The IASB has issued IFRS 14 ‘Regulatory deferral accounts’, an interim standard on the accounting for certain balances that arise from rate-regulated activities.
IFRS 14 is only applicable to entities applying IFRS 1 as first-time adopters of IFRS that currently recognize regulatory deferral balances and meet certain criteria. This is common in the utilities industry but the proposals might affect other industries where prices are regulated.
The standard permits such entities to continue to apply their previous GAAP accounting policies for the recognition, measurement, impairment and derecognition of regulatory deferral accounts when IFRS is adopted. The interim standard also provides guidance on selecting and changing accounting policies (on first-time adoption or subsequently) and on presentation and disclosure.
IFRS 14 is effective from 1 January 2016. The objective of the interim standard is to allow entities adopting IFRS to avoid major changes in accounting policy until the IASB broader project to develop an IFRS on rate-regulated activities is completed. The IASB is expected to issue a discussion paper on the project later in 2014 to seek initial views on the accounting for rate-regulated activities.