IFRS 20 Regulatory Assets and Regulatory Liabilities is a new accounting standard to improve financial reporting for companies subject to rate regulation, and replaces IFRS 14 Regulatory Deferral Accounts. It is important to note the new standard supplements the information a company provides when applying revenue recognition accounting rules under IFRS 15 Revenue from Contracts with Customers.    

The International Accounting Standards Board (IASB) said IFRS 20 is designed to help investors more easily understand how rate regulation affects a company’s financial performance, financial position and its prospects for future cash flows.

It will affect companies subject to rate regulation which determines how much a company can charge customers and when it can charge them, and has particular relevance for the utilities sector. Companies that supply vital services such as electricity, water and gas, and transport, are often subject to this type of regulation.