THE Public Accountants and Auditors’ Board (PAAB) has issued a new reporting guidance framework that permits companies to present financials for year ending December 31, 2018 in United States dollars (US$).
The guidance framework was issued after consultative work undertaken by the Zimbabwe Accounting Practices Board through its sub-committees, the Accounting Standards Committee (ASC) and the Committee for Auditing Standards (CFAS).
PAAB said the guidance was effective for financial periods commencing on or after January 1, 2018.
The board said the presentation currency for most firms was expected to remain as US$ for the period ended December 31, 2018, since there was no official local currency before February 22, 2019.
“Since there was no official and legal local currency prior to the February 22, 2019, in particular given the provisions of SI 33, the presentation currency of most entities in the country is expected to remain as the United States dollar as at December 31, 2018 and for the year then ended,” PAAB said.
Statutory Statement (SI) 33 of 2019, subsection D, states that “for accounting and other purposes, all assets and liabilities that were immediately before the effective date, valued and expressed in United States dollars (other than assets and liabilities referred to in section 44C (2) of the principal Act) shall, on and after the effective date be deemed to be valued in RTGS dollars at a rate of 1:1 to the United States dollar.”
PAAB said notes to the financial statements dealing with the functional and presentation currencies should be expanded to include a detailed description of currency.
Presentation currencies should be referenced to events after the reporting date note, which will be expected to cover the introduction of the Real Time Gross Settlement dollar (RTGS dollar).
The board said the guidance framework does not establish new requirements or exemptions from the requirements of International Financial Reporting Standards and International Accounting Standards.
Following the introduction of the RTGS dollar by the Reserve Bank of Zimbabwe on February 20, 2019, most listed firms postponed the presentation of financials awaiting the issuance of guidance from the PAAB on the functional and presentation currency for reporting.
Some of the listed companies, including Old Mutual Plc, Simbisa Brands and Truworths reported their financials before the guidance was issued and resorted to the old reporting standards in US$.
In 2009, Zimbabwe adopted the multi-currency system to replace the Zimbabwean dollar, with most entities adopting the United States dollar as the functional and presentation currency.
Zimbabwe witnessed significant monetary and exchange control policy changes in 2016 and increasingly through to 2019. Relevant changes were as a result of continued economic challenges faced by the country that resulted in foreign currency shortages.