RDR Concessions: NZ IFRS 20 Regulatory Assets and Regulatory Liabilities
The XRB has recently issued NZ IFRS 20 Regulatory Assets and Regulatory Liabilities, which provide requirements on accounting for regulatory assets and regulatory liabilities, including the recognition, measurement and presentation of such assets and liabilities.
| The XRB is not proposing any disclosure concessions for Tier 2 for‑profit entities in relation to the new disclosure requirements in NZ IFRS 20. |
The new NZ IFRS 20 disclosures are important to understanding the regulatory asset and regulatory liability balances which would be reported by regulated entities and the disclosure requirements relate to either:
- Core quantitative and movement disclosures which are key disclosure areas for users in relation to liquidity/solvency and understanding the fundamental context of the regulatory asset and regulatory liability balances and are necessary to support the new accounting model and should not receive RDR concessions.
- Narrative risk/uncertainty and relationship disclosures which are key contextual information to understand the nature of the arrangements and the regulatory assets and regulatory liability balances which will be new to Tier 2 users and reporting entities.
The disclosure requirements in NZ IFRS 20 can be grouped into the following themes. The XRB do not propose RDR concessions for these requirements because they either provide core information about regulatory balances, performance, risks and future cash flows, or support the effective application and presentation of that information.
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Disclosure requirements introduced to NZ IFRS 20 |
Reason no RDR concession is proposed |
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Disclosure objectives and scope, paragraphs 68–71: Explain the recognised and unrecognised regulatory amounts, their effect on performance and financial position, and the timing and uncertainty of future cash flows. |
These paragraphs provide the essential context and structure for the detailed disclosures. They impose little or no separate disclosure cost. |
| Movement reconciliations, paragraphs 72–74: Reconcile opening and closing regulatory balances, disaggregating and explaining the main types of movement.
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The reconciliation is necessary to understand how regulatory balances change and affect performance. The information should largely be available from the entity’s accounting records. |
| Timing of recovery and fulfilment, paragraphs 75–77: Provide a time-band analysis showing when regulatory assets will be recovered and regulatory liabilities fulfilled.
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This information is important for assessing future cash flows, liquidity and solvency. Entities may use judgement to select time bands appropriate to their circumstances and users. |
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Measurement and uncertainty, paragraph 78(a)–(c): Disclose relevant discount rates, uncertainties affecting recovery or fulfilment, and balances subject to the discounting exemption.
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These disclosures provide important information about measurement, risk and comparability. Incremental costs should be limited because the information is generally used in recognition and measurement.
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Relationship with related assets and liabilities, paragraphs 79–80: Explain how regulatory balances interact with related assets or liabilities when paragraph 60 applies.
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The information is needed to understand the combined financial effects and risks of the related balances. It applies only in more complex circumstances where the underlying analysis should already have been performed.
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Unrecognised regulatory balances, paragraph 81: Explain the nature of unrecognised regulatory assets and liabilities and why they have not been recognised.
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These items may affect future rights, obligations and cash flows despite not appearing in the statement of financial position. The information should be available from the entity’s recognition assessment.
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Regulatory capital base, paragraphs 82–83, B51(a) and B52: Explain its relationship with accounting items, including whether the relationship is direct and how inflation is addressed.
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This information is fundamental to understanding how regulation affects financial position, performance, returns and risk. It should generally be available from the regulatory agreement.
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Aggregation and disaggregation, paragraphs B95–B97 and NZ IFRS 18.41–43: Provide guidance on presenting regulatory information at an appropriate level of detail.
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These paragraphs guide the presentation of information required elsewhere and do not create separate substantive disclosures. They improve clarity at minimal incremental cost.
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About the RDR framework
The purpose of the RDR framework is to simplify the financial reporting for Tier 2 entities by removing or modifying some of the disclosure requirements in the accounting standards, while maintaining the same recognition and measurement requirements as Tier 1 entities.
The objective is to balance the benefits with the costs of preparing financial statements for Tier 2 for-profit entities. It achieves this by only requiring disclosures when they are of particular interest or value to users of those financial statements.
How to provide feedback
Feedback is sought from stakeholders who may be affected by the proposals.
You can provide feedback by completing the form below or sending your submission to accounting@xrb.govt.nz
This consultation will close on Monday 1 February 2027.
All submissions will be published on the XRB website unless confidentiality is requested. If you object to the release of any information in your submission, please identify the specific parts and the reasons under the Official Information Act 1982. We reserve the right not to publish defamatory submissions. Submissions are subject to the Official Information Act 1982 and the Privacy Act 2020. The XRB will handle personal information in accordance with these Acts.