Hyperinflationary economies

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19 Feb, 2010

Both IFRSs and US GAAP require that the financial statements of an entity that reports in the currency of a hyperinflationary economy should be stated in terms of the measuring unit current at the balance sheet date.

In other words, the amounts in those financial statements must be restated for changes in the general purchasing power of the reporting currency. For a number of years, the International Practices Task Force of the American Institute of CPAs has published unofficial guidance on the inflation status of countries that appear to be at or near the hyperinflation level. The AICPA (through its Center for Audit Quality) has just released CAQ Alert #2010-11 Monitoring Inflation Status of Certain Countries The Alert states the following view of the Task Force:

The following countries should continue to be considered highly inflationary as of 30 September 2009:

  • Myanmar
  • Zimbabwe
The following country should be considered highly inflationary for periods beginning on or after 1 December 2009:
  • Venezuela
The following countries are on the Task Force's inflation 'watch list':
  • Democratic Republic of Congo
  • Ethiopia
  • Guinea
  • Iran
  • Iraq
  • Sao Tome and Principe
  • Seychelles
Click to Download CAQ Alert #2010-11 (PDF 65k), which is copyright by Center for Audit Quality and posted on IAS Plus with their kind permission.

 

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