Unpleasant News For Local Business Owners

Unexpected events from Dessie to the Bole neighborhood of Addis Ababa. The government is currently pressuring local businesses to embrace IFRS and not to make any changes to their financial statements in light of this claim. The Board Chairperson of the Accounting and Audit Board of Ethiopia (AABE), Eyob Tekalign (Ph.D.), refuted the assertions made by accounting companies and reporting bodies, notably Ernst & Young (EY), which referred to Ethiopia as having a hyper inflationary economy.

Data from the IMF and the Ethiopian Statistics Service were quoted by EY. Both stated that Ethiopia’s three-year total inflation rate has exceeded 100%. Companies must modify their balance sheets in accordance with International Accounting Standard (IAS) 29 if there is chronic inflation in the economy in which they conduct business.

The Accounting & Audit Board of Ethiopia stated that qualitative factors indicate that “companies using IFRS as their reporting framework in Ethiopia should not apply IAS 29 for either fiscal year 2022 or the year ending June/July 2023” because the definition of hyperinflation for accounting purposes differs because it is based on various economic environment characteristics, not just the inflation figure.

It was said that Ethiopia’s economy is not hyper inflationary because of the ongoing peace in North Ethiopia, growth in deposits, and the public’s great confidence in the Birr. Contrary to what experts claimed, all the evidence points to hyperinflation in Ethiopia when it comes to accounting standards.

Related Articles

Back to top button