The global problem of inflation and need for inflation adjusted-financial reporting

Abstract

Research background: Inflation, a macroeconomic phenomenon, may lead to an inaccurate presentation of financial data included in the financial statements, which otherwise should present a relevant and reliable information on financial health of the company. Purpose of the article: The purpose of the article is to point out the relevance and quality of data contained in the financial statements in the context of existence of inflationary pressure in the economy, and thus point out the importance of inflation accounting in the practice of business entities in the current situation (and not only in hyperinflation economics). Methods: In accordance with the purpose and the theoretical nature of the article, there will be preferably used the method of analysis and comparison of existing literature, method of opinion confrontation, method of synthesis and generalization. The subject of the analysis will be principally scientific sources dating from the 70s of last century to the present and IAS 29. Findings & Value added: The comprehensive elaboration of the issue in question from a theoretical point of view is a basic prerequisite for the carrying out the empirical research in conditions of Slovakia, pointing to its pros/cons and possible obstructions of its implementation in the process of financial reporting under current economic situation that except other is characterized by a general rise in the prices of economic goods, while inflationary pressures are currently being seen as a worldwide problem.