The Australian Accounting Standards Board has issued AASB 20 Regulatory Assets and Regulatory Liabilities, establishing financial reporting rules for rate-regulated entities. The standard applies to organisations where a regulator determines the timing and amount charged for goods or services, such as energy and water utilities.
Scope and Mechanism of AASB 20
The standard applies to rate regulation frameworks that entitle an entity to total allowed compensation for goods or services provided in a given period. This compensation can include the recovery of infrastructure costs as well as performance incentives. Timing differences occur when compensation for goods or services supplied in one period is reflected in regulated rates charged in another period.
To capture these timing differences, AASB 20 requires entities to recognise regulatory assets, regulatory liabilities, regulatory income and regulatory expenses. This accounting approach aims to provide financial statement users with clearer insight into how timing variations affect financial performance, financial position and prospects for future cash flows.
Effective Date and Superseded Rules
AASB 20 is effective for annual reporting periods beginning on or after 1 January 2029, with early application permitted.
Once effective, the new standard supersedes AASB 14 Regulatory Deferral Accounts.
| Parameter | Details |
|---|---|
| In-scope entities | Entities subject to rate regulation (e.g. electricity, water and gas supply) |
| Effective date | Annual periods beginning on or after 1 January 2029 (earlier application permitted) |
| Superseded standard | AASB 14 Regulatory Deferral Accounts |
