Auditor insights on hyperinflation and audit practices in Lebanon under IAS 29: a qualitative approach

Purpose This study investigates the practical implications of IAS 29, Financial Reporting in Hyperinflationary Economies, on audit practices in Lebanon. It examines how Lebanese auditors address the challenges posed by hyperinflation while maintaining compliance and audit quality. Design/methodology/approach The study adopts a qualitative methodology, relying on interviews with ten experienced auditors in Lebanon conducted between December 2023 and April 2024. Two rounds of interviews were conducted to gather data. Findings The findings reveal significant challenges in implementing IAS 29, particularly in the restatement of financial statements to reflect current purchasing power, the use of reliable inflation indices and addressing inconsistencies across clients. The study highlights the unique pressures faced by auditors in Lebanon, including weak institutional frameworks and hyperinflation’s complexities and inconsistencies in applying IAS 29. The insights gathered were analyzed through the lenses of institutional theory and positive accounting theory (PAT) to contextualize the interplay between regulatory pressures, economic incentives and audit practices. Research limitations/implications The study centers on auditors’ insights, potentially neglecting perspectives from other stakeholders. Practical implications The study offers recommendations for enhancing the IAS 29 framework and its application, addressing gaps in institutional support and harmonizing standards like IAS 21 to resolve currency-related challenges. Originality/value This paper contributes to and advances the growing body of knowledge on the challenges of IAS 29 implementation and auditing practices in hyperinflationary contexts, specifically within Lebanon’s economic environment. These insights are invaluable for policymakers and stakeholders in understanding the practical implications of hyperinflationary accounting standards. The findings may also provide transferable lessons to other developing economies grappling with hyperinflation and regulatory complexities.