The International Accounting Standards Board (IASB) has issued IFRS 20 Regulatory Assets and Regulatory Liabilities, a new accounting standard designed for corporations operating under specific rate-regulation frameworks. The standard aims to provide investors with clearer insights into how rate regulation influences a company’s financial performance, financial position, and future cash flows.
The new framework primarily affects utilities and infrastructure companies supplying vital services—such as electricity, water, and gas—where regulatory bodies dictate both the pricing and the specific timing of customer billings.
Under existing frameworks, when a discrepancy occurs between the period a company supplies regulatory goods or services and the period it formally bills its customers, reported revenue may fail to accurately reflect true operational performance. IFRS 20 classifies these discrepancies as “differences in timing” and mandates that companies account for the financial effects of these variances directly within their financial statements. The standard is expected to eliminate significant diversity in current accounting practices and improve financial comparability across regulated global industries.
Andreas Barckow, Chair of the IASB, highlighted the transparency benefits of the update, stating: “IFRS 20 will provide investors with more complete and transparent information about companies operating in these critical rate-regulated industries.”
The formulation of IFRS 20 followed an extensive global consultation process, which included the review of more than 300 comment letters, over 200 stakeholder meetings, and two distinct rounds of practical fieldwork executed across 22 jurisdictions. The board noted that this deep engagement was critical to balancing investor information needs with practical corporate implementation.
IFRS 20 will become mandatory for annual reporting periods beginning on or after 1 January 2029, though corporations are permitted to opt for early adoption. The new standard is designed to supplement the disclosures provided under IFRS 15 Revenue from Contracts with Customers and will officially replace the interim standard, IFRS 14 Regulatory Deferral Accounts.
