On 27 May 2026, the International Accounting Standards Board (IASB) published its new standard IFRS 20 ‘Regulatory Assets and Regulatory Liabilities'. IFRS 20 requires an entity that is subject to a regulatory agreement to provide information about its regulatory assets, regulatory liabilities, regulatory income and regulatory expense. IFRS 20 is effective for annual reporting periods beginning on or after 1 January 2029.
The standard concludes a long-running project driven by the absence of a comprehensive accounting framework for entities whose prices are set by a regulator. IASB started the comprehensive project in September 2012.
In 2014, the IASB decided to provide an interim solution by publishing the limited‑scope standard IFRS 14 Regulatory Deferral Accounts. The standard was targeted at rate‑regulated entities that previously did not apply IFRS Accounting Standards and recognised regulatory deferral balances under their previous GAAP. This was to address the concern that the lack of guidance may be a barrier to the adoption of IFRS Accounting Standards for such entities. IFRS 14 has never been endorsed in the EU.
IFRS 20 supersedes IFRS 14.
IFRS 20 applies to entities subject to rate regulation under which a regulator sets the prices charged to customers for goods or services and determines the timing of those charges. Typical examples include electricity, gas and water distributors and transmission network operators. These entities routinely face timing mismatches: costs incurred today may only be recovered through future tariffs, or amounts collected today may have to be returned to customers through lower rates in the future.
The objective of IFRS 20 is to provide relevant information that faithfully represents how regulatory income and regulatory expense affect an entity’s financial performance, and how regulatory assets and regulatory liabilities affect its financial position.
IFRS 20 specifies how to account for regulatory assets and regulatory liabilities and the resulting regulatory income and regulatory expense. Its application is intended to result in information that supplements the information provided by applying other IFRS Accounting Standards, primarily information about revenue from contracts with customers recognised applying IFRS 15. An entity is required to apply other IFRS Accounting Standards to account for rights and obligations created by a regulatory agreement before applying IFRS 20.
Regulatory assets are defined in IFRS 20 as enforceable present rights to add an amount to future rates. Similarly, regulatory liabilities are defined as enforceable present obligations to deduct an amount from future rates. These amounts are compensation for regulatory goods or services already supplied but that has not yet been included in the entity’s revenue.
An entity is required to recognise all regulatory assets and all regulatory liabilities existing at the end of the reporting period. If there is existence uncertainty, an entity is required to recognise a regulatory asset or regulatory liability if it is more likely than not that it exists. The recognition of some regulatory assets and regulatory liabilities is subject to specified conditions being met.
To measure the regulatory assets and the regulatory liabilities, an entity uses a cash-flow-based technique. For the initial measurement, an entity is required to include all estimated future cash flows arising from a regulatory asset or regulatory liability, discounted by using the regulatory interest rate. For the subsequent measurement, an entity updates the estimates of future cash flows and continues to use the regulatory interest rate as the discount rate, unless the regulatory agreement changes the regulatory interest rate.
An entity is required to present its regulatory income or regulatory expense in the statement of profit or loss, and its regulatory assets and regulatory liabilities in the statement of financial position. It is required to disclose further information about regulatory income, regulatory expense, regulatory assets and regulatory liabilities.
IFRS 20 is effective for annual reporting periods beginning on or after 1 January 2029. Earlier application is permitted. An entity is required to apply IFRS 20 to all regulatory assets and all regulatory liabilities either retrospectively or using a modified retrospective approach that is explained in the standard.
For a quick view, start with IFRS 20 at a glance.
For an overview of the Standard, watch the IASB webcast.
For detailed information, read Deloitte’s GAAP in Focus newsletter summarising the requirements.
Seminars, webcasts, business breakfasts and other events organized by Deloitte.
