How are IFRS applied in Guatemala?
Importance of IFRS in Guatemala
Guatemalan companies, in order to enter the international market, based on the needs of trade development, globalization and free trade agreements, took on the task of adopting the International Financial Reporting Standards (IFRS). The implementation of this change implied moving from an accounting basis and a different language to a more developed one with international terms and methodology, requiring analysis of each item that makes up the Financial Statements, as well as of the entity itself.
The IFRS were adopted as generally accepted accounting principles in Guatemala. Therefore, not complying with the mandatory application of IFRS means that companies do not present information suitable and comparable for the international market, which may result in the loss of opportunities to enter the foreign market. Likewise, not having reliable financial information prepared with high quality standards does not represent a useful tool for timely decision making both for managers and directors of the companies and for any other user of the financial statements.
In Guatemala, the application of the International Financial Reporting Standards (IFRS) for the preparation of accounting records is mandatory as of January 2009.
The College of Public Accountants and Auditors of Guatemala (CCPAG), is the governing entity of the public accounting and auditing profession in Guatemala, being responsible for promoting the permanent research of accounting and auditing standards and techniques that should govern in Guatemala through the International Accounting and Auditing Standards Committee regarding the adoption of international accounting standards -NIC/NIIF and their interpretations.
On December 20, 2007 it published in the Diario de Centro América the Resolution dated December 18, 2007 where it resolves to adopt as the Generally Accepted Accounting Principles in Guatemala, referred to in Article 368 of the Commercial Code, the Conceptual Framework for the Preparation and Presentation of Financial Statements and International Financial Reporting Standards.
On July 23, 2010 published in the Diario de Centro América the Resolution dated July 7, 2010 where it resolves: To adopt as part of the Generally Accepted Accounting Principles in Guatemala referred to in the Code of Commerce, the International Financial Reporting Standard for Small and Medium Sized Entities – IFRS for SMEs.
On March 4, 2013 published in the Diario de Centro América the Resolution dated July 7, 2010 where: Adopts the code of ethics of IFAC (International Federation of Accountants), as a guide for moral action and to maintain unscathed the moral integrity of the Public Accountant and Auditor in the exercise of the profession.
Structure of the Mexican standards
IFRS establish the recognition, measurement, presentation and disclosure requirements for significant transactions and economic events in financial statements for general information purposes. They have been designed to be applied in financial statements for general information purposes and other financial information to meet the information needs of users for efficient economic decision making.
Full IFRS comprise:
- International Financial Reporting Standards – IFRS
- Interpretations to IFRSs – IFRICs
- International Accounting Standards – IASs, as amended by IASC and Improved by IASB
- Interpretations of IASs – SICs
Publicly accountable entities are required to use the full IFRS.
The IFRS for SMEs comprises the International Financial Reporting Standard for Small and Medium-Sized Entities – IFRS for SMEs.
The IFRS for SMEs are used by entities that:
- do not have public accountability and
- publish financial statements for general information purposes for external users:
- Current or potential creditors
- Credit rating agencies
A subsidiary whose parent uses full IFRS may use IFRS for SMEs.