Philippine Public Sector Accounting Standard 4

THE EFFECTS OF CHANGES IN FOREIGN EXCHANGE RATES

Table of Contents
PAG
Numbe
r
BACKGROUND
INTRODUCTION TO THE IPSAS 4
PHILIPPINE APPLICATION GUIDANCE TO IPSAS 4
Scope

Effective Date

PPSAS 4 - The Effects of Changes in Foreign Exchange Rates

January 2014

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Philippine Public Sector Accounting Standard 4

THE EFFECTS OF CHANGES IN FOREIGN EXCHANGE RATES
Background
This Philippine Public Sector Accounting Standard (PPSAS) 4 consists of
International Public Sector Accounting Standard (IPSAS) 4, The Effects
of Changes in Foreign Exchange Rates, and the Philippine Application
Guidance (PAG) prepared to suit the Philippine public sector situation.
The IPSAS 4 was issued in May 2000 and revised in December 2006
and April 2008 by the International Public Sector Accounting Standards
Board (IPSASB) of the International Federation of Accountants (IFAC).
This includes amendments resulting from IPSASs issued up to January
15, 2012.
The PAG (in italics) provides supplementary guidance on the proper
implementation of IPSAS 4.
Introduction to the IPSAS 4
IPSAS 4 prescribes the standards in including foreign currency
transactions and foreign operations in the financial statements, and
translating financial statements into a presentation currency.
Translation refers to the conversion of foreign currency denominated
financial statements into the presentation currency (which is the
Philippine peso) by using the rate at which the currencies are
exchanged.
However, in the Philippine public sector except
Government Business Enterprises, the applicability of IPSAS 4 is limited
to accounting for foreign currency transactions and the corresponding
effects of changes in exchange rates.
Philippine Application Guidance to IPSAS 4
Scope
PAG1.Paragraph 6 deals with the applicability of this Standard to all
public sector entities other than Government Business
Enterprises (GBEs).
GBE is an entity that has all the following characteristics: (a) Is
an entity with the power to contract in its own name; (b) Has
been assigned the financial and operational authority to carry on
- The Effects of Changes in Foreign Exchange Rates

PPSAS 4
January 2014

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a business; (c) Sells goods and services, in the normal course of

its business, to other entities at a profit or full cost recovery; (d)
Is not reliant on continuing government funding to be a going
concern (other than purchases of outputs at arms length); and
(e) Is controlled by a public sector entity.
This standard shall be applied to all National Government
Agencies (NGAs), Local Government Units (LGUs) and
Government-Owned and/or Controlled Corporations (GOCCs) not
considered as GBEs.
Effective Date
PAG2.This PPSAS shall apply for annual financial statements covering
periods beginning January 1, 2014.

PPSAS 4 - The Effects of Changes in Foreign Exchange Rates

January 2014

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