New Accounting Rules for Reporting Unexchangeable Currencies Published
The IASB has issued a narrow accounting rule aimed at eliminating confusion about how to report foreign currency transactions when the currency in question cannot be exchanged for another currency. The board published an amendment to IAS 21, The Effects of Changes in Foreign Exchange Rates, which requires companies to apply a two-step approach when reporting a lack of exchangeability between currencies. The guidance is effective for annual reporting periods beginning on or after Jan. 1, 2025. Early application is permitted. The amendments will result in more comparable information and will be more useful to users of financial statements, the IASB said. “These amendments fill a gap in our accounting standards,” IASB Vice Chair Linda Mezon-Hutter said in a statement. “Diverse views on assessing whether a currency can be exchanged into another currency, and the exchange rate to use when it cannot, could lead to material differences in companies’ financial statements,” she said. “The amendments will improve the usefulness of information provided to investors.”
IASB Schedules Meeting on Proposed Income Tax Rules for SMEs
The IASB has scheduled a meeting for August 23 to vote on whether to finalize proposed amendments to the IFRS for SMEs (small and medium-sized entities) guidance which would introduce a temporary exemption from income tax accounting rules tied to international tax reform. Typically, the board is on annual summer hiatus in the month of August, and therefore this meeting is an anomaly. The changes are expected to pass, and final rules could be issued in September, according to meeting papers, published on August 10. The discussions will surround Exposure Draft (ED) 2023-3, “International Tax Reform—Pillar Two Model Rules—Proposed Amendments to the IFRS for SMEs Standard,” which was issued for public comment on June 1. It would introduce a temporary and mandatory exception so that companies will not have to account for deferred taxes arising from Pillar Two model rules that were issued by the Organisation for Economic Co-operation and Development (OECD). The proposal also aims to introduce targeted disclosure requirements in periods when Pillar Two legislation is in effect; and clarify that ‘other events’ in the disclosure objective for income taxes include enacted or substantively enacted Pillar Two legislation.
AICPA Board Votes to Issue Proposal on Attestation Standards to Align with Quality Management Standards.
The AICPA’s Auditing Standards Board (ASB) voted unanimously to issue proposed Statement on Standards for Attestation Engagements (SSAE), Amendments to the Attestation Standards for Appropriate Consistency with the New and Revised Quality Management Standards, during a special meeting held on August 10, according to Ahava Goldman, an associate director with the Association of International Certified Professional Accountants. The objective of the standards-setting project is to revise certain attestation standards to better conform with quality management (QM) standards issued in June 2022. The suite of QM standards are as follows:
- Statement on Quality Management Standards (SQMS) 1, A Firm’s System of Quality Management
- SQMS 2, Engagement Quality Reviews
- Statement on Auditing Standards (SAS) 146, Quality Management for an Engagement Conducted in Accordance with Generally Accepted Auditing Standards
- Statement on Standards for Accounting and Review Services (SSARS) 26, Quality Management for an Engagement Conducted in Accordance with Statements on Standards for Accounting and Review Services.
The proposed SSAEs would primarily revise AT-C section 105, “Concepts Common to All Attestation Engagements,” and also to the documentation requirements in sections 205, “Assertion-Based Examination Engagements,” 210, “Review Engagements,” and 215, “Agreed-Upon Procedures Engagements.”