IASB consults on foreign exchange accounting rules
The board’s proposed amendments aim to help companies determine the accounting rules to use when a currency isn’t exchangeable into another currency.The International Accounting Standards Board (IASB) issued Tuesday proposed amendments to IAS 21, The Effects of Changes in Foreign Exchange Rates.
The IASB said its proposals, set out in the exposure draft Lack of Exchangeability: Proposed Amendments to IAS 21, aim to help companies determine whether a currency can be exchanged into another currency, and what accounting rules to apply if the currency cannot be exchanged.
IAS 21 sets out the exchange rate a company uses when it reports foreign currency transactions or a foreign operation’s results in a different currency. Currently, the standard “does not set out the exchange rate to use when there is no observable exchange rate the company can use — such as when a currency cannot be converted into a foreign currency”, the IASB explained.
The board posted an explanatory webcast.
Comments are due 1 September 2021 and should be submitted online or emailed to commentletters@ifrs.org.
— Oliver Rowe (Oliver.Rowe@aicpa-cima.com) is an FM magazine senior editor.