Lack of exchangeability - Amendments to IAS 21
- Completed
- Completed
- Didrik Thrane-Nielsen, Vasileios Dionelis, Ovidiu Spirescu
Description
IAS 21 The Effects of Changes in Foreign Exchange Rates provides the requirements on translating financial statements from functional currency into presentation currency and translating the financial statements of a foreign operation.
However, IAS 21 does not provide any specific requirements on what exchange rate a reporting entity uses to translate the results and financial position of a foreign operation when a currency is not exchangeable into another currency.
On 20 April 2021, the IASB published Exposure Draft Lack of Exchangeability (the ED) where the IASB proposed to amend IAS 21 and to specify:
- when a currency is exchangeable into another currency and, consequently, when it is not;
- how an entity determines the exchange rate to apply when a currency is not exchangeable; and
- the information an entity provides when a currency is not exchangeable.
On 14 September 2021, following the consultation period with constituents, EFRAG published its Comment Letter and submitted it to the IASB. In the letter, EFRAG supported the overall objective of the ED and pointed to some concerns over the proposals.
On 2 November 2021, EFRAG published a Feedback Statement, which summarises EFRAG's response to constituents' comments.
The IASB published the amendments on 15 August 2023. An entity is to apply those amendments for annual reporting periods beginning on or after 1 January 2025. Earlier application is permitted. The newsletter is available here.
The European Commission issued a letter requesting advice on the endorsement of the Amendments on 21 August 2023.
EFRAG issued its Draft Endorsement Advice on 28 September 2023. In the letter, EFRAG's preliminary assessment was that the Amendments satisfied the criteria for endorsement for use in the EU and therefore EFRAG recommended their endorsement.
After considering the feedback received to its public consultation, EFRAG issued its Final Endorsement Advice on 9 January 2024 reiterating the initial assessment that the Amendments satisfied the criteria for endorsement for use in the EU. EFRAG therefore recommended their endorsement.
The news item on the publication of the endorsement advice can be found here.
The relevant documents are available in Documents section, below.
On 13 November 2024, the European Commission endorsed the Amendments.
Documents
Project news
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01/12/2023 - REMINDER - EFRAG seeks comments on its Draft Endorsement Advice on Lack of Echangeability (Amendments to IAS 21)
EFRAG is consulting on its assessment of Amendments to IAS 21 The Effects of Changes in Foreign Exchange Rates Lack of Exchangeability against the technical criteria for endorsement in the EU, and on its assessment on whether the Amendments are conducive to the European public good.
Comments are requested by 7 December 2023 by completing this form.
EFRAG's draft endorsement advice letter is available here.
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28/09/2023 - EFRAG seek comments on its Draft Endorsement Advice on Lack of Echangeability (Amendments to IAS 21)
EFRAG is consulting on its assessment of Amendments to IAS 21 The Effects of Changes in Foreign Exchange RatesLack of Echangeability against the technical criteria for endorsement in the EU and on its assessment of whether the Amendments are conducive to the European public good. Comments are requested by 7 December 2023 by completing the form available here. EFRAG's draft endorsement advice letter is available here.
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02/11/2021 - EFRAG's Feedback Statement on IASB ED Lack of Exchangeability
EFRAG releases its Feedback Statement related to its Final Comment Letter on the IASB Exposure Draft 2021/04 Lack of Exchangeability.
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14/09/2021 - EFRAG Final Comment Letter on Lack of Exchangeability
EFRAG has published its Comment Letter on the IASB Exposure Draft ED/2021/4 Lack of Exchangeability. EFRAG welcomes the IASB’s efforts to address a long-standing gap in current IFRS reporting.
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20/08/2021 - REMINDER - EFRAG requests comments on its DCL on Lack of Exchangeability ED by 26 August
EFRAG requests constituents’ comments to its Draft Comment Letter on the IASB ED Lack of Exchangeability (Amendments to IAS 21) by Thursday 26 August 2021.
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03/06/2021 - EFRAG's Draft Comment Letter on the IASB Exposure Draft ED/2021/4 Lack of Exchangeability (proposed amendments to IAS 21)
EFRAG has published its Draft Comment Letter in response to the IASB's Exposure Draft ED/2021/4 Lack of Exchangeability (proposed amendments to IAS 21) and seeks constituents' views on the proposals. Comments are requested by 26 August 2021.
