Adjustment for inflation

1

In principle, thank you very much for this software, everything it allows us to do is incredible! I wanted to know if there is any function or the possibility of adding an option that allows us to make adjustments for inflation? Considering that we are from a country with a lot of inflationary variation (Argentina), this function would really be a great tool.
Again, grateful for this system!

3

What adjustments are you trying to make? I know of no such adjustments in any accounting process. Accounting involves recording things that have already happened, exactly as they happened at the time.

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5

I remember some 20 years ago having studied hyper-inflationary accounting.

I believe the solution was to use an intermediate currency as a functional currency and treat the local currency as a foreign currency and this will capture the effect of inflation on all local currency accounts.

For example:

  1. Define USD to be your Base Currency in Manager
  2. Define your local currency as a Foreign Currency and update your local exchange rates

Manager is already capable of supporting that. See this guide:
https://www.manager.io/guides/currencies

However, I’m sure this would introduce a few challanges for tax reporting but you will have to teach us about those.

Also as I mentioned, this was the textbook solution some 20+ years ago and I haven’t updated my knowledge of the subject since. So as @Tut already said, If you know of a better solution please share it so it could be considered.

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6

What I understand, and we also deal with hyperinflation is that there are 2 issues.

  1. You need to account for monetary gains (loans or payables) and losses (cash or receivables). The difference between gains and losses needs to be adjusted for inflation and Manager has no automation for that but it ideally would allow for some correction to be applied to the net profit in P&L which obviously rightfully so reflect on retained earnings.
  2. The value of non-monetary assets should be indexed and that is far more complicated as it would need Manager to have the ability to index them. So here as retained earnings will reduce as per point 1 you could argue that equity + these assets are to an extend on an ongoing basis subjected to such hyper-inflation.

This is not easy to solve and we just use Manager as is and subject the financial data for taxation.