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EFRAG does not support interim standard on rate regulation

  • EFRAG (European Financial Reporting Advisory Group) (dk green) Image

10 Sep 2013

The European Financial Reporting Advisory Group (EFRAG) has published its final comment letter on the IASB's exposure draft ED/2013/5 'Regulatory Deferral Accounts'. The comment letter makes clear that EFRAG constituents do not support the pursuance of this interim project.

In May 2013, EFRAG published a draft comment letter on ED/2013/5 and asked for its constituents to comment. EFRAG's final comment letter to the IASB contained constituent feedback, and officially disagreed with the interim project.

EFRAG does not support the ED because:
  • It results in a lack of comparability between (a) entities that take advantage of the ED and (b) entities that already apply IFRS or do not wish to apply the ED (see paragraphs 3 to 5 of the Appendix); and
  • It is not limited to facilitating first-time adoption but maintains previous accounting policies for an indefinite period. Other interim standards such as IFRS 4 Insurance Contracts and IFRS 6 Exploration for and Evaluation of Mineral Resources have shown that there was no such thing as a short-term interim standard (see paragraph 6 of the Appendix).

EFRAG notes in its comment letter that if the IASB proceeds to issue an interim standard based on the ED, that the standard must be strictly limited to an option for first-time adopters.

Please click for access to the final comment letter on the EFRAG website.

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