Assessing the Reliability of Financial Reports Amid Inflation: The Role of Inflation Accounting Implementation

Continuously increasing inflation is a major challenge in presenting reliable and relevant financial reports, especially in developing countries like Indonesia.This study aims to analyze the role of inflation accounting in increasing the reliability of financial reports during times of high inflation.With a qualitative-descriptive approach, this research examines two main methods in inflation accounting, namely General Price Level Accounting (GPLA) and Current Cost Accounting (CCA), and their impact on the value of assets, liabilities, income, and costs.The analysis resultsshow that historical cost-based financial reports do not reflect actual economic conditions during inflation, so they can be misleading in decision making.The application of inflation accounting, through adjustments to purchasing power and current prices, has been proven to be able to increase the relevance and reliability of financial information.However, limitations in implementation in Indonesia are due to the lack of regulations and practical understanding regarding this method.Therefore, the application of inflation accounting is important in supporting the quality of financial reports and more accurate decision making amidst economic instability.