FRS Regards the IASB Rate Regulation Rules Unfair to the UK
FRC has criticized heavily a contentious project which would allow the rate regulated organizations to go on using their former accounting policies upon the adoption of the international accounting standards. The reporting watch dog in the UK stated that it is not for the interim standard on the rate regulated entities that have been issued by the international standard setter, IASB as it would not be advantageous to those nations like the UK who are already using the IFRS.
Those organizations that deal with rate regulated liabilities or assets like utility companies such as water, gas and electricity will go on recognizing the accounts once they adopt IFRS. The interim standard is part of a project intended to be long term designed to offer first time adopters of IFRS relief and which will investigate whether regulation of rates creates liabilities or assets as part of the already recognized under IFRS for those activities that are not regulated.
The Interim standard was criticized in a letter sent to the IASB chairman Hans Hoogervost by Roger Marshall who chairs the FRC’s accounting council for not adhering to principles and that IASB need to first determine if regulatory account balances are liabilities and assets as per the conceptual framework underpinning its standards.
It is important to find out that I they are not, IASB should then be cautious to have them included in the financial statements. Marshall went on to say. The FRC also gave a warning that the aim of one set of international rules can no longer be obtained since previous practices will be continued in various jurisdictions. This then will result in being mover or tow IASB versions sanctioned by IFRS, said Marshall.
There is a legal opinion that was published by FRC last week by Martin Moore QC which appeared to nullify concerns that the IFRS have a conflict with the UK law. The findings of that opinion are that IFRS bind legally and holds up a true and fair view in the financial statements and in many cases can be achieved with compliance of the rules.