We are aware that the June meeting of the Board includes on the agenda a discussion of IAS 21.32 regarding exchange differences on monetary items that form part of an entity’s net investment in a foreign operation. The application of this paragraph, taken together with paras 33 and 15, is something that has been giving concern to many treasurers when they come to account for their normal group funding arrangements.
We would appreciate it if you are able to copy this letter to the Board members prior to the meeting and can then factor into the Board debate the experiences mentioned here. This letter is not confidential and may be made freely available elsewhere if you so wish.
The concerns of treasurers are twofold. Firstly, and most importantly, that the accounting outcomes of the rules in IAS 21 seem to be at odds with displaying in the accounts a true picture of the normal commercial activities carried on by companies’ treasury operations; and secondly that there seems to be some difference of opinion as to the interpretation of the rules as written.
