We encourage IASB to address regulatory assets

  • Deloitte Comment Letter Image

12 Dec 2008

At its meeting in November 2008, the IFRIC considered a request to address whether regulated entities should recognise an asset or liability as a result of rate regulation by regulatory bodies or governments.

The IFRIC tentatively decided not to add the issue to its agenda, mainly because divergence in practice does not seem to be significant. That tentative decision was published for comment in the November 2008 IFRIC Update newsletter. Deloitte has submitted a Letter of Comment (PDF 122k) noting some instances where regulatory assets and liabilities have been recognised under IFRSs. The Deloitte letter also notes that in several jurisdictions that will soon be applying IFRSs (including US, Canada, and Brazil) their national GAAP has required (or permitted) the recognition of regulatory assets and liabilities. Our letter notes that some within these jurisdictions believe that recognising such assets and liabilities is supportable under the current IFRS Framework.

Therefore, we ask the IFRIC to encourage the IASB to add this project to its agenda and publish guidance to ensure that IFRS are properly interpreted in a consistent manner across all jurisdictions. In preparing the guidance, we would suggest that the IASB perform a thorough analysis of the various regulatory regimes in across jurisdictions to ensure that the guidance appropriately captures the economic results of those regimes.

The issue on the agenda of the December 2008 IASB meeting for a possible Board agenda decision.

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