On March 16, 2022, the Center for Audit Quality SEC Regulations Committee and its International Practices Task Force (the Task Force) issued an addendum to its November 6, 2021 Document for Discussion: Monitoring Inflation in Certain Countries to reflect significant changes to the inflation rates in Turkey since that publication.
Subsequent to the issuance of the Task Force’s November 2021 discussion document, the Turkey Statistical Institute released the monthly inflation data for the four months ended February 28, 2022, and based on that new information, the three-year cumulative inflation for that economy exceeded 100% at the end of February 2022. In accordance with paragraph 830-10-45-12 of Accounting Standards Codification Topic 830, Foreign Currency Matters, an economy with a cumulative inflation rate for the three years that precede the beginning of the reporting period, including interim reporting periods, in excess of 100%, should be considered highly inflationary in all instances.
Entities with material operations in Turkey should evaluate the reporting period in which they would start to consider Turkey as a highly inflationary country. The information in the Task Force’s discussion document and addendum may be helpful to financial statement preparers, in conjunction with their internal controls over financial reporting, to make such a determination.