Currency change sparks confusion

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A SERIES of changes to the country’s currency has triggered confusion for accountants, consumers of financial information and investors on the Zimbabwe Stock Exchange (ZSE).

Staff Writer.

The Zimbabwean government has since the beginning of this year been issuing various decrees relating to the country’s currency, a situation that has necessitated the need for compliance with reporting the change in the functional currency in and the requirement to comply with hyperinflationary accounting.

Analysts say the directive to adopt hyperinflationary accounting standards will help listed companies present financial data that compares factually and gives a general guideline on how earnings performed in the current high inflation environment.

The pronouncement that companies preparing financial statements for the period July 1 onwards adopt International Accounting Standard (IAS) 29 was made by the Public Accountants and Auditors Board, a statutory body created by an Act of Parliament and mandated with regulatory oversight of the accounting and auditing professions in Zimbabwe.

IAS 29 on financial reporting in hyperinflationary economies applies where an entity’s functional currency operates in a hyperinflationary economy. Under this requirement, companies will be required to present both inflation-adjusted and historical accounts. This helps investors track how a company’s earnings are faring against inflation.

ZSE chief executive Justin Bgoni last week told businessdigest that the bourse has always taken note of the challenges issuers face after certain policy pronouncements.

“It is unfortunate that policy inconsistency brings confusion to our issuers, making it hard to adapt in terms of compliance and causing suffering for investors in the process,” he said.

“We always take note of the challenges issuers face after certain policy pronouncements and do issue out guidance or if there is need blanket extensions to allow them to comply. We will continue to play an active role, lobby with the government and provide input to facilitate the successful implementation of government policies.”

These initiatives are expected to create a conducive environment for issuers to be able to comply.

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