Use of a Hyperinflationary Presentation Currency by a Non-hyperinflationary Entity (IAS 21)

The IASB met on 19 March 2024 to discuss, in relation to the proposed amendments to IAS 21 The Effects of Changes in Foreign Exchange Rates:

• the disclosure requirements for subsidiaries without public accountability; and
• the due process requirements.

The amendments relate to non-hyperinflationary entities with a presentation currency that is hyperinflationary.

For subsidiaries without public accountability (eligible subsidiaries) as defined in the prospective IFRS Accounting Standard Subsidiaries without Public Accountability: Disclosures, the IASB tentatively decided to propose that:

1. an eligible subsidiary within the scope of the proposed amendments be required to disclose that its financial statements (or the results and financial position of its foreign operation) and corresponding figures for previous periods have been translated at the closing rate at the date of the most recent statement of financial position; and
2. an eligible subsidiary whose presentation currency ceases to be hyperinflationary be required to disclose that fact.

All 14 IASB members agreed with these decisions.

The IASB tentatively decided to propose that an eligible subsidiary that translates the results and financial position of a foreign operation that has a non-hyperinflationary functional currency into a hyperinflationary presentation currency be required to disclose summarised financial information about the results and financial position of that foreign operation.

Thirteen of 14 IASB members agreed with this decision.

The IASB set a 120-day comment period for the exposure draft.

All 14 IASB members confirmed they were satisfied the IASB has complied with the applicable due process requirements and has undertaken sufficient consultation and analysis to begin the process for balloting the exposure draft.

No IASB member indicated an intention to dissent from the proposals in the exposure draft.