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Results of research on the decision-usefulness of financial information that reflects the economics of rate-regulated activities

  • IFRS - AcSB Image

Sep 15, 2016

On September 15, 2016, the Accounting Standards Board (AcSB) released a paper prepared for discussion at a public meeting of the Accounting Standards Advisory Forum (ASAF). The paper was developed at the direction of the AcSB as part of its research program, and is provided to ASAF members to further the work of the IASB and the national standard setters.

The data in this paper provides evidence, from existing practice, demonstrating what information users need to understand the economics of rate-regulated activities, and how this information factors into their decision-making. This data supports evidence-based standard-setting and should assist the IASB’s continued deliberations, and decisions, on how best to reflect the financial effects of rate regulation in IFRS statements.

As part of its deliberations, the IASB is encouraged to examine the adaptability of its proposed asset and liability definitions to regulatory frameworks that could give rise to rights and obligations. The manner in which such rights and obligations are reflected in financial statements, both qualitatively and quantitatively, can affect the transparency and comparability of the statements and, therefore, the degree to which they help users to make decisions. As evidenced by the data in this paper, information on the economics of rate-regulated activities appears differently in an entity’s financial statements depending on the jurisdiction in which it operates. From a theoretical perspective, such diversity is only justified when the rights and obligations differ between entities.

Download the Discussion Paper from the AcSB's Web site.

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