PFRS 14:

REGULATORY
DEFERRAL
ACCOUNTS
 01 INTRODUCTION

02 SCOPE
CONTENTS
SUMMARY OF PRINCIPLES
03 UNDER PFRS 14

04 PRESENTATION
 1
INTRODUCTION
INTRODUCTION
PFRS 14 specifies the financial reporting
requirements forregulatory deferral account
balances arising from the sale of goods or services
rate regulation.
that are subject to

 Regulatory deferral account balance - the balance

of any expense (or income) account that would not
be recognized as an asset or a liability in
accordance with other Standards, but that
qualifies for deferral because it is included, by the
rate regulator in establishing the rate(s) that can
be charged to customers.
 Rate regulation - a framework for
establishing the prices that can be
charged to customers for goods or
services and that framework is subject to
oversight and/or approval by a rate
regulator.
 Rate regulator - an authorized body that is
empowered by statue or regulation to
establish the rate or a range of rates that
bind an entity.
 2
SCOPE
 PFRS 14 is anoptional standard that is
available only tofirst-time adopters. Existing
PFRS users are prohibited from using PFRS
14.

PFRS 14 is intended to provide first-time

adopters temporary relief from
derecognizing rate-regulated assets and
liabilities that the first-time adopter has
recognized under its previous GAAP
pending IASB's final decision on rate-
regulated activities.
 A first-time adopter is allowed, but is not
required, to apply PFRS 14 in itsfirst PFRS
financial statements if the first-time adopter
conducts rate-regulated activities and has
recognized regulatory deferral accounts
under with its previous GAAP.

An entity is allowed to apply PFRS 14 in

subsequent periods only if it has applied PFRS
first PFRS financial statements.
14 in its
 3
SUMMARY OF PRINCIPLES UNDER PFRS 14
Continuation of existing accounting policy.
Afirst time adopter continues to apply its previous
GAAP to the recognition, measurement, impairment
and derecognition of regulatory deferral account
balances, except for changes in accounting policies
and the presentation of regulatory deferral accounts.

Changes in accounting policy

An entity may change its accounting policy if the
change results in more relevant and no less reliable,
information. An entity shall use the criteria in PAS 8
when judging relevance and reliability.
However, an entity isprohibited from changing its
accounting policy un order to start recognizing
regulatory deferral account balances.
Interaction with other standards
PFRS 14 prescribes specific exception or
additional requirements related to the
interaction of PFRS 14 with other PFRSs .
These briefly summarized below:

a. PAS 10Events after the Reporting Period is

applied when fetermining whether estimates
and assumptions relating as regulatory
deferral account balances need to be
adjusted for events after the reporting period.
b. PAS 12Income taxes is applied when recognizing
deferred tax assets and liabilities and income tax
expense relating to rate-regulated activities.
However, the deferred tax assets and liabilities and
income tax expense resulting from these activities
presented
are separately either:
i.within the regulatory deferral account balances
(for deferred tax assets and liabilities) and
movements in regulatory deferral account balances
(for income tax expense); or
ii.as separate line items alongside the regulatory
deferral account balances (for deferred tax assets
and liabilities) and movements in regulatory deferral
account balances (for income tas expense)
c. PAS 33Earnings per share is applied when
presenting EPS information. However, an
entity applying PFRS 14 is required to
present an additional basic and diluted EPS
that excludes the effects of the net
movement in regulatory deferral account
balances.

d. PAS 36Impairement of Assets is applied

to the impairment testing of regulatory
account balances that are included in CGUs.
e. PFRS 3Business Combination is applied
to business combinations. If an entity that
uses PFRS 14 acquires another business, it
shall apply its accounting policy for
regulatory deferral account balances, which
could result to the recognition of the
acquiree's regulatory deferrak account
balances even if the acquiree had not
recognized those balances.
 f. The measurement and presentation requirements
of PFRS 5Non-Current Assets Held for Sale and
Dicontinued Operations do not apply when regulatory
deferral account balances are included in a disposal
group or discontinued operations. Accordingly, the
regulatory deferral account balances and
movements in the account balances are:
i. measured in accordance with the entity's previous
GAAP; and
ii. presented separately from the other assets and
liabilities of the disposal group and fron the single
amount representing the results of discontinued
operation required by PFRS 5.
 g. PFRS 10Consolidated Financial
Statements and PAS 28Investments in
Associates and Joint Ventures require the
use of uniform accounting policies when
consolidating subsidiaries and when
applying the equity method, respectively.
Accordingly, when an entity consolidates a
subsidiary or joint venture it shall recognize
regulatory deferral accout balances even if
the subsidiary, associate or joint venture haf
not recognized those balances.
 h. If the entity had recognized regulatory deferral
account balances in respect of its subsidiary,
associate or joint venture, it shall make separate
disclosures for thise balances in relation to the
disclosure requirements of PFRS 12.

In all the cases, subject to the exceptions listed

above other PFRS shall be applied whenever they
are relevant to the accounting for regulatory
deferral account balances. For example PAS 21
The Effects of Changes in Foreign Exchange Rates
is applied when translating regulatory deferral
account balances that denominated in a foreign
currency.
 4
PRESENTATION
Statement of financial position
Separate line items are presented for the
totals of:

a. regulatory deferral account debit

balances; and

b. regulatory deferral account credit

balances.
Illustration: Assets section of a Statement
of financial position
Statement of profit or loss and
other comprehensive income
Separate line items are presented:
a. inother comprehensive income for the net
movement of regulatory deferral account
balances that relate to items recognized in OCI,
showing distinctions between those that will be
and will not be reclassified to profit or loss; and
b. inprofit or loss for the remaining net
movement of regulatory deferral account
balances, excluding movements that are not
reflected in profit or loss
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