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Tuesday, 28 January 2014

Perfect quick fix available to IASB

Killing two birds with one stone

The destruction of real value by 

(i) high and hyperinflation in only monetary items never inflation-indexed daily 

and 

(ii) the stable measuring unit assumption (HCA) in constant real value non-monetary items never maintained constant in real value by means of daily indexation in terms of an index that follows all - at least daily - changes in the general price level 

in 

1. high and 

2. hyperinflationary economies 

and the consequent very serious economic problems and distortions caused are real concerns to people in high and hyperinflationary economies.

It takes the IASB a very long time to authorise IFRS. A perfect quick fix to solve the problem in both high and hyperinflationary economies would be:

IFRS `X´ Financial Reporting in High Inflationary Economies could be IAS 29 Financial Reporting in Hyperinflationary Economies plus the fixes in "How to fix IAS 29at inflation greater than 10% per annum or cumulative inflation greater than 26% in three years.

IFRS `X´would thus supersede IAS 29 which would fall away.

This can be done in a very short period of time via the short term process at the IASB. 

Nicolaas Smith 

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