Regulatory accounting:

PUCSL issues guidelines

In a bid to bridge the gap between accounting information currently available and information required by the Commission for making decisions, a regulatory accounting system is to be put in place.

The Public Utilities Commission of Sri Lanka(PUCSL) has issued accountancy guidelines to licensees of electricity generation, transmission and distribution needed to regulate decision-making.

The Commission said the first set of annual regulatory accounts will commence from January 1 2017. According to the tariff methodology designed by the Commission, the determination of allowed revenue requires information at the generation unit level, in the case of generation and sub functional level, in the case of transmission and distribution.

Then it separate accounts were required for each licensed business which will permit financial and non-financial information of the licensees.

The Ceylon Electricity Board (CEB) and Lanka Electricity Company (Private) Limited (LECO) are the main electricity utilities in Sri Lanka.

The existing accounting system of the CEB is structured under nine divisions which has no accounting segregation for regulated and non - regulated business activities such as air conditioning, refrigeration and lift installation business.

However, separate books of accounts need not to be maintained as most of the information required for regulatory accounts can be extracted from the records maintained for statutory accounts with certain modification to the chart of accounts.

The proposed guideline for preparation of regulatory accounts establishes a mechanism for licensees to prepare and submit regulatory accounts, and includes a set of accounting policies and principals, uniform system of accounts, disclosure requirements, principal for cost attribution, allocation and transfer pricing, audit process, principals for reconciliation of regulatory accounts with statutory accounts and templates for the preparation of regulatory accounts.