Tuesday, 1 December 2009

Accountants implement the stable measuring unit assumption

Gill Marcus, the Governor of the SA Reserve Bank is the enemy of inflation.

No-one in SA is the enemy of the stable measuring unit assumption because no-one understands how it operates.

Accountants inexplicably forget that IFRS reject the stable measuring unit assumption in two instances:

(1) In IAS 29 Financial Reporting in Hyperinflationary Economies and

(2) The IASB approved its rejection during low inflation as an option in the Framework, Par. 104 (a) in 1989 which states:

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

Fact: Most countries, including SA, inflation-adjust salaries, wages, rentals, etc. during low inflation.

© 2005-2010 by Nicolaas J Smith. All rights reserved

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