IASB ED/2021/4

  • For-profit

Lack of Exchangeability

The International Accounting Standards Board (IASB) has recently issued for comment ED/2021/4 Lack of Exchangeability (the ED). The ED proposes amendments to IAS 21 The Effects of Changes in Foreign Exchange Rates.

When preparing financial statements, entities are required to translate foreign currency transactions and the results of foreign operations using an exchange rate as specified in IAS 21. However, IAS 21 does not specify what exchange rate should be used when a currency cannot be exchanged for another. Although lack of exchangeability is relatively rare, when it does occur the lack of specific requirements in IAS 21 and the resulting diversity of views can lead to inconsistent reporting.

To address this issue, the ED proposes to introduce requirements for determining whether a currency is exchangeable into another currency and, when it is not, what exchange rate should be used and what disclosures should be provided.

The New Zealand Accounting Standards Board (NZASB) encourages you to read the Exposure Draft and to comment on the proposals. In particular, the proposals would be of interest to entities that have operations in countries where there are restrictions on currency conversions, and entities that have customers or suppliers in such countries.

The XRB Board is committed to adopting international standards in the for-profit sector. Generally, once a standard has been issued by the IASB, the NZASB then issues the New Zealand equivalent standard without further consultation. The NZASB will consult separately about any proposed disclosure concessions for Tier 2 for-profit entities.


Consultation Documents

Commenting on the Proposals

This is your opportunity to comment on these proposals.

Send your comments—both formal and informal—to the NZASB by 19 July 2021, using the secure upload form below.

We also encourage you to send comments directly to the IASB by 1 September 2021, with a copy to the NZASB. Your comments can be made electronically to the IASB website by clicking on the following link https://www.ifrs.org/projects/open-for-comment/. First-time users must register to submit electronically.


Upload your submission here

Please use this secure online form.

It has been designed to make your upload safe, quick and easy. 

You can:

  • Upload an MS Word document (and a PDF file, if you wish); or
  • Write your comments below in the space provided.

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Please note:

  • We would appreciate receiving a copy of your comments in electronic form (preferably Microsoft Word format).  This helps us to more efficiently collate and analyse comments. Please also specify the exposure draft number and title in your electronic file. 

  • Tell us on whose behalf you are making the comments (for example on behalf of a group or an entity).

  • We intend publishing all comments on the XRB website, unless they may be defamatory. If you have any objection to this, we will not publish them. However, they will remain subject to the Official Information Act 1982 and, therefore, may be released in part or in full. The Privacy Act 1993 also applies.

  • If you have an objection to the release of any information contained in your comments, we would appreciate you identifying the parts of your comments to be withheld, and the grounds under the Official Information Act 1982 for doing so (for example, that it would be likely to unfairly prejudice the commercial position of the person providing the information).