IASB issuedlack of exchangeability, amending IAS 21effects of changes in foreign exchange rates, for more detail in financial statements if currency is not exchangeable.
Follows IASB Apr. 2021 consult on accounting when no forex rate exists, see #103344.
Follows IASB Sep. 2022, updated on interpretation decisions reached, see #148532.
Summary
Updates require firms to act consistently in assessing if a currency can be exchanged into another and determining exchange rate to use/disclosures to provide if it cannot.
Addresses an issue not previously covered in accounting requirements for effects of changes in forex rates, responds to concerns in accounting for non-exchangeability.
Fills gap in accounting standards, differing views on whether currency can be exchanged, which rate to use if not, can create financial statement material differences.
IASB said updates will improve the usefulness of information provided to investors; will be consolidated into IAS 21, IFRS 1 in Mar. 2024, at which point they will be available.
Effectiveness
Early application of the amendments is permitted, but they will become effective for annual reporting periods beginning on or after Jan. 1, 2025.
In Dec. 2023, EFRAG seeking comments on its draft endorsement advice, #193518.
