Impact of Hyperinflation on IAS 29 Financial Reporting in Nigeria: A Comparative Analysis

Abstract

Although Nigeria has not formally met the 100% three-year cumulative inflation benchmark, it exhibits several qualitative characteristics of a hyperinflationary economy, including severe currency devaluation, widespread dollarization, inflation-linked contracts, and declining purchasing power. This studyexamines therelevance and  applicability of IAS 29: Financial Reporting in Hyperinflationary Economies in the Nigerian context,focusing on how these hyperinflationary conditions affect the reliability and comparability of financial statements prepared under historical cost accountingUsing a qualitative methodology based on recent macroeconomic data and regulatory literature, the study findings reveal that while IAS 29 is not yet mandated by Nigerian regulators, some multinational subsidiaries are voluntarily applying inflation-adjusted models for internal and group reporting purposes. Challenges identified include the absence of regulatory guidance, limited technical capacity, lack of consistent inflation data, and disconnects between tax and accounting frameworks. Comparative insights from Zimbabwe, Argentina, and Lebanon underscore the importance of early intervention, policy coordination, and professional guidance to avoid systemic financial distortions. The findings confirm that continued reliance on historical cost accounting undermines the reliability, comparability, and decision-usefulness of financial statements in high-inflation contexts. The study concludes that Nigeria is transitioning from high inflation to a hyperinflation-risk economy and recommends proactive regulatory guidance on IAS 29 implementation, enhanced access to credible inflation indices, alignment of tax policies with inflation-adjusted reporting, and the development of inflation monitoring and forecasting frameworks. It further calls on reporting entities to strengthen auditor collaboration, adopt early inflation-adjusted disclosures, and build resilience through scenario planning, while investors are urged to interpret financial information cautiously and demand transparency. Without decisive action, Nigeria risks deeper macroeconomic deterioration and erosion of financial reporting credibility.