Lack of Exchangeability — Amendments to IAS 21
Lack of Exchangeability: Amendments to IAS 21 The Effects of Changes in Foreign Exchange Rates were approved for adoption by all members of the UK Endorsement Board on 15 July 2024.
A link to the Adoption Statement of the Amendments and the text of the Amendments can be found here.
The Amendments are not likely to lead to a significant change in accounting practice and do not meet the criteria for a post-implementation review under Regulation 11 in SI 2019/685.
Background
The Amendments were published on 15 August 2023 and are effective for annual reporting periods beginning on or after 1 January 2025, with early application permitted.
The Amendments address the gap in IAS 21 that specifies the exchange rate to use in reporting foreign currency transactions when exchangeability between two currencies is temporarily lacking but does not specify what an entity is required to do when a lack of exchangeability is not temporary.
The amendments aim to improve the usefulness of the information by:
- Defining what it means for a currency to be “exchangeable”;
- Providing guidance on determining the exchange rate when a currency is not exchangeable; and,
- Specifying the disclosures to provide in those circumstances.
The UKEB actively influenced the development of these amendments. Refer to work performed as part of the ‘Influencing Project’.
UKEB Endorsement Criteria Assessment
On 5 February 2024, the UKEB published its Draft Endorsement Criteria Assessment (DECA) Lack of Exchangeability.
The public consultation closed on 6 May 2024. Thank you to all stakeholders that provided feedback.
All responses received were considered when finalising the Endorsement Criteria Assessment (ECA). The final ECA was published on 17 July 2024. An accompanying Feedback Statement, describing how feedback received from stakeholders was addressed, was also published on the same date.
The following documents are available at the end of this page:
- Project Initiation Plan
- DECA and Invitation to Comment
- Responses from stakeholders
- Final ECA
- Feedback Statement
- Due Process Compliance Statement (DPCS) (will be available after UKEB’s July 2024 Board meeting)
UKEB outreach
The UKEB project outreach included discussions with the UKEB advisory groups, targeted outreach with some companies that are impacted and public consultation on the UKEB’s DECA.
UKEB meetings
The Amendments will be discussed in the following UKEB meetings:
- Project Initiation Plan - 16 November 2023
- Draft Endorsement Criteria Assessment - 30 January 2024
- Adoption package (Draft Endorsement Criteria Assessment (final)/ECA, Feedback Statement, Due Process Compliance Statement (draft), Adoption statement - 24 May 2024
- DPCS presented for noting – 18 July 2024