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EFRAG draft comment letter on the IASB's proposed new standard on rate-regulated activities

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

14 Apr 2021

The European Financial Reporting Advisory Group (EFRAG) has issued a draft comment letter on the IASB exposure draft ED/2021/1 'Regulatory Assets and Regulatory Liabilities'.

The proposed new standard is intended to replace IFRS 14 Regulatory Deferral Accounts.

In its draft comment letter EFRAG

  • generally agrees with the IASB proposals and considers that the benefits would outweigh the costs for both users and preparers;
  • is seeking views of constituents on possible unintended consequences on the impact of the scope outside the utilities sector;
  • supports the three proposed components of the total allowed compensation except for the treatment of construction work in progress;
  • disagrees with the proposed application of a minimum adequate rate as the discount rate for regulatory assets, when the regulatory interest rate provided is insufficient;
  • considers that the level of detail required to meet the specific disclosure objectives might impose a significant burden on reporting entities to generate the information; and
  • Questions the proposed amendments to IFRS 1 and IFRS 3.

Comments on EFRAG's draft comment letter are requested by 28 July 2021. For more information, see the press release and the draft comment letter on the EFRAG's website.

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