Imrecon

Ian Rowson is a Chartered Accountant by background and has long experience advising on regulatory accounting frameworks.  

From 2000 to 2005, he represented a regulator on the Joint Inter-regulatory Working Group on Regulatory Accounts and was actively involved in the development of the joint statement on ‘The role of regulatory accounts in regulated industries' in 2001 and the guidance to auditors issued by ICAEW in 2003 (TR 05/03).  Imrecon has developed regulatory accounting frameworks, regulatory accounting guidance and licence terms relating to regulatory accounts and is highly fluent in the accounting and economic principles behind inflation accounting, regulatory depreciation, RAB/RAV/RCV accounting etc.

Imrecon's approach

Imrecon relates regulatory accounting requirements to regulatory objectives.  Regulators do need reliable financial and other historical information, and carefully structured information and associated audit requirements can give regulators valuable assurance on the historical information they use.  However, there is a potentially more interesting role for reporting requirements in making a business's performance in a regulated environment more transparent. 

Incentive objectives depend on consumers of performance information being well informed, notably investors, participants in a company's governance and those who are relevant to the reputations of senior managers.  Ensuring that there is good quality information reaching these people so they can make fair assessments about performance in the incentive regime is integral to a regulator's incentive strategy. 

Formal regulatory accounts can provide a component of such an information strategy.  An other important component is reporting on companies' performance by the regulator itself.  For example, reporting companies' positions in efficiency league tables can help reinforce the effect of economic incentives on the mindsets of managers.

Imrecon therefore considers that regulatory accounting requirements are best seen as part of a broader incentive strategy that recognises the role of transparency in performance information.