Relevance of Fair Value and Inflation Adjustments in IFRS for SMEs: Venezuela
Abstract
This doctoral article explores how inflation adjustments and fair value measurements, according to IFRS for SMEs, impact the quality, relevance, and reliability of financial information in a hyperinflationary and dollarized context in Venezuela. A qualitative, exploratory, and descriptive approach was used, employing in-depth interviews with key actors in the accounting ecosystem. Findings reveal that historical cost is absolutely irrelevant, making inflation adjustments (Section 31) and fair value (Section 34 for biological assets) essential and complementary for a true financial picture. However, reliability is compromised by subjectivity, the absence of active markets, and the informality of indices, introducing manipulation risks. Transactional dollarization adds complexity and new avenues for distortion. The study concludes with the imperative need for adaptation and credible information, recommending greater standardization and oversight for regulators, and for SMEs, investment in quality accounting and transparency to ensure sustainability and trust.
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