When PS 2601, Foreign Currency Translation becomes effective in 2022, how will accounting FX cash and debt be impacted for governments in Canada?

When PS 2601, Foreign Currency Translation becomes effective in 2022, how will accounting FX cash and debt be impacted for governments in Canada? When PS 2601, Foreign Currency Translation becomes effective in 2022, how will accounting FX cash and debt be impacted for governments in Canada?

1 Expert Answer

Umar Saeed

MAcc, CPA, CA, Partner,  Welch LLP

The overall concept of foreign currency translation has not changed in PSAB's handbook. The requirement that foreign denominated assets or liabilities are translated into Canadian dollars at the reporting date in the new Foreign Currency Translation standard is the same as it was in the old standard.


Translation gains or losses arise when the foreign currency exchange rate on the transaction date differs from the reporting date. This happens all the time and the calculation of this exchange gain or loss is the same in the new standard as it was in the old standard.


However, PSAB's new foreign currency standard requires FX translation gains and losses to be reported in the Statement of Re-measurement Gains and Losses. Normally, when the monetary item is realized or settled would you report the translation gain and loss in your annual surplus or deficit.

Answers by Welch LLP

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