ED 307 proposes a new accounting model that would require companies subject to rate regulation to give investors better information about their financial performance.
The proposed model would require an entity to:
• recognise regulatory assets and regulatory liabilities in its statement of financial position;
• recognise regulatory income and regulatory expense in its statement of financial performance; and
• measure regulatory assets and regulatory liabilities on a modified historical cost basis reflecting updated estimates of future cash flows that will arise from those assets and liabilities.
If finalised, the proposals would replace AASB 14 Regulatory Deferral Accounts, an interim Standard that permits a variety of accounting approaches for the effects of rate regulation to continue temporarily – but only where they were applied in accordance with generally accepted accounting principles prior to adopting Australian Accounting Standards.
Please submit your comments to the AASB by 10 May 2021, via the AASB website, LinkedIn or email at [email protected].