Currency Conversion and IAS 21

Francis’ currency conversion methodology generally aligns with IAS 21, applying average rates to P&L items and closing rates to balance sheet items. Although IAS 21 does not specify how to handle equity accounts, it does require any exchange rate differences to appear in a separate equity component called Other Comprehensive Income (OCI).

By default, Francis allocates exchange rate differences directly to the relevant accounts. However, you can reassign these differences for equity accounts to an “OCI” row using formulas. At minimum, the disparity between the average rate for P&L items and the closing rate for balance sheet items (Effect 2) should be reflected in OCI. You can also transfer adjustments to equity accounts for monthly closing rates (Effect 1) into OCI.

If you need help configuring IAS 21 in Francis, reach out to us at support@francis.app.