EFRAG publishes its Draft Comment Letter on IASB Exposure Draft ED/2021/1 Regulatory Assets and Regulatory Liabilities
16 April 2021
In January 2021, the IASB published the Exposure Draft ED/2021/1 Regulatory Assets and Regulatory Liabilities. The proposed standard introduces a requirement of reporting regulatory assets and regulatory liabilities in the balance sheet, and related regulatory income and regulatory expense in the income statement; thereby providing a more complete picture to the investors.
EFRAG has published its Draft Comment Letter on the Exposure Draft, in which it has supported the IASB’s overall objective to develop an accounting model for regulatory assets and regulatory liabilities.
EFRAG has supported the three proposed components of the total allowed compensation except for the treatment of construction work in progress ('CWIP'), for which it is seeking constituent views.
EFRAG has also supported the proposed cash-flow measurement technique but has disagreed with the proposed application of a minimum adequate rate as the discount rate for regulatory assets, when the regulatory interest rate provided is insufficient.
Comments on the Draft Comment Letter are requested by 28 July 2021.
The Draft Comment Letter may be accessed here.