not yet available for use (Agenda Papers 9B and 9C).

Components of total allowed compensation (Agenda Paper 9A)

The IASB tentatively decided that in the Standard, the application guidance focus on:

  1. helping entities to identify differences in timing instead of specifying the components of total allowed compensation; and
  2. the most common differences in timing that could arise from various types of regulatory schemes.

All 10 IASB members agreed with this decision.

Regulatory returns on an asset not yet available for use (Agenda Papers 9B and 9C)

The IASB tentatively decided that the Standard specify that when an entity has an enforceable present right to regulatory returns on an asset not yet available for use, those returns would form part of the total allowed compensation for goods or services supplied during the construction period of that asset. The Standard will provide guidance for entities to assess whether their rights to these regulatory returns are enforceable.

Eight of nine IASB members agreed with this decision. One IASB member was absent.

Next milestone

IFRS Accounting Standard