|
|
Based on the support from respondents, including users’ views provided during outreach activities, EFRAG reinforced the message in its comment letter that users would prefer the effects of rate regulation to be recognised in the primary financial statements supplemented by sufficiently detailed disclosures.
However, EFRAG agreed with respondents’ comments that any specific disclosure requirements were carefully targeted to meet the needs of users without imposing excessive costs on preparers. Furthermore, EFRAG noted that some preparers had advised that they found it impracticable in many cases to present a reconciliation of the Regulatory Asset Base as it exists in the regulatory accounting, with the IFRS numbers. The Regulatory Asset Base is often based on other frameworks of accounting (such as local GAAP or specific regulatory reporting).
EFRAG also agreed that one of the factors to consider is the stewardship function of financial statements and whether it is considered relevant to recognise the impacts of regulation in the financial statements.
Based on input from respondents, EFRAG confirmed its support that defined rate regulation formed a good basis for a common starting point in the discussion on rate-regulated activities.
All respondents agreed that enforceable rights and obligations that stemmed from the rate-setting mechanism were essential elements for distinguishing the types of rate regulation that required recognition in the financial statements.
Many respondents indicated that the authorised revenue that results from a rate-setting mechanism, was also a key feature and needed to be further analysed, especially in the context of IFRS 15.
Many respondents said that they supported a principle-based approach to developing accounting requirements based on current IFRS and the Conceptual Framework. Some respondents specifically noted that any deferral accounting balances that are to be recognised in the primary financial statements should meet the definition of an asset and a liability in the [revised] Conceptual Framework.
Only a few respondents supported a reporting approach that considered deferring or accelerating the recognition of a combination of costs and revenue.
Many respondents supported a reporting approach that was based on the principles in IFRS 15 Revenue from Contracts with Customers.