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FINANCIAL REPORTING / INTERNATIONAL

IASB proposes interim standard on rate-regulated activities

 

By Ken Tysiac
April 26, 2013

The International Accounting Standards Board (IASB) proposed an interim standard Thursday that would allow entities to preserve their existing accounting policies for rate-regulated activities—with some modifications to enhance comparability—while the board considers whether it should develop specific guidance.

Feedback from the IASB’s agenda consultation led the board to launch a project to consider whether it should develop specific guidance for rate-regulated activities. The board also is trying to determine what information financial statement users would need about the consequences of rate regulation if specific guidance is developed.

Industry sectors such as transportation and utilities are subject to rate regulation in many jurisdictions, and rate regulation can significantly affect the timing and amount of an entity’s revenue. But existing IFRS does not provide specific guidance for rate-regulated activities.

The exposure draft for the interim standard proposed Thursday, Regulatory Deferral Accounts, seeks comments by Sept. 4. Comments can be submitted at the IFRS website.

IASB Vice Chairman Ian Mackintosh said in a news release that completing the larger project will take time because many rate-regulated models are used throughout the world.

“Consequently, we are proposing some interim measures to enhance the comparability of financial reporting by entities with rate-regulated activities until guidance is developed,” he said.

Ken Tysiac (ktysiac@aicpa.org) is a JofA senior editor.

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