Running-in period for inflation accounting?

Press, 20 December 1978, Page 24

Running-in period for inflation accounting?

PA Wellington The New Zealand Society of Accountants believes that inflation accounting and the old historical cost accounting methods must run side by side for a period in order to gain support for inflation accounting. [ A member of the society, Mr P. M. McCaw, told a i press conference to launch ithe society’s cost accounting! [guidelines that the society! had noted the "grass routs! ' revolt" against current cost [accounting in the United Kingdow. | He said that there were 'two basic reasons for changing to inflation accounting, internal and external rea- , sons. The internal reason nad been recognised by the Gov- ; ernment as worthy of investigation and resulted in the Richardson committee findings released two years ago. Mr McCaw said that the [society’s guidelines followed [Richardson’s closely.

Ihe external reasons were clear because New Zealand was a trading nation, Mr McCaw said. He said the guidelines issued by the society were also in sympathy with the guidlines followed by New' Zealand’s major trading partners such as the United Kingdom and Australia. He said all of them had [recommended ‘‘chopping’’ 'historical cost accounting. But in Britain there had [been a “grass roots revolt" and the majority of accountants voted against C.C.A. not because they disagreed with it. but because it was going to be compulsory. "It is now felt inevitable that the tw'o must run side by side for a period as no fundamental change can be made until there are a lot oi people in support,” he said. This was the reason, he said, the society urged public companies to produce supplementary abbreviated inflation adjusted state-

e nients, to run alongside th? d historical accounts. r He -said New Zealand «.<■> going further than some s overseas countries and apart e from recommending an u e flation accounted profit and v loss statement and balanceg sheet, the society was also 3 urging companies to have inflation accounts audited to j confirm that the guidelines ■ have been adhered to. The society would suggest ■ to companies that they start ?, their preparations on April .. 1, 1979, and revalue their ' opening stock values at this d dale Ihe society s president 11 (Mr A. L. Fleury) urged all listed companies to accept - its guidelines and publish ine flation accounted statements. 0 He said that while it might appear to some that 1 little has happened since the release of the Richardson e findings two years ago, pro- - gress had been made and the e latest guidelines had the 1 general support of the Gov- - ernment.