Final Comment Letter published: Lack of Exchangeability—Amendments to IAS 21

Date: 02 September 2021

The UK Endorsement Board (UKEB) published its Final Comment Letter in response to the IASB’s Exposure Draft: Lack of Exchangeability—Amendments to IAS 21.

IAS 21 The Effects of Changes in Foreign Exchange Rates sets out the exchange rate an entity uses when it reports foreign currency transactions, or a foreign operation’s results, in a different currency. The proposed amendments aim to improve the usefulness of the information produced by entities when exchange rates to be used in reporting foreign currency transactions lack exchangeability by:

  1. helping companies determine whether a currency is exchangeable into another currency;
  2. specifying the accounting requirements to apply when a currency lacks exchangeability; and
  3. requiring further disclosures.

The Final Comment Letter supports the proposals in the IASB’s Exposure Draft (ED) as they provide guidance on an area not covered by the existing Standard. As such, they should reduce any diversity of practice, leading to consistency and comparability of financial statements.

For more information on the proposals and the UK Endorsement Board’s approach to this project, please see our website: Click here