Foreign Currency

International financial reporting standards (IFRS) governing the translation of foreign currency financial statements and the accounting for foreign currency transactions are found primarily in International Accounting Standards 21 (IAS 21), The Effects of Changes in Foreign Exchange Rates. IAS 21 prescribes two sets of requirements when translating foreign currency financial statements. The first of these deals with reporting foreign currency transactions by each individual entity, which may also be part of reporting group in the individual entities' functional currencies or remeasuring the foreign currency financial statements into the functional currency. The second set of requirements is for the translation of entities' financial statements from the functional currency into presentation currency. The functional currency of the entity holding the instrument is irrelevant in determining effectiveness, and any entity within the group, regardless of its functional currency, can hold the hedging instrument.