Reminder: as of November 5, 2024, amendments to the National Accounting Standard NAC(U)SB 21 “Impact of Exchange Rate Changes” came into effect, approved by the Ministry of Finance of Ukraine Order No. 460 dated 24.09.2024.
These changes clarify the treatment of foreign currency transactions and define characteristics of monetary and non-monetary items.
Key Updates
1. Initial recognition of foreign currency transactions
Transactions in foreign currency are now recognized in the reporting currency using the exchange rate at the beginning of the day of the transaction.
Non-cash transactions may also be recognized in the reporting currency at the amounts indicated in the bank documents, taking into account the bank’s exchange rate on the transaction date.
2. Monetary and non-monetary items
-
Monetary items — items with the right to receive or the obligation to provide a fixed or determinable amount of money or its equivalents.
-
Non-monetary items — items without such rights or obligations.
3. Technical clarifications
Certain terms were refined by adding “economic” or “business” for consistency in the standard.
Summary
The amendments to UAS 21 “The Effects of Changes in Foreign Exchange Rates”, which came into force on 5 November 2024, are aimed at clarifying and unifying approaches to accounting for foreign currency transactions. The updates relate to the initial recognition of foreign currency transactions, clearer differentiation between monetary and non-monetary items, as well as terminological alignment of the standard’s provisions. Application of the updated rules is expected to ensure more accurate recognition of foreign exchange differences and improve the quality of financial reporting.
Recommendations
Accounting professionals are advised to:
-
review the company’s accounting policies related to foreign currency transactions in light of the updated requirements of UAS 21;
-
pay particular attention to the correct determination of the date of initial recognition of business transactions and the applicable exchange rate;
-
analyse the classification of assets and liabilities as monetary or non-monetary items, as this directly affects the recalculation process and recognition of exchange differences;
-
formalise internal procedures governing the use of bank exchange rates for non-cash foreign currency transactions;
-
ensure that responsible staff are properly informed about the amendments to enable their correct practical application.
If required, Kreston Ukraine specialists are ready to provide advisory support on implementing the amendments to UAS 21 and adapting accounting procedures to the updated regulatory requirements.
