Accounting Standards - ASB euro appendix
The Accounting Standards Board’s Urgent Issues Task Force this week interrupted its usual August hiatus to publish an appendix explaining how companies should handle the transition to the euro.
‘We don’t usually publish anything in August because people are away,’ said ASB secretary Michael Butcher. ‘But the appendix wasn’t a new thing, and we thought it might actually be useful. It’s our usual practice with things approved by the UITF to get them out as soon as possible.’
The appendix to UITF Abstract 21 applies with immediate effect. It was drafted following several requests for further guidance on how to convert accounts published after the new currency is introduced among participating countries on 1 January 1999. The issue is particularly important for accountants in Ireland, who follow ASB standards.
One of the main complications was how to present ‘convenience translations’ of previous years’ figures to provide a meaningful comparison to results reported in the euro for the first time. The new guidance stipulates that the previous figures should be converted using the local currency’s euro rate established on 1 January 1999.
However where fluctuating historical exchange rates might affect comparisons, for example between accounts reported in French francs consolidated into an Irish company’s accounts, the figures should be translated at the exchange rates ruling at the relevant dates, with the results then translated into euros.