Rate-regulated Activities

Current Status Next Steps

IASB is deliberating comments received on its Discussion Paper.

Second half of 2017 – IASB to issue a second discussion paper.

BACKGROUND

The Accounting Standards Board (AcSB) is participating in the International Accounting Standards Board’s (IASB) comprehensive project to determine whether (or how) IFRSs should be amended to provide guidance on rate-regulated activities. In January 2014, the IASB issued interim IFRS 14 Regulatory Deferral Accounts to provide guidance for first-time adopters of IFRSs with rate-regulated activities pending completion of this project. 

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The AcSB’s due process includes ensuring that Canadian entities’ financial reporting needs are considered by the IASB and issuing the AcSB’s own exposure draft on each IASB proposal.  Subject to the responses to the AcSB’s exposure draft on whether the IASB’s proposals are appropriate for application in Canada, the AcSB expects that the amendments will be incorporated into Canadian GAAP in accordance with the AcSB’s strategy of adopting IFRSs for publicly accountable enterprises.

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PROJECT NEWS & DECISION SUMMARIES

AcSB Decision Summary – March 21-22, 2017
The AcSB discussed an updated version of its research paper on the decision-usefulness of financial information that reflects the economics of rate-regulated activities. The paper has been expanded to make it more globally inclusive, using new data obtained in part by surveying other national standard setters to learn about the regulatory frameworks in their jurisdictions. The AcSB directed the staff to revise the paper to:

  • incorporate additional data from completed surveys returned after this AcSB discussion; and
  • provide further context for the data presented in some areas and improve the clarity around the overall research findings.

No decisions were made. The AcSB will consider a final draft of this research paper at a later date.

AcSB Decision Summary – December 15, 2016
The AcSB received an update on the discussions of the IASB staff’s proposed accounting model for rate-regulated activities at the December 2016 meetings of the Accounting Standards Advisory Forum and the IASB.

The AcSB directed the staff to expand its research paper to include more global data, in order to support the advancement of the IASB’s Rate-regulated Activities project. This includes working with other national standard setters to perform a comparison of regulatory frameworks across various jurisdictions and learning more about the perspective of users of financial statements outside Canada.

AcSB Decision Summary – November 21-22, 2016
The AcSB discussed the IASB staff’s preliminary proposed model for accounting for rate-regulated activities in order to advise the AcSB Chair on points to raise with the IASB at the December 2016 meeting of the Accounting Standards Advisory Forum (see the Forum’s Agenda Paper 3). No decisions were made.

The discussion on next steps regarding the AcSB staff research paper exploring the decision-usefulness of financial information that reflects the economics of rate-regulated activities was deferred to a future meeting.

AcSB Decision Summary – September 21-22, 2016
The AcSB discussed a research paper, written by its staff, exploring the decision-usefulness of financial information that reflects the economics of rate-regulated activities.  The paper will be discussed at the September 2016 meetings of the International Forum of Accounting Standard Setters and the Accounting Standards Advisory Forum.  The AcSB will continue its discussions and determine next steps for the paper after considering this input.    

Members also advised the AcSB Chair on points to be provided to the Korea Accounting Standards Board on its rate-regulated activities paper, to be discussed at the same international meetings (see the Forum’s Agenda Paper 3B). 

No decisions were made.

Rate-regulated Activities – AcSB Staff Research Paper
September 15, 2016. A paper examining the decision-usefulness of financial information that reflects the economics of rate-regulated activities will be discussed at upcoming meetings of the AcSB, the International Forum of Accounting Standard Setters, and the Accounting Standards Advisory Forum (ASAF).  Register to hear the ASAF discussion on September 29, 2016.

AcSB Decision Summary – April 20, 2016
The AcSB discussed the feedback provided by the Chair on the discussion of the IASB staff’s illustrative example at the Accounting Standards Advisory Forum’s recent meeting (see the Forum’s Agenda Paper 03). The discussion highlights the continuing diversity in views on how to account for rate-regulated activities that are being assessed in the IASB’s Rate-regulated Activities project.

The AcSB decided to increase its level of activity on the project in order to assist the IASB in obtaining the facts and information it needs to make decisions that are evidence based and consider the economic substance of the tripartite relationship between the rate regulator, the entity and the customer.

AcSB Decision Summary – March 22-23, 2016
The AcSB discussed the IASB staff’s illustrative example in order to advise the AcSB Chair on points to raise with the IASB at the April 2016 meeting of the Accounting Standards Advisory Forum (see the Forum’s Agenda Paper 03). No decisions were made.

AcSB Decision Summary – May 25-26, 2015
The AcSB considered an update on the financial reporting frameworks used by Canadian rate-regulated entities and agreed to continue to monitor the sector’s transition to IFRSs.

AcSB Decision Summary – April 22, 2015 
The AcSB considered recent developments on the IASB’s Rate-regulated Activities research project and agreed to continue to monitor the project closely.

AcSB Response – Reporting the Financial Effects of Rate Regulation
On January 15, 2015, the AcSB submitted a comment letter responding to the IASB’s Discussion Paper issued in September 2014. The letter strongly supports the continuation of the Rate-regulated Activities project and the extensive research being conducted by the IASB to understand user needs. The letter discusses the feedback received from Canadian stakeholders on the type of information users need to understand the financial effects of rate regulation in order to predict future cash flows. The letter supports the development of specific IFRS requirements to account for those effects, and the IASB’s decision to focus discussions on a generic type of rate regulation.  Read the AcSB letter posted by the IASB.

AcSB Decision Summary – January 14, 2015
During a conference call on January 12, 2015, the AcSB discussed stakeholder feedback obtained from its outreach activities on the IASB’s Discussion Paper, “Reporting the Financial Effects of Rate Regulation,” and reviewed a draft of its comment letter.  

During the meeting on January 14, 2015, the AcSB approved its response letter to the IASB’s Discussion Paper, subject to drafting changes to incorporate the Board’s comments.

AcSB Decision Summary – December 10, 2014
The AcSB discussed the points to be included in its response letter to the IASB’s Discussion Paper, “Reporting the Financial Effects of Rate Regulation,” after considering stakeholder input received from outreach activities conducted to date. 

Canadian stakeholders are encouraged to respond directly to the IASB by the January 15, 2015 comment deadline.

IASB Roundtable – Stakeholders’ Views Sought on a Discussion Paper on Reporting the Financial Effects of Rate Regulation
November 17, 2014. The AcSB is hosting an IASB roundtable on December 12, 2014 to seek input on the IASB’s Discussion Paper. Register to attend the roundtable to share your views.

AcSB Decision Summary – November 5-6, 2014
The AcSB staff presented an educational session on the IASB Discussion Paper, “Reporting the Financial Effects of Rate Regulation.” The AcSB approved a plan to respond to the Discussion Paper that includes undertaking targeted outreach with Canadian stakeholders, including consulting with its User Advisory Council and hosting an IASB public roundtable on the Discussion Paper.

Canadian stakeholders are encouraged to submit their comments directly to the IASB by January 15, 2015.

IASB Discussion Paper – Reporting the Financial Effects of Rate Regulation
September 22, 2014. The IASB has issued a Discussion Paper exploring what information about rate-regulated activities is most useful to users of financial statements and the possible approaches to reporting the financial effects of rate regulation. Canadian stakeholders are encouraged to submit their comments to the IASB by January 15, 2015.

AcSB Decision Summary – July 16, 2014
The AcSB received an update on the IASB’s Rate-regulated Activities research project.  The AcSB agreed that the participation of four Canadians on the IASB’s Consultative Group for Rate Regulation, the assistance provided by the AcSB staff and the AcSB’s plan to respond to the forthcoming IASB discussion paper reflect a level of involvement with the project commensurate with its importance to Canada.

Request for Information – Rate Regulation
April 2, 2013. The IASB has issued a Request for Information to assist it in determining the scope of its comprehensive project on rate-regulated activities. Canadian stakeholders are encouraged to submit their comments to the IASB by May 30, 2013.

Nominations for Consultative Group – Rate-regulated Activities
January 31, 2013. The IASB is seeking nominations for a consultative group being established to assist with its recently reactivated project.

AcSB Decision Summary – November 7-8, 2012
The AcSB discussed recent international developments, including the IASB’s decision to restart its previous Rate-regulated Activities project with the development of a discussion paper.

 

Disclaimer: This project summary has been prepared for information purposes only. Decisions reported are tentative and reflect only the current status of discussions on this project, which may change after further Board deliberations. Decisions to publish Handbook material are final only after a formal ballot process.