By Alois Vinga
COMPANIES operating in Zimbabwe are set to spend more on accounting and auditing services due to a recent move to adopt IAS 29, an accounting standard applied in financial reporting in hyper-inflationary economies, Chartered Accountants Academy (CAA) chief executive, Anesu Daka said Monday.
Speaking to NewZimbabwe.com Business on the sidelines of the hyperinflation reporting workshop Tuesday, Daka said the new reporting system requires more time and details expended in preparing financial statements.
“The new reporting system requires companies to avail historical information and the selection of a pricing index used in period under review in order to make the financial report realistic in the eyes of the company’s stakeholders and investors.
“Now this means accountants are going to spend more time preparing these reports and it may come with additional costs for companies seeking these services,” said Daka.
Under IAS 29, financial reports must follow restatement procedures which include, selection of a general price index, segregation of monetary and non-monetary items, restatement of non-monetary items excluding shareholders’ equity, among others.
Prior the adoption of IAS 29, companies in Zimbabwe have been using IFRS 1 which does require too much time in preparation of financial reports.
However, the latter method had become inconsistent with the accounting ethics and does not present the true value as it referred to the US$ as the reporting currency yet in reality, the economy has since migrated to the Zimbabwe dollar.
The latest move does not signal the first time Zimbabwe has adopted hyperinflation reporting standards. In 2008, the country resorted to the same before abandoning it after the adoption of the multi-currency system.
While the Zimbabwe National Statistics Office has since ceased the publication of annual inflation figures, the International Monetary Fund reported inflation in Zimbabwe was 300% as of August 2019.