Project plan for agenda request on rate regulated liabilities

Date recorded:

The staff presented a project plan for an agenda request on rate regulated liabilities.

In January 2008 the IFRIC received a request on whether regulated entities should be permitted or required to recognise a liability (or an asset) as a result of price regulation by regulator bodies or governments, that is, to defer excess profits (costs) that will be returned through future price decreases (or increases).

The IFRIC agreed with a staff analysis that the issue is widespread and has practical relevance. In addition, some IFRIC members noted that divergent interpretations exist in practice mainly because national GAAPs allow a variety of accounting treatments.

The IFRIC agreed with the staff that the question whether a consensus can be reached on a timely basis mainly depends on the definition of the scope.

The IFRIC asked the staff to prepare a paper on the scope of the potential agenda item for discussion at the July meeting.

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