IAS 21 - The Effects of Changes in Foreign Exchange Rates: Matters Arising

Emuebie Emeke; Ogundeyi Adebayo; Fakuade Olufunmilayo; Tunji Shiyanbola

doi:doi:10.11648/j.ijafrm.20220703.11

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IAS 21 - The Effects of Changes in Foreign Exchange Rates: Matters Arising

Emuebie Emeke, Ogundeyi Adebayo, Fakuade Olufunmilayo, Tunji Shiyanbola

Published in International Journal of Accounting, Finance and Risk Management (Volume 7, Issue 3)

Received: 22 May 2022 Accepted: 20 June 2022 Published: 13 July 2022

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Abstract

One of the aims of the International Accounting Standard Board (IASB) is to enhance the quality of financial reporting and ensure universality in comparison of financial statements produced in different entities and countries by users of such financial statements. International Accounting Standard (IAS) 21: Effect of Changes in Foreign Exchange Rates is applicable to Multinational entities and businesses that engage in Foreign Currency denominated transactions. Thus, this study examines IAS 21 and matters arising from its adoption and application. The objective, scope, measurement and presentation are discussed as it affects entities with foreign operations such as subsidiaries, associates, joint venture and branch of an entity operating under a different environment subjected to different laws and currency of exchange. The study employs exploratory method in discussing concepts like Currency Translation, Foreign Currency Transactions, Foreign Currency Translations and Functional Currency Determination with the Stakeholder Salience Theory as the underpinning theory. Closing Rates, Exchange Rates and Fair Value of non-monetary items were examined as they pertain to Reporting of Foreign Currency Transactions. The application of the standard does not cover items covered by other standards such as IAS 39 on Financial Instruments, IAS 7 on Statement of Cashflow. Lack of Exchangeability of Cryptocurrencies have been identified as the main constraint in the application of the standard on virtual currency transactions Thus the study concludes that, although the standard provides the framework for accounting for foreign operations denominated in foreign currencies, management discretion might override the principles as other matters relating to foreign operations are still not addressed. It is therefore recommended that, While the IASB attempt to address currency exchangeability is appropriate, IAS 21 should address the impact of virtual currencies (cryptocurrencies) on overseas transactions and translations.

Published in	International Journal of Accounting, Finance and Risk Management (Volume 7, Issue 3)
DOI	10.11648/j.ijafrm.20220703.11
Page(s)	92-98
Creative Commons	This is an Open Access article, distributed under the terms of the Creative Commons Attribution 4.0 International License (http://creativecommons.org/licenses/by/4.0/), which permits unrestricted use, distribution and reproduction in any medium or format, provided the original work is properly cited.
Copyright	Copyright © The Author(s), 2024. Published by Science Publishing Group

Keywords

Cryptocurrency, Foreign Exchange Rates, Foreign Exchange Transactions, Foreign Exchange Translations, IAS

References

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APA Style

Emuebie Emeke, Ogundeyi Adebayo, Fakuade Olufunmilayo, Tunji Shiyanbola. (2022). IAS 21 - The Effects of Changes in Foreign Exchange Rates: Matters Arising. International Journal of Accounting, Finance and Risk Management, 7(3), 92-98. https://doi.org/10.11648/j.ijafrm.20220703.11

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ACS Style

Emuebie Emeke; Ogundeyi Adebayo; Fakuade Olufunmilayo; Tunji Shiyanbola. IAS 21 - The Effects of Changes in Foreign Exchange Rates: Matters Arising. Int. J. Account. Finance Risk Manag. 2022, 7(3), 92-98. doi: 10.11648/j.ijafrm.20220703.11

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AMA Style

Emuebie Emeke, Ogundeyi Adebayo, Fakuade Olufunmilayo, Tunji Shiyanbola. IAS 21 - The Effects of Changes in Foreign Exchange Rates: Matters Arising. Int J Account Finance Risk Manag. 2022;7(3):92-98. doi: 10.11648/j.ijafrm.20220703.11

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@article{10.11648/j.ijafrm.20220703.11,
  author = {Emuebie Emeke and Ogundeyi Adebayo and Fakuade Olufunmilayo and Tunji Shiyanbola},
  title = {IAS 21 - The Effects of Changes in Foreign Exchange Rates: Matters Arising},
  journal = {International Journal of Accounting, Finance and Risk Management},
  volume = {7},
  number = {3},
  pages = {92-98},
  doi = {10.11648/j.ijafrm.20220703.11},
  url = {https://doi.org/10.11648/j.ijafrm.20220703.11},
  eprint = {https://article.sciencepublishinggroup.com/pdf/10.11648.j.ijafrm.20220703.11},
  abstract = {One of the aims of the International Accounting Standard Board (IASB) is to enhance the quality of financial reporting and ensure universality in comparison of financial statements produced in different entities and countries by users of such financial statements. International Accounting Standard (IAS) 21: Effect of Changes in Foreign Exchange Rates is applicable to Multinational entities and businesses that engage in Foreign Currency denominated transactions. Thus, this study examines IAS 21 and matters arising from its adoption and application. The objective, scope, measurement and presentation are discussed as it affects entities with foreign operations such as subsidiaries, associates, joint venture and branch of an entity operating under a different environment subjected to different laws and currency of exchange. The study employs exploratory method in discussing concepts like Currency Translation, Foreign Currency Transactions, Foreign Currency Translations and Functional Currency Determination with the Stakeholder Salience Theory as the underpinning theory. Closing Rates, Exchange Rates and Fair Value of non-monetary items were examined as they pertain to Reporting of Foreign Currency Transactions. The application of the standard does not cover items covered by other standards such as IAS 39 on Financial Instruments, IAS 7 on Statement of Cashflow. Lack of Exchangeability of Cryptocurrencies have been identified as the main constraint in the application of the standard on virtual currency transactions Thus the study concludes that, although the standard provides the framework for accounting for foreign operations denominated in foreign currencies, management discretion might override the principles as other matters relating to foreign operations are still not addressed. It is therefore recommended that, While the IASB attempt to address currency exchangeability is appropriate, IAS 21 should address the impact of virtual currencies (cryptocurrencies) on overseas transactions and translations.},
 year = {2022}
}

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TY  - JOUR
T1  - IAS 21 - The Effects of Changes in Foreign Exchange Rates: Matters Arising
AU  - Emuebie Emeke
AU  - Ogundeyi Adebayo
AU  - Fakuade Olufunmilayo
AU  - Tunji Shiyanbola
Y1  - 2022/07/13
PY  - 2022
N1  - https://doi.org/10.11648/j.ijafrm.20220703.11
DO  - 10.11648/j.ijafrm.20220703.11
T2  - International Journal of Accounting, Finance and Risk Management
JF  - International Journal of Accounting, Finance and Risk Management
JO  - International Journal of Accounting, Finance and Risk Management
SP  - 92
EP  - 98
PB  - Science Publishing Group
SN  - 2578-9376
UR  - https://doi.org/10.11648/j.ijafrm.20220703.11
AB  - One of the aims of the International Accounting Standard Board (IASB) is to enhance the quality of financial reporting and ensure universality in comparison of financial statements produced in different entities and countries by users of such financial statements. International Accounting Standard (IAS) 21: Effect of Changes in Foreign Exchange Rates is applicable to Multinational entities and businesses that engage in Foreign Currency denominated transactions. Thus, this study examines IAS 21 and matters arising from its adoption and application. The objective, scope, measurement and presentation are discussed as it affects entities with foreign operations such as subsidiaries, associates, joint venture and branch of an entity operating under a different environment subjected to different laws and currency of exchange. The study employs exploratory method in discussing concepts like Currency Translation, Foreign Currency Transactions, Foreign Currency Translations and Functional Currency Determination with the Stakeholder Salience Theory as the underpinning theory. Closing Rates, Exchange Rates and Fair Value of non-monetary items were examined as they pertain to Reporting of Foreign Currency Transactions. The application of the standard does not cover items covered by other standards such as IAS 39 on Financial Instruments, IAS 7 on Statement of Cashflow. Lack of Exchangeability of Cryptocurrencies have been identified as the main constraint in the application of the standard on virtual currency transactions Thus the study concludes that, although the standard provides the framework for accounting for foreign operations denominated in foreign currencies, management discretion might override the principles as other matters relating to foreign operations are still not addressed. It is therefore recommended that, While the IASB attempt to address currency exchangeability is appropriate, IAS 21 should address the impact of virtual currencies (cryptocurrencies) on overseas transactions and translations.
VL  - 7
IS  - 3
ER  -

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Author Information

Emuebie Emeke

School of Management Sciences, Babcock University, Ilishan-Remo, Nigeria
Ogundeyi Adebayo

School of Management Sciences, Babcock University, Ilishan-Remo, Nigeria
Fakuade Olufunmilayo

School of Management Sciences, Babcock University, Ilishan-Remo, Nigeria
Tunji Shiyanbola

School of Management Sciences, Babcock University, Ilishan-Remo, Nigeria

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APA Style

Emuebie Emeke, Ogundeyi Adebayo, Fakuade Olufunmilayo, Tunji Shiyanbola. (2022). IAS 21 - The Effects of Changes in Foreign Exchange Rates: Matters Arising. International Journal of Accounting, Finance and Risk Management, 7(3), 92-98. https://doi.org/10.11648/j.ijafrm.20220703.11

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ACS Style

Emuebie Emeke; Ogundeyi Adebayo; Fakuade Olufunmilayo; Tunji Shiyanbola. IAS 21 - The Effects of Changes in Foreign Exchange Rates: Matters Arising. Int. J. Account. Finance Risk Manag. 2022, 7(3), 92-98. doi: 10.11648/j.ijafrm.20220703.11

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AMA Style

Emuebie Emeke, Ogundeyi Adebayo, Fakuade Olufunmilayo, Tunji Shiyanbola. IAS 21 - The Effects of Changes in Foreign Exchange Rates: Matters Arising. Int J Account Finance Risk Manag. 2022;7(3):92-98. doi: 10.11648/j.ijafrm.20220703.11

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@article{10.11648/j.ijafrm.20220703.11,
  author = {Emuebie Emeke and Ogundeyi Adebayo and Fakuade Olufunmilayo and Tunji Shiyanbola},
  title = {IAS 21 - The Effects of Changes in Foreign Exchange Rates: Matters Arising},
  journal = {International Journal of Accounting, Finance and Risk Management},
  volume = {7},
  number = {3},
  pages = {92-98},
  doi = {10.11648/j.ijafrm.20220703.11},
  url = {https://doi.org/10.11648/j.ijafrm.20220703.11},
  eprint = {https://article.sciencepublishinggroup.com/pdf/10.11648.j.ijafrm.20220703.11},
  abstract = {One of the aims of the International Accounting Standard Board (IASB) is to enhance the quality of financial reporting and ensure universality in comparison of financial statements produced in different entities and countries by users of such financial statements. International Accounting Standard (IAS) 21: Effect of Changes in Foreign Exchange Rates is applicable to Multinational entities and businesses that engage in Foreign Currency denominated transactions. Thus, this study examines IAS 21 and matters arising from its adoption and application. The objective, scope, measurement and presentation are discussed as it affects entities with foreign operations such as subsidiaries, associates, joint venture and branch of an entity operating under a different environment subjected to different laws and currency of exchange. The study employs exploratory method in discussing concepts like Currency Translation, Foreign Currency Transactions, Foreign Currency Translations and Functional Currency Determination with the Stakeholder Salience Theory as the underpinning theory. Closing Rates, Exchange Rates and Fair Value of non-monetary items were examined as they pertain to Reporting of Foreign Currency Transactions. The application of the standard does not cover items covered by other standards such as IAS 39 on Financial Instruments, IAS 7 on Statement of Cashflow. Lack of Exchangeability of Cryptocurrencies have been identified as the main constraint in the application of the standard on virtual currency transactions Thus the study concludes that, although the standard provides the framework for accounting for foreign operations denominated in foreign currencies, management discretion might override the principles as other matters relating to foreign operations are still not addressed. It is therefore recommended that, While the IASB attempt to address currency exchangeability is appropriate, IAS 21 should address the impact of virtual currencies (cryptocurrencies) on overseas transactions and translations.},
 year = {2022}
}

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TY  - JOUR
T1  - IAS 21 - The Effects of Changes in Foreign Exchange Rates: Matters Arising
AU  - Emuebie Emeke
AU  - Ogundeyi Adebayo
AU  - Fakuade Olufunmilayo
AU  - Tunji Shiyanbola
Y1  - 2022/07/13
PY  - 2022
N1  - https://doi.org/10.11648/j.ijafrm.20220703.11
DO  - 10.11648/j.ijafrm.20220703.11
T2  - International Journal of Accounting, Finance and Risk Management
JF  - International Journal of Accounting, Finance and Risk Management
JO  - International Journal of Accounting, Finance and Risk Management
SP  - 92
EP  - 98
PB  - Science Publishing Group
SN  - 2578-9376
UR  - https://doi.org/10.11648/j.ijafrm.20220703.11
AB  - One of the aims of the International Accounting Standard Board (IASB) is to enhance the quality of financial reporting and ensure universality in comparison of financial statements produced in different entities and countries by users of such financial statements. International Accounting Standard (IAS) 21: Effect of Changes in Foreign Exchange Rates is applicable to Multinational entities and businesses that engage in Foreign Currency denominated transactions. Thus, this study examines IAS 21 and matters arising from its adoption and application. The objective, scope, measurement and presentation are discussed as it affects entities with foreign operations such as subsidiaries, associates, joint venture and branch of an entity operating under a different environment subjected to different laws and currency of exchange. The study employs exploratory method in discussing concepts like Currency Translation, Foreign Currency Transactions, Foreign Currency Translations and Functional Currency Determination with the Stakeholder Salience Theory as the underpinning theory. Closing Rates, Exchange Rates and Fair Value of non-monetary items were examined as they pertain to Reporting of Foreign Currency Transactions. The application of the standard does not cover items covered by other standards such as IAS 39 on Financial Instruments, IAS 7 on Statement of Cashflow. Lack of Exchangeability of Cryptocurrencies have been identified as the main constraint in the application of the standard on virtual currency transactions Thus the study concludes that, although the standard provides the framework for accounting for foreign operations denominated in foreign currencies, management discretion might override the principles as other matters relating to foreign operations are still not addressed. It is therefore recommended that, While the IASB attempt to address currency exchangeability is appropriate, IAS 21 should address the impact of virtual currencies (cryptocurrencies) on overseas transactions and translations.
VL  - 7
IS  - 3
ER  -

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