IASB issues IFRS 20 to improve financial reporting for companies subject to rate regulation

The International Accounting Standards Board (IASB) has today issued IFRS 20 Regulatory Assets and Regulatory Liabilities, a new Accounting Standard for companies subject to a specific type of rate regulation. It aims to help investors better understand how that rate regulation affects a company’s financial performance, financial position and its prospects for future cash flows.

The rationale for IFRS 20

The Standard will affect companies subject to rate regulation that determines how much a company can charge customers and when it can charge them. Companies that supply vital services such as electricity, water and gas are often subject to this type of regulation.

If there is a difference between when a company supplies regulatory goods and services and when it charges customers for those goods and services, reported revenue may not fully reflect the company’s performance in a period. IFRS 20 calls this a ‘difference in timing’. The new Standard requires companies to account for the effects of differences in timing in their financial statements. 

IFRS 20 is also expected to reduce diversity in accounting practices and improve comparability between companies in regulated industries.

IASB Chair, Andreas Barckow, said:

IFRS 20 will provide investors with more complete and transparent information about companies operating in these critical rate-regulated industries.

Global engagement

The development of IFRS 20 was informed by extensive consultation, including over 300 comment letters, more than 200 stakeholder meetings and two rounds of fieldwork conducted in 22 jurisdictions. This engagement was essential to ensuring that IFRS 20 strikes the right balance between providing useful information and ensuring practical implementation.

Effective date and related Standards

IFRS 20 is effective for annual reporting periods beginning on or after 1 January 2029. Companies may choose to apply the Standard earlier.

IFRS 20 supplements the information a company provides when applying  IFRS 15 Revenue from Contracts with Customers and replaces IFRS 14 Regulatory Deferral Accounts.

Finding your way around the IFRS 20 package

Where to start

For a quick view, start with IFRS 20 at a glance.

For an overview of the Standard, watch this webcast.

Access the Standard

Available to digital subscribers or to purchase as a standalone ePub.

• IFRS 20 Regulatory Assets and Regulatory Liabilities
• Basis for Conclusions explains the IASB’s considerations in developing the requirements in IFRS 20.
• Illustrative Examples show how the requirements apply in practice.

Access the supporting materials

• Project summary gives an overview of the project in non-technical language.
• Effects Analysis describes the likely benefits and costs of IFRS 20.
• Feedback Statement summarises stakeholder feedback and the IASB’s response to feedback.