Inflation gives listed firms accounting headache
Zimbabwe’s annual inflation spiked to 175,8% last month, up from 86,5% in May, according to the Zimbabwe National Statistics Agency.
SOME firms listed on the Zimbabwe Stock Exchange (ZSE) have failed to publish their financial results for the year ended March 31, 2023 due to non-availability of official inflation adjusting factors.
Ariston Holdings Limited (Ariston) and National Tyre Services Limited (NTS) are some of the companies that have issued notices to shareholders, informing them about the challenge.
“National Tyre Services wishes to advise its valued shareholders, the investing public and other stakeholders that it shall delay publication of its reviewed financial results for the half year ended March 31, 2023.
“These were due for release by June 30, 2023 and will now be published on or before July 31 2023 following the extension granted to the company by the Zimbabwe Stock Exchange.
“The delay is caused by the non-availability of official inflation adjusting factors which would enable the presentation of financial statements that are compliant with IAS 29: Financial Reporting in Hyperinflationary Economies.”
The tyre maker also informed its shareholders that it will not be able to publish audited financial results for the 12 months ended March 31, 2023 before July 5, 2023 in compliance with the ZSE listing rules.
“The delay has been as a result of work finalisation on IAS 21, IAS 29 and IFRS 16 which has taken longer than anticipated. National Tyre Services Limited, therefore, sought and was granted an extension by the Zimbabwe Stock Exchange. We would like to assure our shareholders that we will be publishing our year-end results on or before 31 July 2023.”
Due to hyperinflation in the country, listed companies are required to comply with International Accounting Standard 29 (IAS 29): Financial Reporting in Hyperinflationary Economies.
They should also be compliant with IAS 21 which looks at the effects of changes in foreign exchange rates on comparative and current year financial information.
Deloitte and Touche Zimbabwe auditors in May 2023 condemned Edgars Stores Limited financial results for the year ended January 8, 2023, saying it failed to comply with International Financial Reporting Standard 13 (IFRS 13) and International Accounting Standard 29 (IAS 29).
The auditors subsequently issued a negative opinion to the clothing manufacturer, claiming that the consolidated and separate financial statements, adjusted for inflation, did not accurately depict its financial situation, performance and cash flows.
Zimbabwe’s annual inflation spiked to 175,8% last month, up from 86,5% in May, according to the Zimbabwe National Statistics Agency.
Some independent inflation estimates are saying Zimdollar inflation was above 1 200% in June.-newsday
