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Accounting Standards Body Issues Guidelines for Financial Reporting in Hyperinflationary Economies and More

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July 16, 2021

The National Accounting Standards (NAS) body has issued several interpretations aimed at providing clarity on financial reporting in hyperinflationary economies and other key areas. The updates are effective immediately.

Applying the Restatement Approach

Companies operating in hyperinflationary economies must apply the restatement approach under NAS 29 Financial Reporting in Hyperinflationary Economies. This means that they must restate their financial statements to reflect the effects of hyperinflation on their financial position and performance.

IFRIC Interpretations

The International Financial Reporting Interpretations Committee (IFRIC) has issued several interpretations on various topics, including:

Changes in existing decommissioning, restoration, and similar liabilities
Members’ shares in co-operative entities and similar instruments
Hedges of a net investment in a foreign operation

SIC Guidance Updates

The Standing Interpretations Committee (SIC) has updated its guidance on the following topics:

Government assistance – no specific relation to operating activities
Income taxes – changes in the tax status of an entity or its shareholders
Service concession arrangements: disclosures
Intangible assets – web site costs

Key Takeaways

Companies operating in hyperinflationary economies must apply the restatement approach under NAS 29 Financial Reporting in Hyperinflationary Economies.
IFRIC has issued guidance on changes in existing decommissioning, restoration, and similar liabilities; members’ shares in co-operative entities and similar instruments; and hedges of a net investment in a foreign operation.
SIC has updated its guidance on government assistance – no specific relation to operating activities; income taxes – changes in the tax status of an entity or its shareholders; service concession arrangements: disclosures; and intangible assets – web site costs.

Next Steps

Companies operating in hyperinflationary economies should review their financial reporting practices to ensure compliance with the updated guidance. Financial statement preparers are advised to consult the relevant interpretations and seek professional advice if needed.

Contact Us

For more information on the updates, please visit our website or contact our Secretariat at [insert contact details]. To purchase a copy of NFRS 2018, please visit our office or call us on [insert phone number].

“Understanding Financial Reporting in Hyperinflationary Economies” (available on our website).