PFRS 14

REGULATORY
DEFERRAL
ACCOUNTS
LEARNING
OBJECTIVES
Describe the applicability of PFRS 14.
INTRODUCTION
PFRS 14 specifies the financial reporting
requirements for regulatory deferral
account balances arising from the sale of
goods or services that are subject to rate
regulation.
INTRODUCTION
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 requires
deferral because it is included, or is expected to be
included, by the rate regulator in establishing the
rate(s) that can be charged to customers.
INTRODUCTION
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 change of rates
that bind an entity.
SCOPE
PFRS 14 is an optional standard that is available only
to first-time adopters. Existing PFRS users are
prohibited from using PFRS 14.
It is intended to provide first-time adopters temporary
relief from derecognizing rate-regulated assets and
liabilities.
It is intended to provide first-time adopters temporary
relief from derecognizing rate-regulated assets and
liabilities.
An entity is allowed to apply PFRS 14 in subsequent
period only.
SUMMARY OF
PRINCIPLES
CONTINUATION OF EXISTING ACCOUNTING
POLICY
- A first-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.
SUMMARY OF
PRINCIPLES
CHANGES IN ACCOUNTING POLICY
- An entity may change its accounting policy if the
change results in more relevant and no less reliable,
or more reliable and no less relevant, information. An
entity shall use the criteria in PAS 8 when judging
relevance and reliability.
However, an entity is prohibited from changing its
accounting policy in order to start recognizing
regulatory deferral account balances.
INTERACTION WITH
OTHER STANDARDS
PAS 10 Events After the Reporting Period
PAS 12 Income Taxes
PAS 33 Earnings per Share
PAS 36 Impairment of Assets
PFRS 3 Business Combination
PFRS 5 Non-current Assets Held for Sale and
Discontinued Operations
PFRS 10 Consolidated Financial Statements and PAS 28
Investments in Associates and Joint Ventures
PFRS 12 Disclosure of Interests in Other Entities
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

The regulatory deferral account balances sre not

presented as current or noncurrent. Instead, they are
presented separately from the sub-totals of assets and
liabilities that re presented in accordance with other
standards.
 ILLUSTRATION: ASSETS SECTION OF A
STATEMENT OF FINANCIAL POSITION
20x2 20x1
Cash and cash equivalents 1,000 5,000
Trade and other receivables 3,000 1,000
Inventories 4,000 3,000
Total current assets 8,000 9,000
Property, plant and equipment 6,000 7,000
Total noncurrent assets 6,000 7,000
Total assets 14,000 16,000
Regulatory deferral account debit balances and related 2,000 1,000
deferred tax asset
Total assets and regulatory deferral account debit balances 16,000 17,000
PRESENTATION
STATEMENT OF PROFIT OR LOSS AND OCI
Separate line items are presented:
a. in other 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. In profit or loss for the remaining net movement of
regulatory deferral account balances, excluding
movements that are not reflected in profit or loss.
Reference: Conceptual Frameworks and Accounting
Standards, 2019 Edition by Zeus Vernon B. Millan
Thanks!