The IASB issued IFRS 20 Regulatory Assets and Regulatory Liabilities to replace IFRS 14 Regulatory Deferral Accounts, a new accounting standard for companies subject to a specific type of rate regulation, it was published on 27 May 2026.
IFRS 20 applies to entities subject to a specific type of rate regulation, arrangements in which a regulator determines how much a company can charge its customers and when those amounts can be charged. This is most common among providers of essential services, including electricity, water, gas, and certain transportation and energy businesses. If your organisation operates under a regulatory agreement of this nature, IFRS 20 is likely to have a direct impact on your financial statements.
Imagine a water company that spends millions fixing pipes this year. The regulator says: “Fine, you can recover that cost, but only by charging customers higher rates next year.” Under the old rules, this year’s accounts look terrible (big costs, no matching revenue) and next year’s look artificially great. The company’s real performance is distorted.
IFRS 20 calls this a “difference in timing,” and its key principle is that a company should recognize the total allowed compensation for regulatory goods or services in the same period it supplies them. In other words: if you’ve earned the right to charge customers more later, you book a regulatory asset now. If you’ve overcharged and owe customers money back through lower future rates, you book a regulatory liability.
IFRS 20 makes regulated utilities’ financial statements match economic reality by recording the money they’re entitled to collect (or obligated to give back) through future regulated rates, not just what they billed this year.
Important note: Although the effective date may appear distant, implementation should not be delayed. Affected entities should begin by identifying regulatory agreements within the scope of the standard, assessing the potential impact on reported results, updating systems and processes, and developing a clear implementation roadmap. Early engagement with auditors, regulators, and investors will help ensure a smooth transition.
