EFRAG: Final comment letter on the IASB's ED/2013/5 Regulatory Deferral Accounts

10 September 2013

EFRAG does not support this ED because it results in a lack of comparability and it is not limited to facilitating first-time adoption.

EFRAG does not support the ED because:

• It results in a lack of comparability between (a) entities that take advantage of the ED and (b) entities that already apply IFRS or do not wish to apply the ED; and
• It is not limited to facilitating first-time adoption but maintains previous accounting policies for an indefinite period. Other interim standards such as IFRS 4 Insurance Contracts and IFRS 6 Exploration for and Evaluation of Mineral Resources have shown that there was no such thing as a short-term interim standard.

If, despite a lack of support from constituents, the IASB were to issue an interim standard based on the ED then EFRAG believes that it is crucial that such standard be strictly limited to an option for first-time adopters. Also, the IASB should ensure that the effects of that option are restricted to the recognition and separate presentation of the regulatory deferral account balances.

To serve this purpose, EFRAG has carried out an analysis of the proposed standard:

• EFRAG assessed whether the IASB was successful with its intent of limiting comparability issues to the regulatory deferral account balance line items. EFRAG identified a number of issues that the IASB should resolve (see paragraphs 9 to 12 of the Appendix); and
• EFRAG considered the requirements in the ED and identified certain difficulties that application of the proposals may raise (see response to the specific questions asked in the ED).

EFRAG's analysis has highlighted a number of significant issues relating to comparability, cross-cutting measurement issues and presentation issues that could arise from implementing the proposals.

Press release

Full comment letter

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