TOBB President: Inflation Accounting Has Become A Mandatory Requirement

Rifat Hisarcıklıoğlu, president of the Union of Turkish Chambers and Commodity Exchanges (TOBB), also joined the call for an immediate transition to inflation accounting to prevent the damage caused by inflation.

Making a statement on his social media account, Hisarcıklıoğlu said, “Inflation accounting has become a mandatory requirement for our companies. As a business world, we hope that the necessary measures will be taken in this regard.”

CHAMBERS OF INDUSTRY AND COMMERCE ALSO DEMAND

There are also requests from chambers of industry and commerce across the country for the transition to inflationary accounting.

In previous months, Ankara Chamber of Industry (ASO) President Nurettin Özdebir also said that high inflation melts profits and capital, and this can cause serious damage to businesses.

Özdebir also warned that the increase in the exchange rate made imports more expensive and therefore a sufficient competitive advantage in exports could not be achieved.

Ankara Chamber of Commerce (ATO) President Gürsel Baran, who visited Treasury and Finance Minister Nureddin Nebati in August, said: “Inflation accounting has become a necessity for businesses.”

Baran said companies seem to be making profits all the time, even though their capital has melted away due to inflation.

Sabancı Holding’s chief financial officer, Orhun Köstem, said in a statement he made in the summer: “We are making preparations for accounting for inflation.”

WHAT IS INFLATION ACCOUNTING?

According to the tax procedure law, if there is a total increase of 100 percent in the National IPP index in the last 3 years, and if there is an increase of more than 10 percent in the current year, the inflation accounting.

The latest data published by TUIK reveals that the PPI broke new records.

Consequently, the National Producer Price Index (D-IPP) increased by 7.83 percent monthly and 157.69 percent annually in October.

Annual consumer inflation (CPI), which was 83.45 percent in September, rose to 85.51 percent in October. This rate of inflation was the new peak in 24 years.

Inflation accounting, on the other hand, is calculated by multiplying non-monetary values ​​(stocks, tangible and intangible assets, etc.) with the adjustment coefficient (such as the inflation rate-PPI), which is closest to the purchase . power at the date of the financial statement can be defined as calculating.

In periods of high inflation, corrective actions must be taken to eliminate the effects of inflation on the financial statements, and these technical adjustments are classified as “Inflation Accounting”.