Headache for reporting firms

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THE Public Accountants and Auditors Board (PAAB) says the recently gazetted Statutory Instrument 33 of 2019, which set an exchange rate of 1:1 between RTGS$ and US dollars, conflicts with Zimbabwe’s prescribed reporting standards.
The law, which was gazetted on February 22, 2019 specified, among other things, that for accounting and other purposes, all assets and liabilities that were immediately before the effective date valued in US dollars “shall on and after the effective date be deemed to be valued in RTGS dollars at a rate of one-to-one to the US dollars”.
In its much anticipated financial reporting and auditing guidance on currency considerations, which it published last week, the PAAB pointed out that the law may “present challenges in terms of compliance with International Financial Reporting Standards (IFRSs)”.
“The standards require the use of a spot rate in accounting for transactions but during the 2018 financial year, some entities may have experienced premiums and discounts on the official foreign exchange rate of 1:1 between the RTGS balances, bond notes and the US dollar,” the board said.
Tapiwa Chizana, the Institute of Chartered Accountants of Zimbabwe (ICAZ) president, said the conflict will affect each company differently, depending on the nature of its business and its various circumstances.