Disclosure (AASB20_09-26)

The overall objective of paragraphs 69–83 and B95–B97 is to require an entity to disclose in the notes information about the entity’s: 

(a) regulatory income and regulatory expense that, together with the information required by other Australian Accounting Standards, will provide insights into the total allowed compensation for regulatory goods or services supplied by the entity in a reporting period, and hence into the entity’s financial performance and prospects for future cash flows; and 

(b) regulatory assets and regulatory liabilities that will provide insights into the entity’s financial position at the end of a reporting period and the amount, timing and uncertainty of the entity’s future cash flows.

An entity shall disclose information that enables users of financial statements to understand: 

(a) the amounts that are recognised in the statement of financial position and statement(s) of financial performance for regulatory assets, regulatory liabilities, regulatory income and regulatory expense; and 

(b) the nature of unrecognised regulatory assets or unrecognised regulatory liabilities and the reason they have not been recognised.

This information provides insights into: 

(a) the total allowed compensation for regulatory goods or services supplied by the entity in a reporting period, in particular the extent to which part or all of the total allowed compensation for regulatory goods or services supplied by the entity in a reporting period was (or will be) included in determining the regulated rates charged to customers – and hence included in AASB 15 revenue – in a different period; and 

(b) the amount, timing and uncertainty of the entity’s future cash flows.

To achieve the objective set out in paragraph 69, an entity shall apply paragraphs 72–81.

An entity shall disclose, in a table, reconciliations from the opening to the closing carrying amounts of regulatory assets and from the opening to the closing carrying amounts of regulatory liabilities. In the reconciliations, an entity shall group the changes described in paragraph 73 into: 

(a) changes included in the statement of profit or loss; 

(b) changes included in other comprehensive income; and 

(c) other changes not included in (a) or (b) (see paragraph 73(g)).

An entity shall disclose in the reconciliations required by paragraph 72 changes in the carrying amount of a regulatory asset or regulatory liability arising from: 

(a) the origination of regulatory assets during the reporting period; 

(b) the origination of regulatory liabilities during the reporting period; 

(c) the recovery of regulatory assets during the reporting period; 

(d) the fulfilment of regulatory liabilities during the reporting period; 

(e) regulatory interest income on regulatory assets or regulatory interest expense on regulatory liabilities; 

(f) other components of regulatory income or regulatory expense – for example, changes in the carrying amount of a regulatory asset or regulatory liability arising from remeasurements of the regulatory asset or regulatory liability or changes in the boundary of a regulatory agreement; and 

(g) changes in regulatory assets and regulatory liabilities that did not give rise to regulatory income or regulatory expense – for example, regulatory assets acquired and regulatory liabilities assumed in a business combination.

An entity shall provide an explanation of the items described in paragraph 73(f)–(g).

For regulatory assets and regulatory liabilities measured in accordance with paragraph 34, an entity shall disclose quantitative information, using time bands, about when it expects to recover the regulatory assets and fulfil the regulatory liabilities. The entity shall disclose the quantitative information disaggregated between: 

(a) regulatory assets and regulatory liabilities for which a regulatory agreement applies a regulatory interest rate that is not nil; and 

(b) regulatory assets and regulatory liabilities for which a regulatory agreement applies a regulatory interest rate of nil.

The entity shall determine the quantitative information required by paragraph 75 using: 

(a) undiscounted cash flows, excluding regulatory interest cash flows; and 

(b) reasonable and supportable assumptions about the timing of future cash flows that are consistent between periods.

The entity shall use its judgement to determine an appropriate number of time bands for the quantitative information required by paragraph 75. For example, an entity might determine appropriate time bands to be: 

(a) not later than one year; 

(b) later than one year and not later than three years; 

(c) later than three years and not later than five years; and 

(d) later than five years.

For regulatory assets and regulatory liabilities measured in accordance with paragraph 34, an entity shall also disclose: 

(a) the discount rate, or ranges of discount rates, used in measuring regulatory assets and regulatory liabilities to which a regulatory agreement applies a regulatory interest rate; 

(b) an explanation of how uncertainties affect the recovery of regulatory assets or fulfilment of regulatory liabilities; and 

(c) the carrying amounts of regulatory assets and of regulatory liabilities at the end of the reporting period to which the entity has applied the exemption from discounting estimated future cash flows in paragraph 50.

For regulatory assets and regulatory liabilities measured by an entity applying paragraph 60, the entity shall provide information about the regulatory assets and regulatory liabilities and the related liabilities and related assets that explains: 

(a) the relationship between the carrying amounts, and changes therein, of the regulatory assets or regulatory liabilities and the carrying amounts, and changes therein, of the related liabilities or related assets; 

(b) the relationship between the risks associated with the regulatory assets or regulatory liabilities and the risks associated with the related liabilities or related assets; and 

(c) how uncertainties affect the recovery of regulatory assets or fulfilment of regulatory liabilities.

For example, if a regulatory asset arises from pension costs and is measured by an entity applying paragraph 60, the entity will need to consider how to disclose the information required by this Standard and the information required by AASB 119 Employee Benefits in a manner that shows the relationships described in paragraph 79.

An entity shall disclose information about unrecognised regulatory assets and unrecognised regulatory liabilities that enables users of financial statements to understand: 

(a) the type of compensation or deduction the unrecognised regulatory assets and unrecognised regulatory liabilities relate to; and 

(b) the reason they have not been recognised – for example, an entity might not recognise a regulatory asset because the entity has determined that its regulatory capital base does not have a direct relationship with a related item or items (see paragraph 29).

An entity shall disclose information that enables users of financial statements to understand the relationship between the entity’s regulatory capital base and a related item or items. That understanding will: 

(a) provide insights into the nature of a regulatory agreement and the effect of a regulatory agreement on the entity’s financial position and financial performance; and 

(b) enable users to make comparisons between entities subject to different regulatory agreements.

To achieve the objective in paragraph 82, an entity shall disclose: 

(a) the type of relationship (direct or not direct) between its regulatory capital base and a related item or items; 

(b) the reasons why the entity determined that the relationship is of that type; 

(c) any change to or from a direct relationship, and the reason for the change; and 

(d) the regulatory approach (nominal or real) used by the regulator to compensate the entity for inflation on its regulatory capital base (see paragraphs B51(a) and B52).