Accounting Standard AASB 2025-4 Amendments to Australian Accounting Standards – Translation to a Hyperinflationary Presentation Currency

Administered by Department of the Treasury

Legislation au F2025L01556 In force Legislative Instrument

Legislation content

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:

  1.                    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
  2.                    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:

  1.                    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
  2.                    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.

Overview

Accounting Standard AASB 2025-4, titled "Amendments to Australian Accounting Standards – Translation to a Hyperinflationary Presentation Currency," was enacted in 2025 to address the need for clarity in translation procedures for entities operating in hyperinflationary economies. This accounting standard arose from amendments issued by the International Accounting Standards Board in November 2025, and was subsequently adopted by the Australian Accounting Standards Board (AASB) to ensure alignment with international standards while catering to the unique economic conditions in Australia. The AASB, under its legislative powers conferred by the Corporations Act 2001, issued this standard to clarify translation procedures for entities with a presentation currency in a hyperinflationary economy, while their functional currency remains in a non-hyperinflationary economy. This standard aims to ensure consistency and transparency in financial reporting for such entities, effective from annual periods beginning on or after 1 January 2027, with earlier application permitted. The AASB determined that these amendments would not substantially impact businesses or competition, hence no policy impact analysis was prepared.

Scope and Application

The Accounting Standard AASB 2025-4 applies to entities whose presentation currency is that of a hyperinflationary economy, particularly when their functional currency is from a non-hyperinflationary economy and they are translating their results and financial position into the currency of a hyperinflationary economy. This also applies to entities translating the results and financial position of a foreign operation into the currency of a hyperinflationary economy, where the foreign operation’s functional currency is from a non-hyperinflationary economy. The Standard applies to annual periods beginning on or after 1 January 2027, with earlier application permitted. The AASB has the power to amend the Accounting Standards made under the Corporations Act 2001, and these Standards are legislative instruments subject to the Acts Interpretation Act 1901. The Standard incorporates marked-up text to clearly identify amendments to AASB 121 and AASB 129, which are implemented using clean text in the compilations of the pronouncements when they are prepared, based on the legal commencement date of the amendments. The Standard does not exempt any entity or class of entities from its application, nor does it provide any specific exclusions or thresholds.

Key Provisions

Accounting Standard AASB 2025-4, Amendments to Australian Accounting Standards – Translation to a Hyperinflationary Presentation Currency, amends AASB 121 The Effects of Changes in Foreign Exchange Rates and AASB 129 Financial Reporting in Hyperinflationary Economies. The main purpose of these amendments is to clarify the translation procedures for entities that present their financial statements in the currency of a hyperinflationary economy but have a functional currency in a non-hyperinflationary economy, or for entities translating the financial statements of a foreign operation with a functional currency in a non-hyperinflationary economy into a hyperinflationary presentation currency (sections 2 and 3). This amendment also addresses the translation procedures for comparatives in financial statements and the implications when the presentation currency ceases to be that of a hyperinflationary economy (section 3). These provisions are designed to ensure that financial statements accurately reflect the economic substance of transactions and financial positions in such circumstances, thereby providing stakeholders with more reliable information. The AASB 2025-4 imposes specific obligations on entities that need to translate their financial statements into a hyperinflationary presentation currency. These entities must apply the clarified translation procedures to ensure that their financial statements accurately reflect the economic conditions of the hyperinflationary economy. This includes applying appropriate exchange rates and adjusting for the effects of hyperinflation when translating financial statements from a functional currency of a non-hyperinflationary economy into a hyperinflationary presentation currency (sections 4 and 5). Entities must also ensure that comparative information in their financial statements is translated consistently with the current period, taking into account the changes in the hyperinflationary environment (section 6). Breaches of the requirements outlined in AASB 2025-4 may result in non-compliance with financial reporting standards. While the Standard itself does not specify penalties for non-compliance, the broader legislative framework under which these Accounting Standards operate may impose penalties. For example, under the Corporations Act 2001, entities that fail to comply with accounting standards may be subject to civil penalties, including fines. Additionally, directors or officers of entities that fail to comply may be held personally liable for the entity's breaches, potentially resulting in fines or imprisonment (sections 1300 and 1317E). These potential consequences underscore the importance of adhering to the translation procedures set out in AASB 2025-4.

Legal classification tags

Area of Law
Commercial Law
Instrument
Accounting Standard
Concepts
Definitions & Interpretation
Reporting & Disclosure Obligations
Regulatory Standards

Interactions

Authorises

All Versions

Sourced from the Federal Register of Legislation at 26 August 2026. For the latest information on Australian Government law please go to https://www.legislation.gov.au.