The members of the EACB gladly take the opportunity to comment on the IASB’s exposure draft on regulatory assets and regulatory liabilities.
The EACB welcomes the proposed objective of the ED for an entity subject to rate regulation to provide investors with relevant information about their financial performance. In particular, we support the IASB’s intention to address the issue of differences in timing, depending on when an entity can include the total allowed compensation in the regulated rates charged.
In relation to the scope of the ED, the EACB believes that further adjustments should be introduced. Specifically, the EACB supports restriction of the scope of the ED to the scope of IFRS 15 accounting standard. An explicit reference to IFRS 15 in the definition of a regulatory agreement would ensure that the proposed requirements do not create any distortion in their interactions with other IFRS and especially with the requirements for accounting for financial instruments under IFRS 9.
Further to that, the EACB also suggests that the legal form of the regulatory agreement as well as the need for a regulator who enforces the regulatory agreement have to be explicitly stated in the ED.