EFRAG publishes final Comment Letter on Lack of Exchangeability

EFRAG has published its final Comment Letter on the IASB Exposure Draft ED/2021/4 Lack of Exchangeability. EFRAG supports the overall objective of the ED, but identifies some concerns with the proposals.

On assessing exchangeability between two currencies, EFRAG proposes to the IASB to consider whether guidance should also address other legal indirect exchange mechanisms. EFRAG also recommends to the IASB to clarify some of the proposals related to the notion ‘normal administrative delay’ in the context of the definition of the spot exchange rate provided in IAS 21.8.

Regarding determination of spot exchange rate when exchangeability is lacking, EFRAG agrees with the proposed approach. However, EFRAG recommends the IASB to require the use of an observable rate by way of a rebuttable presumption, improving application guidance and addressing the use of observable exchange rates in unofficial or illegal currency exchange transactions.

The final Comment Letter may be accessed here.