Egypt announces the amendment of accounting standards to address the effects of the change in the exchange rate

Cairo, December 29 / Egypt decided to amend some provisions of accounting standards related to the effects of changes in foreign exchange rates on companies’ business results, by setting optional and temporary accounting treatments to deal with the effects of the exceptional economic decision related to moving the exchange rate.

And according to the decision issued by Egyptian Prime Minister Dr. Mostafa Madbouly in this regard, the philosophy of one of these accounting treatments revolves around enabling companies that acquired assets in foreign currencies before the unusual exchange rate movements and still have financing obligations on this asset on October 27, 2022 to capitalize the losses of currency differences. These assets are recorded in their financial statements in Assets, in order to mitigate the impact of exchange rate differences on their annual business results and financial indicators.
The new amendments also allow the establishment’s other accounting treatment to recognize the debit and credit currency differences resulting from translating the balances of assets and liabilities of monetary nature into existing foreign currencies, even if they are not linked to a specific asset, at the end of December 31, 2022 or at the end of the closing date of the financial statements for the financial period to apply this treatment. special accounting, under other comprehensive income.
Dr. Mohamed Farid, Chairman of the Board of Directors of the Egyptian Financial Supervisory Authority, said, in a statement, that the new annex is an exceptional and temporary accounting treatment that helps companies absorb the effects of the exchange rate movement on their assets that they financed before the decision in foreign currencies, which reduces pressure on the income statement.