News / National
Zimbabwe gold-backed digital token to cause accounting, auditing headache
16 Oct 2023 at 01:11hrs | Views
The introduction of the Zimbabwe gold-backed digital token (ZiG) is posing a significant challenge for accounting and auditing professionals due to the uncertainty surrounding whether it should be classified as a currency or an investment instrument, according to an expert.
Although Treasury and central bank officials have emphasized that ZiG is not a currency but rather a store of value, it is intended for use in domestic transactions and is transacted electronically. Tinashe Murerekwa, head of Kreston Zimbabwe Audit and Advisory Services, expressed concerns about the classification of ZiG and its potential impact on financial reporting.
He raised questions such as whether ZiG is becoming the dominant currency and how to handle accounting and financial reporting if it were to replace other currencies. Additionally, he pointed out that the introduction of ZiG adds to the challenges faced by accounting and auditing professionals, who are already dealing with issues related to currency inconsistencies.
The financial reporting profession in Zimbabwe has faced challenges due to currency fluctuations, hyperinflationary conditions, and changes in the way inflation rates are measured. The constant adjustments to reporting standards and indices have created inconsistencies in financial reports.
Finance, Economic Development & Investment Promotion Minister Mthuli Ncube addressed concerns about inflation statistics, noting that the country uses both the US dollar and the Zimbabwe dollar for transactions. He emphasized the need to report on a weighted average inflation basis, given that a significant portion of transactions occur in US dollars. He expressed confidence in the credibility and compliance of the Zimbabwe National Statistics Agency in reporting statistics.
The introduction of ZiG and the associated accounting and reporting challenges highlight the complexity of managing financial data in a multi-currency environment.
Although Treasury and central bank officials have emphasized that ZiG is not a currency but rather a store of value, it is intended for use in domestic transactions and is transacted electronically. Tinashe Murerekwa, head of Kreston Zimbabwe Audit and Advisory Services, expressed concerns about the classification of ZiG and its potential impact on financial reporting.
He raised questions such as whether ZiG is becoming the dominant currency and how to handle accounting and financial reporting if it were to replace other currencies. Additionally, he pointed out that the introduction of ZiG adds to the challenges faced by accounting and auditing professionals, who are already dealing with issues related to currency inconsistencies.
The financial reporting profession in Zimbabwe has faced challenges due to currency fluctuations, hyperinflationary conditions, and changes in the way inflation rates are measured. The constant adjustments to reporting standards and indices have created inconsistencies in financial reports.
Finance, Economic Development & Investment Promotion Minister Mthuli Ncube addressed concerns about inflation statistics, noting that the country uses both the US dollar and the Zimbabwe dollar for transactions. He emphasized the need to report on a weighted average inflation basis, given that a significant portion of transactions occur in US dollars. He expressed confidence in the credibility and compliance of the Zimbabwe National Statistics Agency in reporting statistics.
The introduction of ZiG and the associated accounting and reporting challenges highlight the complexity of managing financial data in a multi-currency environment.
Source - newsday
