Historical Cost financial statements technically always wrong

September 21, 2012 in Uncategorized

Historical Cost financial statements technically always wrong

All HC financial reports are out of date the day after the date of the financial report because the Daily Consumer Price Index is generally different every day. HC financial statements are generally never published on the date of the financial statements.

This fact is very easily understood during hyperinflation as stated by the South African Institute of Chartered Accountants in 2008. Under IAS 29, HC or CC financial statements are “restated” in terms of the monthly published CPI at the balance sheet date. The stable measuring unit assumption is applied during hyperinflation in terms of IAS 29. IAS 29 is an extension to not a departure from HCA as stated by PwC and required by IFRS. All financial reports prepared in terms of IAS 29 are out of date the day after the date of the financial reports.

Under the CIPP paradigm all finacial reports are updated daily to the current, i.e., today´s, date in terms of the Daily CPI or other daily index during low and high inflation and deflation and hard currency parallel rate or other daily index during hyperinflation.

Digital CIPP financial reports are never out of date: they are always updated to the current, i.e., today´s, daily index or rate.

All digital CIPP non-monetary accounts in the ledger are never out of date: they are always updated to the current, i.e., today´s, daily index or rate. They are updated daily. It is better not to print hardcopy CIPP financial reports since hard copy financial reports are out of date the day after the date of the financial report.

HC financial reports are generally never valid in terms of the current, i.e., today´s real values or Daily CPI. All HC financial reports are thus technically always wrong in that sense while all CIPP financial reports are technically always right in that sense.

All financial reports perpared in terms of IAS 29 have very little use at all as a result of always being very out of date.

Digital CIPPA financial reports are never out of date.

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Nicolaas Smith

Copyright (c) 2005-2012 Nicolaas J Smith. All rights reserved. No reproduction without permission.

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