EFRAG publishes Draft Comment Letter on IASB's Exposure Draft ED/2021/4 Lack of Exchangeability

In April 2021, the IASB issued Exposure Draft ED/2021/4 Lack of Exchangeability (proposed amendments to IAS 21). At present, IAS 21 does not set out the exchange rate to be used when there is lack of exchangeability between two currencies. The amendments propose that when there is lack of exchangeability between two currencies at a measurement date, an entity shall estimate the spot exchange rate at that date. The proposed amendments also specify the conditions that the estimated exchange rate needs to meet. 

EFRAG has now published its Draft Comment Letter on the Exposure Draft. In the Draft Comment Letter, EFRAG has supported the proposal to set up principles-based guidance for determining a lack of exchangeability and the IASB’s intention not to prescribe a detailed method to determine an estimated exchange rate. EFRAG has further suggested some improvements to the application guidance. The Draft Comment Letter also contains questions to constituents that should provide EFRAG with more insights on current accounting practice for such situations.  

Comments on the Draft Comment Letter are requested by 26 August 2021.

The Draft Comment Letter may be accessed here.