HARARE- A number of Zimbabwe’s listed companies has flouted international accounting standards by failing to provide inflation adjusted accounts due to the Central Statistical Office’s (CSO) failure to announce inflation figures.
The last inflation figures of 100 580.2 percent were announced in January and since then the CSO has failed to release monthly figures.
Zimbabwe Stock Exchange (ZSE) regulations dictate that listed companies should publish audited financial statements which should be adjusted for inflation in line with International Accounting Standard (IAS) 29 and release annual reports within three months of financial year endings.
IAS 29 recommends inflation-adjusted accounts for hyperinflationary economies when a population prefers to keep its wealth in non-monetary assets or stable foreign currency and when amounts of local currency are only held for immediate usage.
Information gathered by The Sunday Standard showed that companies were in a quandary on how to proceed amid revelations that the ZSE had engaged the Institute of Chartered Accountants of Zimbabwe (ICAZ) to engage the government’s statistician on reasons behind the delay in releasing the figures.
The CSO has been on numerous occasions complaining about the shortages of basic goods on the market as contributing to the delay in announcing the figures.
Unconfirmed reports say CSO had been told to keep under wraps the inflation figures as they will cause embarrassment to the government. Gideon Gono, President Robert Mugabe’s economic point man, had forecast inflation to hit single digit levels in 2008.
Emmanuel Munyukwi, ZSE chief executive officer, said the delay in announcing inflation figures will affect companies who have just released their year end results but are supposed to produce annual results within three months.
“We remain concerned by the absence of figures,” Munyukwi diplomatically said.
Annual reports contain results in both historical and inflation adjusted accounts.
The affected companies include Econet Wireless Holdings, Seed Co, Delta Corporation, Dawn Properties, Cottco, Starafrica Corporation, Red Star Holdings, PG Industries, Pelhams Ltd and OK Zimbabwe.
Econet and Seedco had their financial year ended February which means that the annual reports should have been produced by now while the other eight counters are expected to stitch annual reports by the end of this month.
Insiders said ZSE was in an invidious position as it cannot punish the companies for failing to produce inflation adjusted accounts because it is not their problem.
“The companies have indicated in annual results that they cannot compute inflation adjusted accounts because inflation figures are not available,” an insider said Friday.
This is not the first time that stakeholders have raised concern over the delay in announcing inflation figures.
Last year, ICAZ voiced its concern on companies’ failure to adhere to international accounting standards after CSO had put an embargo on inflation figures.
ICAZ said historical figures are misleading in a hyperinflationary environment.
Analysts say Zimbabwe’s inflation was heading towards the 2 million percent mark and is showing no signs of abetting. With daily price hikes as businesses adjust prices according to the interbank rates, analysts forecast that the country’s inflation would be on an upward trend.
Listed companies have been lobbying government to allow them to publish their audited financial statements in US dollars by amending the Companies Act.
However, this option has suffered serious setbacks with the major one being the election stalemate that has rendered Parliament inert till a presidential runoff election is conducted on 27 June.