Implementation of the failed IAS 29 in Zimbabwe

January 17, 2013 in Uncategorized

Implementation of the failed IAS 29 in Zimbabwe

The implementation of daily measurement of most non-monetary and some monetary items in units of constant purchasing power in terms of a daily index based almost entirely on the daily USD free-market exchange rate during hyperinflation, for example the Unidade Real de Valor (URV), in Brazil during 30 years of very high and hyperinflation resulted in a relative stable non-monetary economy from 1964 to 1994 in that country. Brazil´s hyperinflation ended in 1994 with the implementation of the Real Plan. IAS 29 was authorized in 1989.
The above model of daily measurement in units of constant purchasing power did not happen during the implementation of the failed IAS 29 during hyperinflation in Zimbabwe.
In this respect, the implementation of the failed IAS 29 Financial Reporting in Hyperinflationary Economies, had no positive effect on the economy in Zimbabwe.

 

Under IFRS-authorised Capital Maintenance in Units of Constant Purchasing Power in terms of a URV-based Daily Index, Zimbabwe´s economy would not have imploded in 2008. This model would today stabilise Belarus, Venezuela and (I am sorry, President Obama) Iran´s economy.

 

CMUCPP was authorised in IFRS in the original Framework (1989), Par. 104 (a), now the Conceptual Framework (2010), Par. 4.59 (a) which states:

 

“Financial capital maintenance can be measured in either nominal monetary units or in units of constant purchasing power.”

Nicolaas Smith Opinions on this blog expressed by me are my personal opinions. Copyright (c) 2005-2013 Nicolaas J Smith. All rights reserved. No reproduction without permission.

Comments are closed.