Foreign currency transactions and imported equipment/drugs

Most medical equipment, implants and many pharmaceuticals are imported, so FX exposure directly affects cost of sales, payables and reported profit; the SAR/USD peg lulls many providers into ignoring EUR, GBP, JPY and other real currency risk, which shows up as unmanaged, sometimes material FX losses precisely when currency markets are volatile.

Are significant purchases of equipment, implants or drugs denominated in USD, EUR or other foreign currencies rather than SAR? Given the SAR-USD peg, is exposure limited mainly to non-USD currencies such as EUR, and has that distinction been made in the exposure analysis rather than treating all foreign currency alike? Are outstanding foreign currency payables, and any related hedging instruments, remeasured at the closing rate at each reporting date with the resulting gain or loss recognized correctly?

1) Identify all significant foreign-currency-denominated purchase commitments and payables (equipment, implants, pharmaceuticals), distinguishing genuinely foreign-currency-invoiced balances from SAR-invoiced ones even when sourced from foreign suppliers. 2) Translate each transaction at the spot exchange rate on the transaction date to establish the initial SAR cost of inventory/equipment and the corresponding payable. 3) At each reporting date, retranslate monetary items only (foreign-currency payables, cash) at the closing rate; do not retranslate non-monetary items (inventory, PP&E) already recorded at a historical rate. 4) Recognize the resulting exchange differences on monetary items in profit or loss for the period. 5) Separately track exposure by currency (not just USD, given the SAR/USD peg) to identify genuine EUR/GBP/other exposure requiring risk management attention. 6) Where hedging instruments are used, assess and document hedge accounting eligibility and designation under IFRS 9 if that treatment is elected.

Non-monetary items such as inventory and PP&E, once recognized at a historical rate, are not retranslated for currency movements; only monetary balances (payables, receivables, cash) are remeasured at closing rates at each reporting date, with the resulting difference taken to profit or loss; any related hedges should be assessed under IFRS 9 hedge accounting requirements (economic relationship, credit risk, hedge ratio) if hedge accounting is to be applied rather than default fair-value-through-profit-or-loss treatment of the derivative.

Disclose the amount of net foreign exchange gains/losses recognized in profit or loss for the period; disclose the entity's policy for managing foreign currency risk on imported medical supplies and equipment; disclose significant foreign-currency-denominated commitments outstanding at the reporting date; disclose any hedging instruments and their accounting treatment.

• Retranslating inventory or PP&
• E already measured at a historical exchange rate, incorrectly creating phantom FX gains/losses on non-monetary items
• ignoring EUR, GBP or other non-USD exposures because the SAR/USD peg creates a false sense of no FX risk overall
• not tracking which supplier balances are genuinely foreign-currency-denominated versus SAR-invoiced by a local distributor of foreign goods
• failing to apply hedge accounting documentation requirements when claiming hedge accounting treatment
• using an average rate instead of the spot rate at the transaction date for initial recognition.