On Jan. 12, EFRAG issued endorsement advice on IAS 21 amendment.
EFRAG had completed its due process regarding amendments to IAS 21 - The Effects of Changes in Foreign Exchange Rates: Lack of Exchangeability and now submitted its endorsement advice letter to EC for its consideration, before the final implementation.
Follows EFRAG Dec. 2023 sought comments on its endorsement advice, see #193518.
Background
The IASB, in Aug. 2023, issued the Amendments to IAS 21, which were initially issued as exposure draft ED/2021/4 in Apr. 2021, with proposed effectiveness in Jan. 2025.
They specify when a currency is exchangeable into another currency and, when it is not, how entities set an exchange rate to apply when a currency is not exchangeable, as well as the disclosures an entity will provide when a currency is not exchangeable.
In Dec. 2023, EFRAG consulted on its assessment of amendments to IAS 21 effects of changes in foreign exchange rates lack of exchangeability against technical criteria for endorsement in EU, and on whether amendments are conducive to the public good.
EFRAG's overall preliminary assessment was that the amendments satisfy all of the criteria for endorsement for use in the EU and therefore recommends its endorsement.
Final Endorsement
EFRAG has submitted its Endorsement Advice relating to the Amendments for use in the EU and EEA, to the EC, following the results from its recent consultation exercise.
EFRAG concluded that the Amendments meet qualitative characteristics of relevance, reliability, comparability, and understandability to support various economic decisions.
EFRAG had assessed that the Amendments meet the technical endorsement criteria of the IAS Regulation and had concluded they are conducive to the European public good.
EFRAG therefore recommends the endorsement of the Amendments to IAS 21 and this can be found within its letter to the EC, as well as within its accompanying appendices.
EFRAG has also updated its Endorsement Status Report, which is on EFRAG web page.
The amendments specify when a currency is exchangeable into another currency and, when it is not, how a company determines the exchange rate to apply, and the disclosures a company is to provide when a currency is not exchangeable.
Each firm shall apply the amendments referred to in Article 1, at the latest, as from the commencement date of its first financial year starting on or after Jan. 1, 2025.
Regulation shall enter into force on the twentieth day following that of OJ publication
Document dated Jul. 12, 2024, was received on Jul. 17, 2024 due to a fixed feed.
Nov. 2024 Official Journal
On Nov. 13, 2024, EU CMSN issued Reg 2024/2862 amending Reg 2023/1803 re IAS 21; each company shall apply the amendments referred to in Article 1, at latest, as from commencement date of its first financial year starting on or after Jan. 1, 2025.
Regulation in force on 20th day following publication in the Official Journal, Dec. 3.
