The International Accounting Standards Board (IASB) has decided to extend by 30 days the comment period for the Exposure Draft Regulatory Assets and Regulatory Liabilities
The changes to existing rules are designed to give investors better information about the financial performance of companies.
Rate regulation, which is common in some industries, including the utilities and public transport industries, determines the amount a company can charge its customers for goods or services supplied to them and the period when the company can charge that amount.
In some cases, the period when a company supplies goods or services differs from the period when the company can charge customers for those goods or services, and thus differs from the period when the company reports revenue in its income statement.
IASB says that when those differences in timing occur, the revenue a company reports for a period in its income statement and the assets and liabilities it reports in its balance sheet do not give a complete picture of the amount that the rate regulation entitles the company to charge for goods or services supplied in that period.
Currently, IFRS standards do not require companies to give investors information about those differences in timing.
The proposed standard would introduce a requirement for companies to give investors such information by reporting regulatory assets and regulatory liabilities in their balance sheet, and related regulatory income and regulatory expense in their income statement.
The comment period will now close on 30 July 2021.