The International Accounting Standards Board (IASB) has published a limited-scope amendment project to International Accounting Standard 21 "The Effects of Changes in Foreign Exchange Rates." The project aims to simplify procedures for translating financial statements from functional currency to presentation currency in a hyperinflationary economy. The proposal suggests translating all financial statements, including comparative information, at the closing rate at the date of the most recent financial statements presented.
SOCPA, represented by its Accounting Standards Council, has commented on the project, expressing its agreement with the proposed amendment as it balances cost with information needs. The amendment has also proposed a set of disclosure requirements that ensure transparency of presented information regarding the financial impact of foreign operations in hyperinflationary economic environments. SOCPA suggested that the IASB add a disclosure requirement related to exchange rate movements and fluctuations during the period to provide insight into their impact on financial performance during the period.
The full text of SOCPA's comment can be accessed by clicking
here.