IFRS 20 Regulatory Assets and Regulatory Liabilities
Library Dashboard
Library Statistics
10 Frameworks
526 Standards
Quick Tip

Click any framework on the left rail to instantly explore its list of standards.

Framework Overview
Framework Overview
Framework Overview
General Principles
Presentation
Assets
Liabilities
Equity
Revenue
Expenses
Broad Transactions
Agriculture
Airlines
Contractors
Development Stage Entities
Entertainment
Extractive Activities
Financial Services
Franchisors
Health Care Entities
Not-for-Profit Entities
Plan Accounting
Real Estate
Regulated Operations
Software
U.S. Steamship Entities
Framework Overview
Framework
Standards
SORPs
Framework Overview
Standards
Small Business
Framework Overview
General Standards
Assets
Liabilities, Equity, Revenue & Other
Accounting Guidelines
Framework Overview
ASBJ Statements
JMIS Standards
Implementation Guidance
Practical Solutions
Framework Overview
HGB Standards
DRS Standards
Framework Overview
IFRS Standards
IFRS for SMEs
IFRS Publications
IFRS Sustainability
IFRIC
SIC
Framework Overview
IPSAS Standards
Cash Basis IPSAS
RPG – Recommended Practice Guidelines
SRS – Sustainability Reporting Standards
Conceptual Framework
Supporting / Reference Material

IFRS 20

Upcoming

Regulatory Assets and Regulatory Liabilities

Requires recognition of regulatory assets and regulatory liabilities for rate-regulated activities, superseding IFRS 14 Regulatory Deferral Accounts.

Issued
May 2026
1

Conceptual Framework Linkage

Closing a genuine, long-standing IFRS gap
IFRS 20 fills a gap IFRS has lacked COMPREHENSIVE guidance on: when a company is subject to RATE REGULATION (a regulator determines how much and WHEN it can charge customers), a mismatch can arise between when goods/services are SUPPLIED and when the related COMPENSATION is actually charged to customers under the regulatory agreement – IFRS 15 revenue alone may NOT fully reflect the company's performance for the period. IFRS 20 requires recognising the TOTAL ALLOWED COMPENSATION for regulatory goods/services in the SAME period they are supplied, using regulatory assets/liabilities to bridge any timing gap.
HOW IFRS 20 MAPS TO THE FRAMEWORK
Faithful representation – aligning recognised income with the ECONOMIC entitlement the regulatory agreement creates, rather than only the cash-timing-driven IFRS 15 revenue figure Comparability – a SINGLE comprehensive model REDUCES the diversity in practice that previously existed across rate-regulated companies globally
IFRS 20 is NOT sector-specific and, unlike IFRS 14, is NOT optional – any company meeting its scope criteria MUST apply it, a significant difference from its narrow, elective predecessor.
The core principle – identical across the standard
Recognise TOTAL ALLOWED COMPENSATION for regulatory goods/services in the SAME period they are supplied – bridging any timing gap via regulatory assets/liabilities
This is an "OVERLAY" onto existing standards – IFRS 15 revenue is recognised FIRST, then IFRS 20 regulatory income/expense adjusts the total to match allowed compensation.
2

Scope & Definitions

What IFRS 20 covers
IFRS 20 applies where:
  1. the company and a regulator are party to an agreement PRESCRIBING the regulated rate the company can charge customers, and
  2. part of the total allowed compensation for goods/services delivered in ONE period is charged to customers in a DIFFERENT period – creating timing differences.
Effective 1 January 2029, MANDATORY (not optional) for entities meeting scope criteria, superseding IFRS 14.
Key definitions you must know
Difference in timing
Part or all of the total allowed compensation for regulatory goods/services supplied in ONE period is included in regulated rates charged to customers in a DIFFERENT period.
Total allowed compensation
The total amount the company is ENTITLED to earn for regulatory goods/services supplied in a period, per the regulatory agreement – the standard's central benchmark concept.
3

Differences in Timing – The Core Concept

The engine driving regulatory asset/liability recognition
Example 1: An under-recovery creating a regulatory asset
A power distribution utility incurs $50 million of ELIGIBLE costs during the year that its regulatory agreement allows it to recover, but the applicable tariff formula only permits it to charge customers $35 million in the CURRENT year, with the remaining $15 million recoverable through HIGHER tariffs in future years.
The $15 million shortfall represents a DIFFERENCE IN TIMING – the company has an ENFORCEABLE present right to add this amount to future regulated rates, so it recognises a REGULATORY ASSET of $15 million (discounted at the regulatory interest rate) and corresponding REGULATORY INCOME, ensuring TOTAL income recognised for the period ($35 million IFRS 15 revenue + $15 million regulatory income = $50 million) matches the TOTAL allowed compensation actually earned.
4

Total Allowed Compensation

The standard's central benchmark
IFRS 20 provides guidance on the MOST COMMON types of compensation/deductions specified in regulatory agreements (e.g. recovery of specific costs, a return on a regulatory capital base, performance incentives/penalties) to help entities correctly identify what the total allowed compensation for a period actually comprises.
5

Recognition of Regulatory Assets & Liabilities

Enforceable rights and obligations, all recognised
A REGULATORY ASSET is recognised when the entity has an ENFORCEABLE present right to ADD an amount to future regulated rates; a REGULATORY LIABILITY when it has an enforceable present OBLIGATION to DEDUCT an amount from future regulated rates. IFRS 20 requires recognition of ALL regulatory assets/liabilities existing at the reporting date, subject to a SPECIFIC recognition criterion for those arising from regulatory depreciation of a regulatory capital base.
6

Measurement – The Cash-Flow-Based Technique

A discounted cash flow approach, regulatory-rate-anchored
Regulatory assets/liabilities are MEASURED using a cash-flow-based technique – estimating the FUTURE cash flows arising from recovery of a regulatory asset (or fulfilment of a regulatory liability), DISCOUNTED using the REGULATORY INTEREST RATE specified in the regulatory agreement for that specific balance, rather than a general market discount rate.
7

The 'Overlay' Approach – How IFRS 20 Works with IFRS 15

A genuinely distinctive structural feature
IFRS 20 does NOT replace IFRS 15 revenue recognition – it operates as an "OVERLAY." A company FIRST applies IFRS 15 (and other relevant standards) NORMALLY, then LAYERS ON TOP any regulatory income/expense arising from differences in timing, adjusting the total reported income/expense to match the total allowed compensation actually earned in the period. Recognition of a regulatory asset/liability has NO impact on cash flows – it is a purely accrual-based bridging mechanism.
8

Sectors Most Affected

Where IFRS 20 will have the greatest practical impact
IFRS 20 mainly affects entities in industries such as ELECTRICITY, GAS, WATER, and TRANSPORTATION that are subject to rate regulation – sectors where tariff true-up mechanisms and cost recovery timing differences from regulators are an established operational feature. The IASB's own Effects Analysis notes companies in these sectors should expect changes to key financial metrics such as EBITDA, working capital, and return on assets once IFRS 20 is adopted.
9

Disclosure

Key disclosure requirements
Nature of the regulatory agreement(s) and associated risks Reconciliation of opening/closing regulatory asset and liability balances Regulatory income and regulatory expense recognised in the period Regulatory interest rates and other key assumptions used in measurement
10

Critical Judgments & Estimates

Where management judgement matters most
SIGNIFICANT JUDGEMENTS
Whether an enforceable present right/obligation genuinely exists under the regulatory agreement Identifying what comprises "total allowed compensation" for complex tariff formulas
SIGNIFICANT ESTIMATES
Future cash flows arising from regulatory asset recovery/liability fulfilment Appropriate regulatory interest rate where not explicitly specified
The IASB's own Effects Analysis notes that around 40% of fieldwork participants expect IFRS 20 to IMPACT debt covenants – a genuinely significant transition consideration for rate-regulated companies globally.
11

IFRS 20 vs IFRS 14 – Full Comparison

Comprehensive comparison table
FeatureIFRS 14 (superseded)IFRS 20 (from 2029)
ApplicabilityOPTIONAL, first-time-adopter-only, narrow scopeMANDATORY for ALL entities meeting scope criteria – no election
Recognition modelContinuation of previous GAAP policy (if any)COMPREHENSIVE new recognition/measurement model for ALL rate-regulated entities
Effective dateApplied since IFRS adoption1 January 2029, replacing IFRS 14 entirely
IFRS 20 represents a comprehensive overhaul of rate-regulated activity accounting – moving from IFRS 14's narrow, rarely-elected transitional relief toward a mandatory model bringing tariff timing differences onto the balance sheet for every affected entity.
12

Statement Mapping

Where every IFRS 20 item lands
ItemStatement(s) affectedNotes
Regulatory asset/liabilitySOFPPresented separately, discounted at the regulatory interest rate
Regulatory income/expenseSOPLPresented separately from IFRS 15 revenue, bridging to total allowed compensation
13

Related Standards

Cross-reference map
StandardConnection
IFRS 14The narrow, optional predecessor standard IFRS 20 supersedes
IFRS 15Applied FIRST, with IFRS 20 operating as an overlay adjusting to total allowed compensation
IFRS 9Governs measurement of any related financial instrument components arising from regulatory arrangements
Quick-reference glossary
Regulatory interest rate
The discount rate SPECIFIED in the regulatory agreement itself, used to measure the related regulatory asset/liability.
Regulatory capital base (RCB)
The asset base on which a rate-regulated entity earns an allowed return, relevant to regulatory depreciation recognition criteria.
14

Glossary

Regulatory interest rate
The discount rate specified in the regulatory agreement itself, used to measure the related regulatory asset/liability.
Regulatory capital base (RCB)
The asset base on which a rate-regulated entity earns an allowed return.
Difference in timing
Part or all of the total allowed compensation for regulatory goods/services supplied in one period is included in regulated rates charged in a different period.
Total allowed compensation
The total amount the company is entitled to earn for regulatory goods/services supplied in a period.
Financial statement key
BS Balance sheet
IS Income statement
SE Statement of changes in equity
OCI Other comprehensive income
SCF Statement of cash flows
History & Development
December 2008
Added to the IASB's agenda
23 July 2009
Exposure Draft ED/2009/8 Rate-regulated Activities published
Comment deadline 20 November 2009
September 2010
IASB decided to defer the project
December 2012
Reactivated as an active project
The IASB indicated an intention to consider an interim standard for entities adopting IFRS before completing a comprehensive project
28 March 2013
Request for Information Rate Regulation published
Comment deadline 30 May 2013
29 April 2013
Consultative group established
Details
17 September 2014
Discussion Paper DP/2014/2 Reporting the Financial Effects of Rate Regulation published
Comments requested by 15 January 2015
28 January 2021
Exposure draft ED/2021/1 Regulatory Assets and Regulatory Liabilities published
Comments requested by 30 July 2021
27 May 2026
IFRS 20 Regulatory Assets and Regulatory Liabilities published
Effective for annual periods beginning on or after 1 January 2029