IMPACT OF INFLATION IN FINANCIAL REPORTING (A CASE STUDY OF INFLATION AND FINANCIAL REPORTING IN DEVELOPING ECONOMY)

Financial reporting depicts the financial positions of any business organization and fulfills the basic objective of accounting by highlighting the financial facts. It is mainly comprises of position statement, Income Statement and statement of change in financial position. But each country has its own system of reporting and presenting financial statements. The term Inflation in economics context means a rise in the general level of price of goods and services in a country over a period of time. International Financial Reporting Standards (IFRS) is trying to bring uniformity between various accounting practices of different countries but inflation is ignored in International Accounting Standards. As we know that some work has been done in the field of Inflation Accounting, but still it is in the developing stage. Inflation Accounting refers to a range of accounting systems designed to correct problems arising from historical cost accounting in the presence of Inflation. Inflation is a common problem especially for developing and under developing economies. The rate of Inflation is generally very high and business organization operating their business under such conditions have to consider the effect of inflation while preparing the financial statements for a true and fair view of the state of affairs