Explanatory Statement
Accounting Standard AASB 2025-4
Amendments to Australian Accounting Standards –
Translation to a Hyperinflationary Presentation Currency
December 2025
EXPLANATORY STATEMENT
Standards Amended by AASB 2025-4
This Standard makes amendments to AASB 121 The Effects of Changes in Foreign Exchange Rates (August 2015) and AASB 129 Financial Reporting in Hyperinflationary Economies (August 2015).
These amendments arise from the issuance of International Financial Reporting Standard Translation to a Hyperinflationary Presentation Currency (Amendments to IAS 21) by the International Accounting Standards Board in November 2025.
Main Features of AASB 2025-4
This Standard amends AASB 121 and AASB 129 to clarify the translation procedures for an entity whose presentation currency is that of a hyperinflationary economy, in the following circumstances:
- the entity’s functional currency is that of a non-hyperinflationary economy and it is translating its results and financial position into the currency of a hyperinflationary economy; and
- the entity is translating into the currency of a hyperinflationary economy the results and financial position of a foreign operation whose functional currency is that of a non-hyperinflationary economy.
The amendments include the translation procedures for comparatives in the entity’s financial statements and also address the effect of the entity’s presentation currency ceasing to be the currency of a hyperinflationary economy.
Application Date
This Standard applies to annual periods beginning on or after 1 January 2027, with earlier application permitted.
Marked-up Text
This Standard incorporates marked-up text to clearly identify the amendments to AASB 121 and AASB 129. All amendments are incorporated using clean text into the compilations of the pronouncements when they are prepared, based on the legal commencement date of the amendments.
Consultation Prior to Issuing this Standard
In July 2024, the IASB issued Exposure Draft ED/2024/4 Translation to a Hyperinflationary Presentation Currency, with comments due by 22 November 2024. The AASB did not issue the proposals in Australia for public comment, but publicised the IASB’s Exposure Draft and comment deadline on the AASB website. The AASB was of the view that the proposed amendments in ED/2024/4 relating to entities with a presentation currency that is the currency of a hyperinflationary economy would be unlikely to affect Australian entities. Therefore, the AASB decided not to issue an Australian Exposure Draft and did not comment to the IASB on its Exposure Draft. No Australian stakeholders provided submissions to either the AASB or the IASB.
The AASB considered and adopted the amendments made by the IASB to IAS 21 and IAS 29 in finalising AASB 2025‑4. The AASB set an effective date of annual periods beginning on or after 1 January 2027, with earlier application permitted, the same as the IASB’s effective date.
A Policy Impact Analysis has not been prepared in connection with the issue of AASB 2025-4 as the amendments made do not have a substantial direct or indirect impact on business or competition.
Legislative Features of Accounting Standards
Power to Make Amendments
Under subsection 33(3) of the Acts Interpretation Act 1901, where an Act confers a power to make, grant or issue any instrument of a legislative or administrative character (including rules, regulations or by-laws), the power shall be construed as including a power exercisable in the like manner and subject to the like conditions (if any) to repeal, rescind, revoke, amend, or vary any such instrument. Accordingly, the AASB has the power to amend the Accounting Standards that are made by the AASB as legislative instruments under the Corporations Act 2001.
References to Other AASB Standards
References in this Standard to the titles of other AASB Standards that are legislative instruments are to be construed as references to those other Standards as originally made and as amended from time to time and incorporate provisions of those Standards as in force from time to time.
Copyright
This Standard, like all Accounting Standards promulgated by the AASB, is published with Commonwealth of Australia copyright. Educational, commercial and other publishers are able to request the AASB for permission to reprint all or parts of this Standard, which is given without charge.
Exemption from Sunsetting
Accounting Standards promulgated by the AASB that are legislative instruments are exempt from the sunsetting provisions of the Legislation Act 2003 through section 12 of the Legislation (Exemptions and Other Matters) Regulation 2015 (Item 18(a)).
The AASB’s Australian Accounting Standards incorporate Standards set by the International Accounting Standards Board in respect of publicly accountable for-profit entities. The AASB’s Accounting Standards are exempt from sunsetting because a more stringent review process than sunsetting applies to the Standards. This review process ensures Australia’s Accounting Standards regime remains consistent with international Standards. Typically, the AASB Standards are revised at least once within a ten-year period, with most of the Standards subject to much more frequent revisions. Each revision follows the stringent review process (which includes the opportunity for public comment) in order to remain consistent with international Standards. It is very unlikely that any AASB Standard would not have been amended (or else considered for amendment) within a ten-year period through these review processes. Therefore, if it applied, a ten-year sunsetting regime would have very limited practical application to AASB Standards. Parliamentary oversight is retained whenever a Standard is replaced or amended since the Standards are disallowable instruments and subject to the normal tabling and scrutiny process as required by the Legislation Act 2003.
Statement of Compatibility with Human Rights
Prepared in accordance with Part 3 of the
Human Rights (Parliamentary Scrutiny) Act 2011
Accounting Standard AASB 2025-4
Amendments to Australian Accounting Standards –
Translation to a Hyperinflationary Presentation Currency
Overview of the Accounting Standard
This Standard amends AASB 121 The Effects of Changes in Foreign Exchange Rates and AASB 129 Financial Reporting in Hyperinflationary Economies to clarify the translation procedures for an entity whose presentation currency is that of a hyperinflationary economy, in the following circumstances:
- the entity’s functional currency is that of a non-hyperinflationary economy and it is translating its results and financial position into the currency of a hyperinflationary economy; and
- the entity is translating into the currency of a hyperinflationary economy the results and financial position of a foreign operation whose functional currency is that of a non-hyperinflationary economy.
The amendments include the translation procedures for comparatives in the entity’s financial statements and also address the effect of the entity’s presentation currency ceasing to be the currency of a hyperinflationary economy.
Human Rights Implications
This Standard is issued by the AASB in furtherance of the objective of facilitating the Australian economy. It does not diminish or limit any of the applicable human rights or freedoms, and thus does not raise any human rights issues.
Conclusion
This Standard is compatible with the human rights and freedoms recognised or declared in the international instruments listed in section 3 of the Human Rights (Parliamentary Scrutiny) Act 2011.