Objective
The objective of this Standard is to specify the financial reporting requirements for regulatory deferral account balances that arise when an entity provides goods or services to customers at a price or rate that is subject to rate regulation.
Scope
An entity is permitted to apply the requirements of this Standard in its first IFRS financial statements if and only if it:
- conducts rate-regulated activities; and
- recognised amounts that qualify as regulatory deferral account balances in its financial statements in accordance with its previous GAAP.
Recognition and measurement
An entity that has rate-regulated activities and that is within the scope of, and elects to apply, this Standard shall apply paragraphs 10 and 12 of IAS 8 when developing its accounting policies for the recognition, measurement, impairment and derecognition of regulatory deferral account balances
Defined terms
first IFRS financial statements The first annual financial statements in which an entity adopts International Financial Reporting Standards (IFRS), by an explicit and unreserved statement of compliance with IFRS.
first-time adopter An entity that presents its first IFRS financial statements.
previous GAAP The basis of accounting that a first-time adopter used immediately before adopting IFRS.
rate-regulated activities An entityβs activities that are subject to rate regulation.
rate regulation A framework for establishing the prices that can be charged to customers for goods or services and that framework is subject to oversight and/or approval by a rate regulator.
rate regulator An authorised body that is empowered by statute or regulation to establish the rate or a range of rates that bind an entity. The rate regulator may be a third-party body or a related party of the entity, including the entityβs own governing board, if that body is required by statute or regulation to set rates both in the interest of the customers and to ensure the overall financial viability of the entity.
regulatory deferral account balance The balance of any expense (or income) account that would not be recognised as an asset or a liability in accordance with other Standards, but that qualifies for deferral because it is included, or is expected to be included, by the rate regulator in establishing the rate(s) that can be charged to customers.
Disclosure
An entity that elects to apply this Standard shall disclose information that enables users to assess:
- the nature of, and the risks associated with, the rate regulation that establishes the price(s) that the entity can charge customers for the goods or services it provides; and
- the effects of that rate regulation on its financial position, financial performance and cash flows.