15/01/2015 - EFRAG's comment letter on the IASB's Discussion Paper Reporting the Financial Effects of Rate Regulation

EFRAG also supports the IASB's decision to initially focus the debate on accounting for rate-regulated activities on a particular type of rate regulation referred to as defined rate regulation.

Whilst broadly supporting the description of defined rate regulation, EFRAG believes that the existence of a rate-setting framework that creates enforceable rights and obligations and includes an adjusting mechanism based on the revenue requirement has a pivotal role to play in the scoping of the Rate-regulated Activities project. In EFRAG's view, it is the enforceable rights and obligations that stem from the rate-setting framework which should be considered for recognition in the IFRS financial statements and therefore EFRAG sees the main purpose of the features described in the DP as ensuring enforceability of those rights and obligations.

Regarding the accounting approaches proposed in the DP, in EFRAG's view, the revenue approach has an important role to play in any future accounting guidance. EFRAG remains open to considering the cost deferral approach described in the DP, and recommends the IASB to explore in more detail cases where such an approach might produce relevant information.

EFRAG's comment letter is available here.