As the Public Accountants and Auditors Board have clearly and unmistakably stated, Zimbabwe is now going through a hyperinflationary period. They have also instructed all accountants and auditors in Zimbabwe to adjust financial reports for inflation.
Excerpts from Pronouncement 01 of 2019
According to IAS 29: Financial Reporting in Hyperinflationary Economies, it is preferable that all entities that report in the currency of the same hyperinflationary economy apply this Standard from the same date.
Following the processes indicated above, the PAAB can advise that there is broad market consensus within the accounting and auditing professions that the factors and characteristics to apply the Financial Reporting in Hyperinflationary Economies Standard (IAS 29), in Zimbabwe, have been met.
This Public Pronouncement covers the preparation and presentation of financial statements of entities operating in Zimbabwe for the financial periods ended on or after 1 July 2019.
Confusion as there is no inflation rate to use
All businesses in Zimbabwe have to use the Zimbabwean dollar as their operational currency. This is the currency that is going through hyperinflation so the guidance provided in IAS 29 Financial Reporting in
Hyperinflationary Economies Standard has to be applied.
There is confusion, however as one of our learned colleagues in the field has put it:
What is the inflation rate to be used since Mthuli Ncube says no to annual inflation rate measurement or its announcements
No doubt accounting bodies will come up with more detailed guidance but it just goes on to show the folly of this government. It is more interested in appearances than actually going to the root of the problem. Policies are announced without consultation and with little thought as to how they might affect other sectors.
It’s like the Trump government in that regard.