Differences betweetn CIPPA and CPPA

Differences betweetn CIPPA and CPPA

CIPPA                                                                          CPPA  

1.      When implemented

Implemented at all levels of inflation and deflation.

Only implemented during hyper-  inflation as required by IAS 29

2.      Stable measuring unit assumption

The stable measuring unit assumption is never implemented.

The stable measuring unit assumption is implemented in the preparation of Historical Cost or Current Cost financial reports which are then restated in terms                                                                                      of the period-end monthly published CPI only during hyperinflation.

3.      Non–monetary items 

Non–monetary items are split in variable  and constant real value non–monetary items.

No split in non–monetary items.

4.      Capital concept 

Constant purchasing power financial    capital concept implemented.

Nominal financial capital concept imple-mented in HC or CC financial reports then restated in terms of the period–end monthly published CPI only during hyper-inflation.

5.      Capital maintenance concept

Financial capital maintenance in units    of constant purchasing power concept        implemented: i.e., shareholders´ equity      is measured in units of constant purch–      asing power in terms of a daily rate at      all levels of inflation and deflation.

Nominal financial capital maintenance concept implemented: shareholders´ equity is measured in nominal monetary units in HC or CC financial reports during the accounting period which are then restated in terms of the period–end monthly published CPI only during hyperinflation.

6.       Inflation–accounting model or not?

A basic accounting model implemented  at all levels of inflation and deflation in-        cluding during hyperinflation.

An inflation–accounting model imple-mented only during hyperinflation.

7.       IFRS authorization

Originally authorized in IFRS in the Framework (1989), Par 104 (a).

Authorized in IFRS in IAS 29 in 1989.

8.      Measurement

Daily measurement of all items in terms of a daily rate as detailed below.

Non-monetary items in HC or CC financial reports are restated at the end of the accounting period in terms of the period-end monthly published CPI.

9.      Measurement of monetary items

Historic and current period monetary    items are inflation–adjusted daily in terms of a daily rate. When not inflation  –adjusted daily during the current  period, the net monetary loss or gain   is calculated and accounted.

Monetary items are measured in       nominal monetary units. They are not inflation–adjusted or restated. The net monetary loss or gain is calculated and accounted in terms of incorrectly defined monetary and non-monetary items.

10.   Measurement of variable items

Variable items are measured in terms of IFRS and updated daily in terms of  a daily rate when not measured daily in terms of IFRS.

Non–monetary items are not split in variable and constant items. All non–monetary items in HC or CC financial reports are restated in terms of the period–end monthly published CPI.

11.  Measurement of constant items

Historic and current period constant  items are measured in  units of constant purchasing power  on a daily basis in terms of a daily rate.

Non–monetary items are not split in variable and constant items. All non–monetary items in HC or CC financial reports are restated in terms of the period–end monthly published CPI.

12.  Net constant item loss or gain

Net constant item loss or gain calculated and accounted. This is a new accounting concept.

A net constant item loss or gain concept does not exist under HCA, CPPA and IFRS.

13.  Measurement of trade debtors and trade creditors

Constant real value non–monetary pay– ables and receivables (e.g. trade debtors   and trade creditors) are measured in terms of a daily rate. The net constant     item loss or gain is accounted where            applicable.

Trade debtors and trade creditors and other payables and receivables are treated as monetary items and measured in nominal monetary units in HC or CC financial reports. They are not restated. The net real value loss or gain during hyperinflation is incorrectly accounted as a net monetary loss or gain in terms of IAS 29. It is a netconstant item loss or gain.

14.  Consumer Price Index 

Daily Consumer Price Index or a monetized daily indexed unit of account used during low and high inflation and deflation. Daily US Dollar parallel or daily index rate used during hyperinflation.

Monthly Consumer Price Index used during hyperinflation as per IAS 29.

15.  Parallel rate

Daily hard currency parallel rate used  during hyperinflation.

Daily hard currency parallel rate not used during hyperinflation.

16.  Indexation

Daily indexation can be used during        hyperinflation, e.g. in terms of a Brazilian-                 style Unidade Real de Valor.

No daily indexation used during hyperinflation.

17.   Monetized daily indexed unit of account

A monetized daily indexed unit of account can be used at all levels of inflation and deflation.

A monetized daily indexed unit of account not used during hyperinflation.

Nicolaas Smith

Copyright (c) 2005-2012 Nicolaas J Smith. All rights reserved. No reproduction without permission.