IAS 29 gives particular guidance on how to implement Capital Maintenance in Units of Constant Purchasing power.

IAS 29 gives particular guidance on how to implement an incomplete form of Capital Maintenance in Units of Constant Purchasing Power.

Updated on 23 Abril 2013

For example: (i) IAS 29 defines monetary items (incorrectly).

(ii) IAS 29 defines non-monetary items correctly.

(iii) IAS 29 requires that period end finanancial statements be restated in terms of the measuring unit current at the balance sheet date.

IAS 29 does not result in complete Capital Maintenance in Units of Constant Purchasing Power because the current generally accepted practice to use the monthly published CPI results in the erosion/destruction of part of the current year profits. This is fixed with using the generally available Daily CPI.

The IASB Staff Paper 20 for the IFRIC meeting dated 22-23 January 2013 very surprisingly states:

"10. Under current IFRS, there is no particular guidance on how to prepare financial statements stated in constant purchasing power units."

The IASB does not understand the objective of IAS 29 and does not understand Capital Maintenance in Units of Constant Purchasing Power as specifically guide-lined in IAS 29 and authorized in IFRS in 1989.

Nicolaas Smith

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