• IAS 21 The Effects of Changes in Foreign Exchange Rates
  • IAS 39 Financial Instruments: Recognition and Measurement


  • IFRIC D22 issued 19 July 2007. Click for Press Release (PDF 50k).
  • Comment deadline 19 October 2007
  • The draft Interpretation was available publicly on the IASB's Website during the comment period.
  • IFRIC Interpretation 16 Hedges of a Net Investment in a Foreign Operation was issued 3 July 2008. Click for Press Release (PDF 59k).

Deloitte Letter of Comment on this Draft Interpretation

IFRIC Agenda Project Page

Important: IFRIC D24 resulted in the final IFRIC Interpretation 16, issued 3 July 2008. The information on this page reflects the IFRIC's discussions during the development of the final interpretation, including tentative decisions that were changed along the way. We have retained this page for historical purposes only.

Summary of IFRIC D22

In some companies the currency that is used to present financial statements (the presentation currency) differs from the currency that the company or its foreign subsidiaries use daily and in which they generate net cash flows (the operating, or functional, currency). At present, some companies use hedge accounting when 'translating' that functional currency into the presentation currency. The IFRIC takes the view that this mere translation of currency for presentational use does not represent a hedgeable economic risk. Consequently, IFRIC D22 proposes not to allow the use of hedge accounting when translating a functional currency into a presentation currency. The IFRIC concluded that the hedged risk is the foreign currency exposure arising between the functional currency of the foreign operation and the functional currency of any parent entity within the group structure. Clarification was needed on whether a company could account for a hedged foreign currency risk only in the immediate parent entity, only in the main parent entity, or in those or any intermediate parent entity of the foreign subsidiary.

IFRIC D22 also considers which individual entity within a group structure can hold a hedging instrument. IFRIC D22 proposes that the hedging instrument can be held by any subsidiary or parent entity within a group regardless of the entity's functional currency. To assess how effective the hedging instrument is in offsetting the risk from the foreign operation, the company must calculate the change in value of the hedging instrument in the functional currency of the parent hedging its risk and not the functional currency of the subsidiary holding the instrument.

Correction list for hyphenation

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