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Section PS 2601 - Foreign Currency Translation

Effective date:

(i) Government organizations – April 1, 2012; and (ii) Governments – April 1, 2019. Earlier adoption is permitted.

Published by the PSAB:

June 2011

Overview

This Section establishes standards on how to account for and report transactions that are denominated in a foreign currency in government financial statements.

Under PS 2601 Foreign currency translation the government’s functional currency is presumed to be the Canadian dollar. Transactions made in a currency other than Canadian dollars are translated applying the exchange rate in effect on the date of the transaction. Monetary items denominated in a foreign currency are translated at each subsequent reporting date to reflect the current exchange rate.

For fiscal periods beginning prior to April 1, 2019 for governments and prior to April 1, 2012 for government organizations, exchange gains and losses are recognized in the statement of operations except in the case of long-term monetary items. For such items, the gain or loss is deferred and amortized to revenue/expense over the remaining life of the item. The unamortized foreign exchange gain or loss is separately reported on the statement of financial position as an offset or addition to the related long-term monetary item.

History of Section PS 2601

Date

Development

Comments

June 2011

New Section

This Section revises and replaces Section PS 2600 Foreign currency translation.

It is effective for (i) government organizations for fiscal years beginning on or after April 1, 2012; and (ii) governments for fiscal years beginning on or after April 1, 2015. Earlier adoption is permitted. Sections PS 1201 Financial statement presentation, and PS 3450 Financial instruments, are to be adopted at the same time.

May 2012

Revised transitional provisions

The transitional provisions for this Section have been amended to clarify their application to hedging instruments for government organizations transitioning from the standards in Part V of the Handbook – Accounting. A new transitional provision has been added that applies to government organizations transitioning from the standards in Part V with self-sustaining foreign operations.

August 2013

Clarified effective dates

This Section has been amended to clarify the effective dates for governments and government organizations.

March 2014

Revised transitional provisions

The transitional provisions have been amended to extend the effective date for governments by one year to fiscal years beginning on or after April 1, 2016. Earlier adoption is permitted.

June 2015

Revised transistional provisions

The transitional provisions have been amended to extend the effective date for governments to three years to fiscal years beginning on or after April 1, 2019. Earlier adoption is permitted.

Note: The above summary does not include details of consequential amendments made as the result of other projects.

Correction list for hyphenation

These words serve as exceptions. Once entered, they are only hyphenated at the specified hyphenation points. Each word should be on a separate line.