Foreign Currency Transactions & Translation Audit Working Paper
FOREIGN CURRENCY TRANSACTIONS & TRANSLATION — AUDIT WORKING PAPER (IND AS 21)
Entity: {{client_name}} · Period ended: {{period_end}}
A. Functional Currency Determination
- Primary economic environment test — the currency of the economy in which the entity primarily generates and expends cash (Ind AS 21 para 9-10).
- Where indicators conflict, management judgment on functional currency documented, with the factors given the greater weight identified.
- Confirm functional currency has not changed during the year; if it has, confirm the change was applied prospectively from the date of change.
B. Classification of Items — Monetary vs. Non-Monetary
Monetary items (cash, receivables, payables, borrowings in foreign currency) are retranslated at the closing rate at each reporting date. Non-monetary items carried at historical cost are NOT retranslated; non-monetary items carried at fair value are retranslated at the rate on the date fair value was determined.
| Balance | Currency | Monetary / Non-monetary | Translated at closing rate? (Y/N) | Basis if non-monetary (cost / FV date) |
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C. Exchange Difference Recognition
- Exchange differences on monetary items generally recognised in profit or loss in the period in which they arise (Ind AS 21 para 28).
- Where the entity has a net investment in a foreign operation, confirm exchange differences on that monetary item are recognised in OCI, not P&L, per para 32.
- Test the exchange rate used for each transaction — spot rate on transaction date, or an average rate where rates don't fluctuate significantly and its use is not misleading (para 22).
D. Disclosure
Confirm disclosure of the amount of exchange differences recognised in profit or loss (excluding those on financial instruments at FVTPL) and net exchange differences classified in a separate component of equity, with a reconciliation of the opening and closing balance of that amount.
E. Conclusion
Conclusion on functional currency determination, translation accuracy, and exchange-difference recognition and disclosure: ____________________________________________
Prepared by: ______________ Date: 31 July 2026
Reviewed by: ______________ Date: ______________
