The changes to IAS 21 are intended to support countries in determining whether a currency can be exchanged into another currency, and what accounting to apply should it not be possible.
According to the IASB, the current standard does not set out the exchange rate to use when there is no observable exchange rate for a company to use.
In turn, the board’s amendments “would help companies identify if this situation applies to them and the accounting to apply when it counts”.
It added that 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”.
The IASB has set a deadline for comments at 1 September 2021, and has released a webcast alongside its exposure draft to answer a number of commonly asked questions.