PAAB guidelines delay NMB financials

BY MISHMA CHAKANYUKA

NMBZ Holdings Limited (NMB) says it will delay publishing its third quarter interim financial results pending hyperinflationary reporting guidance from the Public Accountants and Auditor’s Board (PAAB).

This comes after the Institute of Chartered Accountants announced that it was set to unveil hyperinflation reporting (IAS29) application guidelines.

The reporting guidance, scheduled to be released this week will provide an index to use in inflation reporting, following the suspension of annual inflation figures publication by Treasury in August.

In a statement, NMB said the results were supposed to be published on or before November 15, 2019 and the group was granted an extension by the Zimbabwe Stock Exchange to issue them on or before the same date next month.

“Shareholders are advised that the group shall delay the publication of its third quarter, 2019 interim financial results as required by the Zimbabwe Stock Exchange. The Public Accountants and Auditors Board of Zimbabwe issued a pronouncement on October 11, 2019 that all Zimbabwean entities with reporting periods ending on or after July 1, 2019 are required to apply hyperinflationary accounting,” NMB said.

In terms of the requirements of the International Accounting Standard 29, ‘Financial Reporting in Hyperinflationary Economies’, all entities reporting in the same hyperinflationary operating environment are encouraged to apply similar indices to produce the inflation-adjusted financial statements.

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“Shareholders are accordingly advised to exercise due caution in dealing with their shares in the company before the publication of the 2019 third quarter results by December 15, 2019.”

The PAAB is expected to issue further guidance by Friday this week on the application of IAS 29 to ensure uniformity is achieved by all entities operating in the Zimbabwean environment.

Local companies are already warming up to the idea, with Simbisa Brands Limited stating in the full year results ended June 2019 that going forward it expects difficulties in complying with the accounting standard in the absence of annual inflation data.

The IAS 29 lists factors showing an economy that is hyperinflationary.

One of the pointers of hyperinflation is when cumulative inflation over a three-year period approaches, or is in excess of 100%.

A parent entity that reports in a hyperinflationary currency, which has subsidiaries that also report in the same currency, should restate the financial statements of those branches in accordance with IAS 29, as part of the merging process.

Where a subsidiary reports in the currency of a different hyperinflationary currency, then its financial statements should first be restated by applying a general price index of the country in which it reports.

The restated financial statements should then be converted at closing rates.

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