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The International Accounting Standards Board (Board) has today published proposals for a new accounting standard that would require companies subject to rate regulation to give investors better information about their financial performance.
Rate regulation, which is common in some industries, including the utilities and public transport industries, determines the amount a company can charge its customers for goods or services supplied to them and the period when the company can charge that amount.
In some cases, the period when a company supplies goods or services differs from the period when the company can charge customers for those goods or services—and thus differs from the period when the company reports revenue in its income statement.
When those differences in timing occur, the revenue a company reports for a period in its income statement and the assets and liabilities it reports in its balance sheet do not give a complete picture of the amount that the rate regulation entitles the company to charge for goods or services supplied in that period.
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