IASB proposed a new standard on rate-regulated activities

On 28 January 2021, the International Accounting Standards Board (IASB) published the exposure draft of a new standard 'Regulatory Assets and Regulatory Liabilities' that is intended to replace IFRS 14 'Regulatory Deferral Accounts'. The deadline for submitting comments is 30 June 2021.


The IASB is developing an accounting model that will require companies subject to rate regulation to give investors better information about their financial performance.

Currently, there is no specific guidance in IFRSs addressing the accounting for rate‑regulated activities and companies use different accounting models to report the effects of rate regulation.

The IASB published the limited‑scope standard IFRS 14 Regulatory Deferral Accounts in January 2014 to provide a short‑term, interim solution for rate‑regulated entities that have not yet adopted IFRSs but that recognise regulatory deferral balances under their previous GAAP. IFRS 14 has not been endorsed for use in the EU. Once the exposure draft of a new standard is finalised, IFRS 14 will be withdrawn.

Key proposals

The main proposals in ED/2021/1 Regulatory Assets and Regulatory Liabilities are the following:


The new standard would replace IFRS 14 Regulatory Deferral Accounts by introducing a new comprehensive accounting model for regulatory assets and liabilities.


The standard would apply when the entity is a party to a regulatory agreement that determines the regulated rate the entity can charge for the goods or services it supplies to customers.


Regulatory assets and liabilities arise when the regulated rate is determined in such a way that some or all of the total allowed compensation for goods or services supplied in one period is charged to customers in a different past or future period. Recognising regulatory assets and liabilities leads to regulatory income and expense.


Regulatory assets and liabilities would be measured at historical cost, modified for subsequent measurement by using updated estimates of the amount and timing of future cash flows. The estimated future cash flows of a regulatory asset or liability would be discounted to their present value by using the regulatory interest rate. After initial recognition, the carrying amount of the regulatory asset or liability would be updated at the end of each reporting period to reflect conditions existing at that date.


In the statement(s) of financial performance, an entity would present all regulatory income and expense as a separate line item immediately below revenue. In the statement of financial position, an entity would present line items for regulatory assets and liabilities.


The exposure draft includes several proposed disclosure objectives and detailed requirements to achieve these objectives.

The deadline for submitting comments is 30 June 2021.

Effective date and transition

The exposure draft does not contain a proposed effective date as the IASB will decide on the effective date only upon completion of its redeliberations. The current expectation is that the standard will become effective approximately 18–24 months after being published in its finalised form.

The standard would be applied retrospectively with one transitional provision and early adoption would be permitted.

Additional information

Additional information is available in Deloitte’s IFRS in Focus newsletter.

Sources:, Exposure draft ED/2021/1

IASB IFRS dReport newsletter

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