Inflation adjustments of financial statements : application of international accounting standard 29 : financial reporting in hyperinflationary economies

The Bank's draft Operational Directive on Financial Sector Operations requires the adjustment of financial statements in countries where the cumulative inflation rate over three years approaches or exceeds 100 percent. Financial statements in those countries are to follow the accounting principles in International Accounting Standard 29 (IAS 29) of the International Accounting Standards Committee. IAS 29 provides a list of principles and requirements but does not outline the procedures for measuring income. Nor does it provide a numerical example. This paper provides a framework for applying IAS 29 to adjust financial statements accompanied by numerical examples and thus may be considered an extension of the standard.Economic Theory&Research,Banks&Banking Reform,Environmental Economics&Policies,International Terrorism&Counterterrorism,Insurance Law