KPMG flags IFRS 20 overhaul for regulated industries, utilities

KPMG’s latest IFRS update reads less like a standards bulletin and more like a workload warning. The biggest lift is IFRS 20, which replaces IFRS 14 and will force rate-regulated companies to build a new accounting model for regulatory assets and liabilities, with the first mandatory reporting periods beginning on or after 1 January 2029.

IFRS 20 turns rate regulation into a reporting project

IFRS 20 is aimed at entities subject to rate regulation, especially in electricity, water, gas, utilities, energy and transport. The IASB says the standard is meant to help investors understand how rate regulation affects performance, financial position and future cash flows, but for KPMG teams the immediate issue is less about the investor narrative than the mechanics of getting the numbers right.

KPMG describes IFRS 20 as a “generational change” for rate-regulated companies, and that is the right lens for audit and advisory teams. Many clients will recognise regulatory assets and regulatory liabilities for the first time, which means new judgments, new documentation, and new mapping between business operations and the financial statements. That work will not sit neatly in one team. It will cut across accounting policy, reporting controls, audit evidence, and advisory support well before the 2029 effective date arrives.

The practical burden is straightforward but heavy: teams have to identify which clients fall in scope, determine how rate regulation flows through the books, and decide where regulatory income and regulatory expense sit in the close process. For firms working with utilities and infrastructure-heavy businesses, that means more time spent on balance-sheet line items, tariff models, and disclosure drafting, not just on year-end sign-off.

Where the pressure lands inside KPMG

This is the kind of change that hits the parts of the firm already under pressure during close and audit season. Audit teams will need to test not only the final numbers but also the judgments behind them, while advisory teams are likely to be pulled into policy design, implementation planning, and control remediation. In practice, that means more meetings with finance leaders, more memo writing, and more back-and-forth over whether a client’s systems can actually capture what the new standard requires.

The sectors most exposed are also the ones with the most complicated operating models. Electricity and gas businesses face long-lived assets, regulated returns, and tariff structures that can move slowly but have large accounting consequences. Water and transport groups can have similarly complex regulatory settlements, which means the new model will not be a simple disclosure update. It will be a reporting redesign.

For KPMG staff, the upside is obvious: where standards get complicated, implementation work follows. That work tends to flow into audit planning, technical accounting reviews, and broader transformation projects, which is often where the firm builds recurring client relationships and, for staff, the kind of experience that strengthens promotion cases.

2026’s IFRS 9 and IFRS 7 changes are already in play

While IFRS 20 has the longest runway, other changes are already forcing teams to adjust current-year processes. The IASB issued amendments to IFRS 9 and IFRS 7 on 30 May 2024, and they are effective for annual reporting periods beginning on or after 1 January 2026, with early application permitted.

Those amendments matter because they reach into routine finance operations. They clarify settlement-date derecognition rules, create an exception for certain financial liabilities settled through electronic payment systems, and add guidance on contingent features, including ESG-linked targets. They also expand disclosure requirements for equity instruments designated at fair value through OCI, which means more inventory work for reporting teams and more evidence for auditors to inspect.

The electronic-payment exception is especially relevant for treasury, accounts payable and controls teams. Companies can choose whether to apply it on a system-by-system basis, and that can make implementation slow and messy if payment processes are spread across multiple platforms. KPMG teams should expect a fair amount of diagnostic work here, because widespread use of electronic payment systems makes the assessment time-consuming and hard to standardise across large groups.

The picture gets even more specific for energy clients. Separate December 2024 amendments deal with contracts referencing nature-dependent electricity, including renewable PPAs. That pushes the work beyond abstract accounting policy and into the mechanics of how power contracts are written, classified and disclosed. For firms with clients in renewables, utilities or energy supply, this is one more area where technical accounting and commercial contracting are now tightly linked.

IFRS 18 will reshape the close, not just the face of the income statement

If IFRS 20 is the long-term systems project, IFRS 18 is the closer-in operational one. The standard was issued on 9 April 2024, replaces IAS 1 Presentation of Financial Statements, and is effective for annual reporting periods beginning on or after 1 January 2027, with earlier application permitted. It also requires comparative amounts for the preceding year, including in the notes, which means clients cannot treat 2027 as a one-year formatting exercise.

That comparative requirement matters because it forces transition planning well in advance. Companies need time to rebuild reporting packs, align chart-of-accounts structures, and decide how the new presentation rules will flow through internal management reporting and external filings. KPMG’s own materials note that IFRS 18 may affect all primary statements, note disclosures and information outside the financial statements, including non-GAAP measures, so the workload will spill beyond the core finance team into investor relations, controllership and advisory review.

For audit teams, the challenge will be consistency. If the comparatives are not built early, the year-to-year narrative becomes harder to defend, and the audit trail gets thinner. For advisory teams, this creates a chance to help clients redesign reporting processes before the deadline turns into a bottleneck.

What teams should be doing now

The standards may have different effective dates, but the internal playbook is the same: get ahead of the documentation, data and judgment work before it shows up in the close. The firms and clients that treat these changes as linked rather than separate will be better positioned when the pressure builds.

• Map the in-scope client base now, especially regulated utilities, energy, water, gas and transport groups.

• Build an inventory of regulatory assets, regulatory liabilities, regulatory income and regulatory expense, and document the judgments behind each one.

• Test whether treasury and payables systems can support the IFRS 9 and IFRS 7 electronic-payment exception on a system-by-system basis.

• Review ESG-linked financing, contingent features and equity instruments designated at fair value through OCI, because disclosure requirements have widened.

• Start IFRS 18 comparative-period planning early, including note disclosures and any measures that sit outside the financial statements.

• Do not overlook IFRS Interpretations Committee agenda decisions, because compliance is not limited to the newest headline standard.

The bigger message for KPMG is that technical accounting is still a durable source of client demand, especially when it reaches into regulated industries, payments and ESG-linked financing. The teams that can translate these standards into clean controls, defensible memos and workable close processes will be the ones carrying the busiest books, and probably the strongest cases for the next round of advancement.