Regulatory Deferral Account: A Review of Literature

Abstract

The study investigated into the IFRS 14 Regulatory Deferral Standard which came into effect in 2016 as an interim standard to explore its strength. Paper review using purposive sampling method was made. The works of four world professional accountant namely; Grant Thornton; KPMG; Delloitte; and IFRS staffer news; including IASB Discussion paper on Rate Regulation (2014) were reviewed. The study revealed that IFRS 14 is a work in progress and serve as interim standard; except for limited changes required, it allows for new adopters of IFRS with regulated Deferral balances to continue with their accounting policies rate regulation based on GAAP; Both the statement of financial position and statement of profit or loss and other comprehensive income are to present a separate regulatory deferral account balance as a separate line of item; entities are to disclose the kind and risk that are associated with the form of rate regulation giving birth to recognising the regulatory deferred account balances. The finding also reveal that the IFRS 14 fully regulated may have beneficial effect than the current approach as a mock comparison move a negative earnings per share of (N3,606) in unregulated to N5,041 on fully regulated deferral.