When SA accountants freely choose financial capital maintenance in units of constant purchasing power instead of their current very destructive stable measuring unit assumption - as they have been authorized by the IASB in the Framework, Par 104 (a) 21 years ago - they will guarantee the reduction of that about R200 billion per annum orchestrated by Mboweni´s reduction in the average annual inflation rate at whatever future rate of inflation. They will permanently secure the reduction of about R200 billion per annum in real value destruction in constant items never maintained as compared to the 18 years before Mboweni´s arrival at the SARB and they will eliminate completely too the current about R167 billion they are still unknowingly, unnecessarily and unintentionally destroying in the real value of constant items never maintained with their very destructive stable measuring unit assumption at 5% average annual inflation.
All SA accountants have to do is freely change over to IFRS authorized IASB-approved financial capital maintenance in units of constant purchasing power during low inflation and they will boost the SA real economy by about R167 billion per annum as long as inflation stays at 5% per annum
Gill Marcus, the current governor of the SARB, will have to bring inflation down to zero per cent per annum on a permanent basis to have the same effect in the real economy: that is not currently advisable in the monetary economy. It is very easy for SA accountants to do that in the constant real value non-monetary item economy: just choose the other - real value maintaining - option presented to them 21 years ago. It is compliant with IFRS and it has been authorized by the IASB in 1989.
Copyright © 2010 Nicolaas J Smith
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