ASC 980-10: Streamlining Regulated Operations Accounting Compliance with Advanced Solutions

Posted In | ASC Accounting

In the increasingly complex world of accounting compliance, the Financial Accounting Standards Board (FASB) has established Accounting Standards Codification (ASC) 980-10 to streamline the accounting and financial reporting requirements for regulated operations. The standard primarily affects the utilities and telecommunications industries, which are subject to extensive regulations. This article explores how advanced solutions can be leveraged to ease the compliance burden, increase efficiency, and maintain transparency in these heavily regulated sectors.

 

Overview of ASC 980-10

ASC 980-10, also known as Regulated Operations, provides guidance on accounting for the effects of regulation on an entity's financial reporting. The main objective of ASC 980-10 is to ensure that financial statements reflect the unique economic environment in which regulated entities operate. It provides a set of criteria for determining when and how regulatory assets and liabilities should be recognized, measured, and disclosed.

 

Key Provisions of ASC 980-10

Some of the key provisions of ASC 980-10 include:
 

1. Regulatory Assets: Entities are required to recognize regulatory assets when it is probable that they will be allowed to recover future costs through the rate-setting process.
    

2. Regulatory Liabilities: Entities must recognize regulatory liabilities when it is probable that they will be required to return future revenues to customers through the rate-setting process.
    

3. Amortization of Regulatory Assets and Liabilities: Entities must amortize regulatory assets and liabilities over the periods during which they are expected to be recovered or returned, respectively.
    

4. Disclosures: Entities must disclose information about the nature and financial effects of their regulatory assets and liabilities to provide transparency to financial statement users.
    

Streamlining Compliance with Advanced Solutions

As the regulatory landscape evolves, organizations in regulated industries need to invest in advanced solutions to meet the ever-changing compliance requirements. Here are three ways advanced solutions can streamline the process:
 

1. Automation: Implementing automation tools can significantly reduce the manual effort required to record, track, and report regulatory assets and liabilities. By automating these tasks, organizations can ensure consistency and accuracy in their financial reporting, while freeing up valuable time and resources for more strategic initiatives.
    

2. Integration: Integrating financial, operational, and regulatory systems can provide a holistic view of an organization's regulatory position. With integrated systems, organizations can better manage their regulatory assets and liabilities, ensuring timely and accurate financial reporting. Additionally, integrated solutions can help organizations identify and mitigate risks associated with regulatory compliance.
    

3. Analytics: Advanced analytics capabilities can help organizations gain valuable insights into their regulatory environment, enabling them to make informed decisions about rate-setting and cost recovery strategies. By leveraging predictive analytics, organizations can better anticipate future regulatory requirements and proactively manage their regulatory assets and liabilities.
    

The utilities and telecommunications industries are heavily regulated, and ASC 980-10 aims to provide clarity and consistency in accounting for the effects of regulation on financial reporting. By embracing advanced solutions like automation, integration, and analytics, organizations can streamline their compliance processes and effectively manage their regulatory assets and liabilities. In doing so, they can increase efficiency, maintain transparency, and ultimately enhance their competitive position in the marketplace.