In April 2021, the International Accounting Standards Board (Board) published the Exposure Draft Lack of Exchangeability. The Exposure draft proposes to add requirements to IAS 21 for a company to determine whether a currency is exchangeable into another currency and the exchange rate to use when it is not.
The Board discussed requirements for the transition to and early application of the proposed amendment to IAS 21 The Effects of Changes in Foreign Exchange Rates. The Board also discussed due process, including permission to begin the balloting process.
The proposed amendment to IAS 21 would (a) define exchangeability and thus a lack of exchangeability; and (b) specify how an entity determines the spot exchange rate when a currency lacks exchangeability.
Entities already applying IFRS Standards
The Board tentatively decided to propose that, if applicable, an entity would apply the amendment prospectively from the beginning of the annual reporting period in which it first applies the amendment (date of initial application) and not restate comparative information. An entity that:
The Board tentatively decided to:
The Board tentatively decided to permit an entity to apply the proposed amendment earlier than the effective date.
All 12 Board members agreed with these decisions.
The Board tentatively decided to allow a comment period of no less than 120 days for the exposure draft of its proposed amendment to IAS 21. All 12 Board members agreed with this decision.
All 12 Board members confirmed they were satisfied the Board has complied with the applicable due process steps and that it has undertaken sufficient consultation and analysis to begin the balloting process for the exposure draft.
No Board member indicated an intention to dissent from the proposals in the exposure draft.