(January 2011) Gold Mine or Fool’s Gold?: Debt is recorded on the right side of the balance sheet in recognition that it’s a source of capital, but users of financial statements...
IFRS and You
How the new standards affect utility balance sheets.
to the Securities and Exchange Commission, “Re: File No. S7-20-07 International Financial Reporting Standards,” February 7, 2008.
9. See International Accounting Standards Board, “Exposure Draft, ED/2009/8,” which was last discussed by the Board on July 21, 2010, where further analysis was deemed necessary before adoption could be considered. The chairman also noted a standard seemed unlikely to be in place before Canada adopts IFRS in 2011.
10. See, for example, FERC, “Uniform Systems of Accounts,” ¶22.
11. Historical data from FERC Form 1 for 2000-2009 shows depreciation comprises 7-8 percent of electric utilities regulated revenue (Source: Velocity Suite data).
12. IFRS refers to this as decommissioning.
13. Source: Velocity Suite data from FERC form 1.
14. The discount rate is the market borrowing rate for that company.
15. The details of these rules are provided in FASB’s Section 815-10-15-22 to 815-10-15-51.
16. Such utilities will likely experience more volatile income figures. This has implications if the utility is subject to incentive rate making, where return on equity in excess of a specific number is shared with customers (or if the utility is subject to an earnings test as is the case in, for example, for example, Ohio Am. Sub. S.B. No. 221.).
17. Scott Hartman, “ Ready for IFRS? ” Public Utilities Fortnightly , January 2009 provides a perspective on steps to take to get ready to implement IFRS in a utility setting.
18. See, Federal Register , “Securities and Exchange Commission: Commission Statement in Support of Convergence and Global Accounting Standards; Notice,” March 2, 2010.