Challenges and Opportunities of Implementing Inflation Accounting in Iran's Reporting Environment

Document Type : Research Paper

Authors

1 Assistant Prof., Department of Accounting, Faculty of Humanities and Science, University of Kurdistan, Sanandaj, Iran.

2 MSc., Department of Accounting, Faculty of Humanities and Science, University of Kurdistan, Sanandaj, Iran.

Abstract

Objective
Inflation accounting plays an essential role in improving the reporting process of business entities facing chronic and double-digit inflation. Addressing this issue requires attention to both the challenges and opportunities associated with inflation accounting. Consequently, the challenges of using inflationary accounting are significant. However, opportunities for employing inflationary accounting also arise. This research aims to identify the challenges and opportunities of applying inflationary accounting in Iran, aligning with the implementation of international accounting standards.
Methods
The required data was collected through the distribution of questionnaires among 239 users of financial statements, preparers of financial statements, independent auditors, and academic staff members of universities. The data collection period was during the fall and winter of 2022 and the spring of 2023. Statistical analysis was done using factorial, exploratory, and confirmatory analysis with the help of AMOS and SPSS software.
Results
Based on the findings, the challenges of using inflation accounting were identified in the following areas: economic environment and financial reporting, educational and executive issues, audit and assurance issues, and institutional and infrastructure issues. Additionally, opportunities for using inflation accounting in Iran's reporting environment were found in audit and assurance issues, infrastructure and institutional issues, the economic environment and financial reporting, and educational and executive issues.
 
Conclusion
The application of inflation accounting in educational and executive, audit and assurance, institutional and infrastructural, economic, and financial reporting sectors is facing challenges. Auditing and assurance, institutional and infrastructure, economic and financial reporting, and educational and executive departments represent opportunities for using inflation accounting in Iran. In other words, the application of inflation accounting in Iran faces severe challenges. However, there are more opportunities to use inflation accounting and to adopt and implement it; sufficient measures must be taken to solve these challenges. To apply inflation accounting effectively, it is crucial to consider not only the economic environment, financial reporting, auditing and assurance factors, and institutional and infrastructure aspects but also the training of practitioners and executives. Additionally, the application of inflation accounting, along with the auditing and assurance of financial statements and improvements in the status of reporting units, will enhance the transparency of the economic and financial environment and address educational and executive issues.

Keywords

Main Subjects

References

 
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Accounting and Auditing Review
Volume 31, Issue 2
2024
Pages 182-221

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