IAS 29 - Reporting in accordance with IFRS after a period of chronic hyperinflation
The Board discussed the IFRS Interpretations Committee's request to consider clarifying how an entity should resume presenting financial statements in accordance with IFRSs after a period of severe hyperinflation, during which it had been unable to comply with IAS 29 Financial Reporting in Hyperinflationary Economies.
The request identifies an entity whose functional currency is that of a hyperinflationary economy and the entity is unable to comply with IAS 29 and prepare IFRS financial statements, because the general price index relating to the entity's functional currency is unavailable, and the functional currency lacks exchangeability. Once an economy ceases to be severely hyperinflationary, the question has been raised of 1) how the entity resumes preparing IFRS financial statements and 2) how the parent of a subsidiary in the above scenario would account for its involvement with the subsidiary. This issue is particularly relevant for those entities based in Zimbabwe or parents with subsidiaries based in Zimbabwe. The Committee recommended the Board to make amendments to IAS 29 as well as other standards including IFRS 1.
While the Board recognised the significance of the issue, they felt that they could not address the issue sufficiently with a complete review of IAS 29 under the time frame needed. The Board asked the staff to reach out to the South African Institute as well as groups in Mexico and Argentina who have been analysing potential issues with regards to IAS 29 to discuss how best to move forward.