tpc
  • Español
  • English
  • Português
The Importance of IFRS in Accounting in El Salvador

The IFRS in El Salvador

Share

Share on linkedin
Share on facebook
Share on whatsapp
Share on twitter

IFRS Relevance

The IFRS implementation has dynamically benefited El Salvador with the opening of capitals and economic borders, the extension to other markets, the increase of investments, and the alliance thereof with other countries in blocks to take advantage of the commercial opening. This implied that the generation of accounting information had to meet global expectations, as these conditions put undeniable pressures on the accounting environment, even when situated in a local context.

Thus, El Salvador implemented IFRS in 1996 through the IV National Accountants Convention, sponsored by the Association of Public Accountants of El Salvador, the College of Academic Public Accountants of El Salvador, and the Accountants Corporation of El Salvador, under the “Accounting harmonization and union unity: An imperative challenge in the face of globalization” slogan. Since then, they were subject to revisions of their legal accounting framework, and even though they did not have legal backing, they did have the “legitimacy” of the union.

Notwithstanding, the Supervisory Board suggested the implementation of International Accounting Standards in 1999 as part of the reference framework for the preparation and presentation of financial statements.

Since 2000, the Accounting and Auditing Supervisory Board has adopted the International Accounting Standards issued by the International Accounting Standards Committee (IASC) as the general basis to prepare and file the financial statements of the different entities.

In recent years, the IFRS have been gradually adopted in El Salvador based on Resolution No. 113/2009 issued by the Board.

Regulatory Entity

The Accounting and Auditing Supervisory Board is the body that applies the accounting principles.

The international standards implementation as part of the standardization of financial reporting worldwide has forced the Accounting and Auditing Supervisory Board of El Salvador to look for efficient and effective mechanisms to guarantee the implementation thereof in the different sectors of the country’s business activity.

Structure of Salvadoran Standards

The complete International Financial Reporting Standards (IFRS) and the International Financial Reporting Standard for Small and Medium Enterprises (IFRS for SMEs) are issued by the International Accounting Standards Board (IASB), an organization created in London, and constitute the legal accounting framework adopted in El Salvador since 2009. According to resolution No. 113/2009 issued by the Accounting and Auditing Supervisory Board, dated October 7, 2009, states:

  1. Approve the IFRS for SMEs adoption, the official version in Spanish, issued by the IASB for the preparation of general-purpose financial statements and other financial information for entities not listed on the stock market or not publicly accountable, except those that voluntarily have adopted the complete IFRS version. In addition, the first financial statements based on this framework must be filed for the year beginning January 1, 2011. The early implementation thereof is permitted.
  2. Approve the IFRS complete adoption, the official version in Spanish, issued by the IASB for the preparation of general-purpose financial statements and other financial information for entities listed on the stock market and those publicly accountable entities. In addition, the first financial statements based on this regulatory framework must be filed for the year beginning January 1, 2011. The early adoption thereof is permitted.
  3. Entities not listed on the stock market or not publicly accountable may voluntarily implement the IFRS and declare them in their notes to the financial statements.
  4. Banks in the system, conglomerates of companies authorized by the Superintendency of the Financial System, and non-bank financial intermediaries and insurance companies will be under the accounting regulatory framework established by said Superintendency. Likewise, pension fund management institutions and pension funds will be under the accounting regulatory framework established by the Superintendence of Pensions. Brokerage firms, securities deposit and custody companies, general deposit warehouses, and the stock exchange will apply the regulatory framework established by the Superintendency of Securities.

Noticias Relacionadas

How can we help you?

    To communicate with us you need to fill out the following form