Deloitte responded to the International Accounting Standards Board’s Discussion Paper DP/2014/2 Reporting the Financial Effects of Rate Regulation. The purpose of the DP was to solicit feedback from constituents whether, and under which circumstances, financial effects arising from rate regulation should be accommodated in financial reporting.

We welcome the Board’s progress in addressing the issue of rate regulation. We believe it is critical that the output of this project is capable of dealing with the range of regulatory regimes in existence and agree that the hybrid scheme described as ‘defined rate regulation’ in the discussion paper captures many of the features of regulatory regimes encountered in practice. We recommend that the next step in the project be an accounting discussion paper preceding the development of any new Standard or amendment to existing standards.

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