Skip to content (Press enter)
Show Sections

Current stage

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 March 2024

The IASB met on 21 March 2024 to redeliberate proposed requirements in the Exposure Draft Regulatory Assets and Regulatory Liabilities to be included in the prospective IFRS Accounting Standard on rate-regulated activities (prospective RRA Standard). These requirements relate to discounting estimated future cash flows (Agenda Paper 9A).

The IASB also discussed whether to develop reduced disclosure requirements for the prospective RRA Standard that could be included in the prospective IFRS Accounting Standard Subsidiaries without Public Accountability: Disclosures (prospective Subsidiaries Standard) (Agenda Paper 9B).

Discounting estimated future cash flows (Agenda Paper 9A)

Regarding the prospective RRA Standard, the IASB tentatively decided:

  1. to retain the proposal that an entity be required to discount estimates of future cash flows that arise from a regulatory asset or regulatory liability;
  2. to retain the proposal that an entity be required to use the regulatory interest rate for a regulatory asset or regulatory liability as the discount rate for that regulatory asset or regulatory liability;
  3. to retain the definition of a regulatory interest rate proposed in the Exposure Draft;
  4. to exempt an entity from applying the proposed requirement described in (a) to discount estimates of future cash flows from a regulatory asset or regulatory liability, if the entity expects the period between recognition of that regulatory asset or regulatory liability and its recovery or fulfilment to be 12 months or less;
  5. to require an entity that elects to apply the exemption described in (d) to disclose that fact and disclose the carrying amount of regulatory assets and regulatory liabilities at the end of the reporting period to which the entity has applied that exemption;
  6. not to exempt an entity from applying the proposed requirement described in (a) to discount estimates of future cash flows from a regulatory asset or regulatory liability for which the regulatory agreement does not specify a time frame for recovery or fulfilment;
  7. to retain the proposal that an entity be required to compute a single discount rate when a regulatory agreement specifies, at initial recognition, different regulatory interest rates over the life of a regulatory asset or regulatory liability;
  8. not to provide guidance on the computation of the single discount rate described in (g);
  9. to exempt an entity that measures regulatory assets or regulatory liabilities described in (g) from applying the proposed requirement described in (a) to discount estimates of future cash flows for the period between recognition and the date from which regulatory interest starts to accrue, if the entity expects that period to be 12 months or less;
  10. to require an entity that elects to apply the exemption described in (i) to disclose that fact and disclose the carrying amount of regulatory assets and regulatory liabilities at the end of the reporting period to which the entity has applied that exemption; and
  11. to clarify that the proposed requirement described in (g) does not apply to a regulatory asset or regulatory liability that attracts regulatory interest rates that depend on an interest rate benchmark, and not to provide further guidance on measuring such a regulatory asset or regulatory liability.

All 14 IASB members agreed with these decisions.

Reduced disclosures for rate-regulated entities (Agenda Paper 9B)

The IASB tentatively decided:

  1. not to develop reduced disclosures for the prospective RRA Standard now; and
  2. to include a question seeking stakeholders’ views on the decision not to develop reduced disclosures in the ‘catch-up’ exposure draft the IASB plans to publish after it issues the prospective Subsidiaries Standard.

Ten of 14 IASB members agreed with these decisions.

Next milestone

IFRS Accounting Standard