The International Accounting Standards Board (IASB) has proposed to ease the transition to IFRS for entities subject to rate regulation.
In the consultation, Regulatory Deferral Accounts, the IASB is proposing an interim standard allowing entities to preserve the existing accounting policies they have in place for rate-regulated activities with some modifications designed to enhance comparability.
IASB vice-chairman Ian Mackintosh said the project was "important" for the "many jurisdictions with large rate-regulated entities".
However, he noted that the project would take some time to complete 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 until guidance is developed through the IASB’s comprehensive Rate-regulated Activities project," Mackintosh added.
KPMG’s global IFRS revenue recognition and provisions leader Phil Dowad said he expected the IASB proposals to remove IFRS adoption barriers.
"Lack of specific guidance on accounting for rate-regulated activities under IFRS is often seen as a hurdle that holds entities back from adopting IFRS. These proposals may accelerate adoption of IFRS by rate-regulated entities in those jurisdictions," he explained.
Deadline to comment on the proposals is 4 September.
The International Accounting Standards Board
Exposure Draft: Regulatory Deferral Accounts