2005年-世界发展银行全球_El_Salvador___Accounting_and_Auditing_36页_591kb

Summary of the Report on the Observance of Standards and Codes (ROSC) in El Salvador

Core Content

This report evaluates the current state of accounting and auditing practices in El Salvador's corporate sector, using International Financial Reporting Standards (IFRS) and International Standards on Auditing (ISA) as benchmarks. It highlights the need for strengthening financial transparency and aligning with international standards to support economic growth, attract foreign direct investment (FDI), and improve the business environment.

Main Findings

• Economic Context: El Salvador is a small, densely populated country with a service-based economy. It has a high level of external debt and is economically dependent on imports. The adoption of the US Dollar as legal tender in 2001 has contributed to lower inflation and interest rates, making the country more attractive to foreign investors.

• Accounting and Auditing Obligations:

  • Most enterprises, including family-owned businesses, are required to have their annual financial statements audited.
  • SMEs are subject to audit obligations that increase their cost of doing business and may lead to noncompliance.
  • The Superintendent of Corporate Obligations (SOM) has limited sanctioning powers and struggles to enforce financial reporting requirements effectively.
  • Non-listed companies do not need to make their financial statements available to third parties, which undermines transparency and increases the risk of corporate failures.

• Adoption of IFRS:

  • El Salvador adopted IFRS in 2000, aligning with its goal of economic integration and attracting FDI.
  • However, the process of adoption has been slow due to weaknesses in the regulatory regime and a lack of capacity among auditors and businesses.
  • The Accounting and Auditing Oversight Board (CVCA) has set a phased-in adoption schedule for IFRS from 2004 to 2006, but it applied the 2003 version of IFRS, not the more recent 2004 version.
  • There is no process in place to review each new or revised IFRS standard before implementation.

• Auditor Regulation and Standards:

  • The CVCA is responsible for overseeing accounting and auditing standards but lacks the resources and institutional capacity to perform its functions effectively.
  • The current licensing requirements for auditors are based on a bachelor's degree in accounting without minimum content standards, professional exams, or practical experience.
  • The CVCA has not established a system for monitoring auditors' compliance with ISA and lacks a defined process for quality control.
  • The Code of Ethics for Public Accountants (CEPCP) is based on the 1998 version of IFAC's code, not the 2005 version, and needs to be updated and better disseminated.

• Regulatory Fragmentation:

  • Three Superintendencies (SSF, SP, SV) have their own criteria for licensing auditors, leading to potential duplication of efforts and inconsistencies.
  • None of these Superintendencies has a specific department dedicated to enforcing accounting standards and financial reporting requirements.

• Challenges in Financial Reporting:

  • The lack of access to financial statements by the public reduces the effectiveness of corporate financial reporting in protecting third parties and mitigating corporate failure risks.
  • The financial sector is dominated by financial conglomerates, while the local securities market is underdeveloped.

Key Recommendations

Conclusion

The report underscores the importance of aligning El Salvador's accounting and auditing practices with international standards to enhance transparency, attract FDI, and support economic growth. It calls for institutional reforms, capacity building, and regulatory harmonization to address current deficiencies and improve the quality of financial reporting in the country.