On Friday, 22 February 2013, the IASB continued its discussions on a proposal for an interim Standard for Rate regulated Activities that would allow entities adopting IFRS to continue to use their local GAAP requirements for rate-regulated activities until the main project is completed.
Interaction with other Standards
The IASB discussed the interaction of other Standards with the regulatory deferral account balances that might be recognised as a result of the interim Standard proposal. All IASB Members agreed.
IAS 33 Earnings per Share (EPS)
The IASB tentatively decided that an entity should present, with equal prominence, an EPS ratio including the movements in the regulatory balances, and an EPS ratio excluding the movements in the regulatory balances. All IASB members agreed.
IFRS 5 Non-current Assets Held for Sale and Discontinued Operations
The IASB tentatively decided that regulatory deferral account balances should be outside the scope of the measurement requirements of IFRS 5. The IASB also tentatively decided that an entity should present regulatory balances that form part of a discontinued operation and/or disposal group within the appropriate regulatory line items. However, the entity should apply judgement to decide whether to highlight the discontinued/disposal amount by presenting it alongside that regulatory balance or instead, by identifying it as part of the analysis of the regulatory line item in the relevant disclosure note. All IASB Members agreed.
IAS 36 Impairment of Assets
The IASB previously decided that regulatory deferral account balances should be outside the scope of IAS 36 and, instead, an entity should continue to apply its existing local GAAP impairment policy for such balances. At this meeting, the IASB confirmed that decision but clarified that the existing requirements of IAS 36 should apply to any cash-generating unit (CGU) that includes regulatory balances, without modification of those existing requirements, in the same way as they apply when other specific items that are excluded from the scope of IAS 36 are included in the CGU. All IASB members agreed.
IAS 12 Income Taxes
The IASB tentatively decided that deferred tax should be calculated on regulatory deferral account balances in accordance with IAS 12, but that the amounts recognised should be included within the regulatory line items, instead of within the tax line items, with clear disclosure. Twelve IASB members agreed.
The IASB tentatively decided that the proposed interim Standard should include brief application guidance to clarify that, when an existing Standard interacts with a regulatory deferral account balance (for example, when a regulatory balance is initially determined in a foreign currency but then has to be translated in the IFRS financial statements), the existing requirements of IFRS should apply to that regulatory balance, unless otherwise specified in the interim Standard (for example, the specific exceptions and presentation requirements relating to the Standards discussed in this meeting). All IASB members agreed.
The staff will prepare an Exposure Draft for the interim Standard based on these decisions and will begin the balloting process for publication.
The IASB decided to publish a Request for Information to gather more factual evidence about different types of rate regulation. The Request for Information will provide a 60-day comment period. All IASB members agreed.
The staff will prepare the Request for Information for publication.