IASB Exposure Draft ED/2021/4 Lack of Exchangeability (Proposed amendment to IAS 21)


The proposed amendments to IAS 21 The Effects of Changes in Foreign Exchange Rates aim to help companies determine whether a currency can be exchanged into another currency, and what accounting to apply if the currency cannot be exchanged.

IAS 21 sets out the exchange rate a company uses when it reports foreign currency transactions or a foreign operation’s results in a different currency. However, the Standard does not set out the exchange rate to use when there is no observable exchange rate the company can use—such as when a currency cannot be converted into a foreign currency. 

The International Accounting Standards Board (IASB) is therefore proposing to add requirements to IAS 21 for an entity to determine whether a currency is exchangeable into another currency, and accounting requirements to apply when it is not. The proposed amendments would improve the usefulness of the information provided to investors by requiring a consistent approach to determining whether a currency is exchangeable into another currency and, when it is not, determining the exchange rate to use and the disclosures to provide.

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Invitation to comment

The Exposure Draft is open for comment until 30 July 2021.

You may provide your comments via email to us at technical@masb.org.my

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