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IASB discuss comments summary

 18 February 2015

The IASB reviewed the main messages received through outreach and comment letters, namely:

  1. Most respondents agree that the Discussion Paper provides a good description of the distinguishing features of rate regulation. Many suggest that the scope of any future guidance should focus more on the rights and obligations and how they relate to the rate-setting mechanism, with other features being considered more as supporting features.
  2. Many respondents suggest that the combination of rights and obligations created by defined rate regulation may not always be faithfully represented in IFRS financial statements and that the project should lead to the recognition of at least some regulatory deferral account balances in IFRS financial statements.
  3. Many respondents agree that IFRS 14 Regulatory Deferral Accounts is a good starting point for disclosure requirements.
  4. Of the four approaches outlined in the Discussion Paper, there was the most support for the recognition of the financial effects of rate regulation through specific IFRS requirements.

No decisions were made at this meeting. However, the IASB highlighted the following issues for the staff to explore further:

  • how to define the scope for the proposed Standard, based on the description of rate regulation;
  • the meaning and use of ‘the customer base’, in particular within the context of the three-way relationship between a rate-regulated entity, the rate regulator and the end customer;
  • the consistency of the approach taken in this project compared with approaches used in other Standards and ongoing projects in accounting for the net effect of the rights and obligations;
  • the interaction of this project with the Conceptual Framework project and its definitions of assets and liabilities; and
  • how the principles of IFRS 15, in particular relating to the identification of performance obligations, could be adapted to rate-regulated activities.

Next steps

The Rate-regulated Activities Consultative Group will meet in early March. The staff will consider the matters discussed at that meeting before developing recommendations for the IASB to consider about specific topics.




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