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We comment on ED/2010/12

  • Deloitte Comment Letter Image

26 Nov 2010

Deloitte has submitted a comment letter on Exposure Draft ED/2010/12 Severe Hyperinflation – Proposed Amendments to IFRS 1.

The amendment proposes guidance on how an entity should resume presenting financial statements in accordance with International Financial Reporting Standards (IFRSs) after a period when the entity was unable to comply with IFRSs because its functional currency was subject to severe hyperinflation. According to the proposed amendment an entity that has been subject to severe hyperinflation would be allowed to measure assets and liabilities at fair value and use that fair value as the deemed cost of those assets and liabilities in the opening IFRS statement of financial position.

Although we do not object to the proposed amendments, we would have preferred the Board not to take up this narrow issue given the Board's time and agenda. Since there seem to be many more issues that we believe should be addressed, we recommend consideration of a comprehensive review of IAS 29 post-2011 (see excerpt below). Click to Download our Comment Letter (PDF 10k). All of our past comment letters are here.

We would have preferred the Board not to take up this narrow that is relevant only for a particular jurisdiction at a time when the Board is under tremendous pressure to complete many of its major projects by June 2011. [...] Our experience indicates that jurisdictions are struggling with applying many aspects of IAS 29 Financial Reporting in Hyperinflationary Economies in its current form. Therefore, we recommend that the Board considers including a comprehensive review of IAS 29 in its post-2011 agenda.

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