The International Accounting Standards Board (IASB) has released an exposure draft on regulatory deferral accounts as part of its reactivated rate-regulated activities research project.

In response to feedback from its agenda consultation, the IASB has initiated a project to consider whether the IASB should develop specific guidance for rate-regulated activities and, if so, what information about the consequences of rate regulation would be most useful for users of financial statements.

At this stage, the IASB is proposing an interim standard that would allow entities to preserve the existing accounting policies that they have in place for rate-regulated activities with some modifications designed to enhance comparability.

Many jurisdictions applying International Financial Reporting Standards (IFRS) have industry sectors that are subject to rate regulation, such as the transportation and the utilities sectors.

Rate regulation can have a significant impact on the timing and amount of an entity's revenue. Existing IFRS does not provide any specific guidance for rate regulated activities.

Ian Mackintosh, vice-chairman of the IASB said: 'the project will take some time, due to the many different rate-regulatory models in use around the world. Consequently, we are proposing some interim measures to enhance the comparability of financial reporting by entities with rate-regulated activities.'

The four-month consultation period closes on 4 September 2013.To comment, click HERE

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