Guatemala

The financial reporting framework in Guatemala is established under the Code of Commerce of 1970. The Code establishes accounting and financial reporting requirements for all companies. It mandates private companies to keep books of accounts and provides the basic legal framework for accounting.

Accounting Framework

As stipulated in the Code of Commerce, all companies must prepare financial statements in accordance with generally accepted accounting principles (Guatemalan GAAP); however, this does not refer specifically to IFRS, and the Code does not define Guatemalan GAAP either. Therefore, companies prepare financial statements based on the Tax Legislation Decree No. 10 of 2012.

The Tax Legislation Decree requires medium and large-sized companies to present annual audited financial statements using income tax rules for calculating taxable income. Financial statements prepared in accordance with the Tax Legislation Decree are considered special purpose financial statements. In addition, the tax authority—Superintendencia de Administración Tributaria (SAT)—also permits companies to prepare statements using IFRS or IFRS for Small- and Medium-sized Entities (SMEs).

Decree No. 72 of 2001 authorizes the Colegio de Contadores Públicos y Auditores (CCPAG), a professional accountancy organization with mandatory membership, to set accounting and auditing standards for its members. The CCPAG adopted IFRS through a Resolution on December 20, 2007, and IFRS for SMEs in 2010. However, the CCPAG's resolutions are not legally binding.

In addition, the Superintendence of Banks (SIB), empowered by the Banks Act No. 19 of 2002, requires banks, other financial institutions, and insurance companies to prepare financial statements based on the SIB accounting manual, which contains some differences from IFRS Standards. Any issues not addressed by the SIB manual should be addressed using IFRS. The SIB also sets requirements for companies within the Guatemalan financial system with loans or financing over US$ 650,000. These companies must present audited financial statements using IFRS or IFRS for SMEs.

Lastly, listed companies supervised by the Securities and Commodities Market (BVNSA) are also permitted but not required to use IFRS.

Auditing Framework

The SAT and the BVNSA require companies under their supervision to have their statements audited in accordance with standards issued by the CCPAG. In 2007, the CCPAG adopted ISA through a Resolution with a provision stating all subsequent revisions and updates as issued by the IAASB, including the stated effective date. Additionally, the SIB has adopted the ISA, as issued by the IAASB, for entities subject to its regulation.

The accountancy profession in Guatemala is regulated at the professional level. The professional accountancy organization (PAO) with mandatory membership is the Colegio de Contadores Públicos y Auditores de Guatemala (CCPAG). The accountancy profession in Guatemala is comprised of public accountants and auditors.

The CCPAG was established by Decree No. 72 of 2001. The decree does not set initial professional development or continuous professional development (CPD) requirements; however, it does state that all professional accountants must become members of the CCPAG to practice. Candidates aspiring to become CCPAG members must obtain a bachelor's accounting degree.

In accordance with the Decree No. 72 of 2001, the CCPAG's responsibilities include: (i) establishing membership requirements; (ii) maintaining a registry of professional accountants; (iii) establishing and setting CPD requirements; (iv) setting accounting and auditing standards for its members; (v) setting ethical requirements; (vi) carrying out investigative and disciplinary procedures; (vi) establishing and implementing a Quality Assurance (QA) review system; (vii) providing training programs for its members, and (viii) promoting improvements to the profession.

Lastly, the Tax Administration, the Superintendence of Banks, and the Securities and Commodities Market maintain registries of public accountants, auditors, and audit firms providing services to companies under their supervision. Regulators require these individuals to have relevant practical experience and be a member of the CCPAG.

There are no independent audit oversight arrangements in Guatemala. The accountancy profession in Guatemala is regulated at the professional level by the Colegio de Contadores Públicos y Auditores de Guatemala (CCPAG). The CCPAG's responsibilities are described in the Regulation section.

The Tax Administration, the Superintendent of Banks, and the Securities and Commodities Market also maintain registries of auditors and audit firms providing services to companies under their supervision. Regulators require these individuals to have relevant practical experience and be a member of the CCPAG.

The Colegio de Contadores Públicos y Auditores (CCPAG)

The CCPAG, established by Decree No. 72 of 2001, unites public accountants and auditors. Membership in the CCPAG is mandatory for all professional accountants in the CCPAG to practice. The CCPAG mandate includes (i) establishing membership requirements; (ii) maintaining a registry of professional accountants; (iii) setting CPD requirements; (iv) setting accounting and auditing standards for its members; (v) setting ethical requirements; (vi) carrying out investigative and disciplinary procedures; (vi) establishing and implementing a Quality Assurance (QA) review system; (vii) providing training programs for its members, and (viii) promoting improvements to the profession.

In addition to being an IFAC Member, the CCPAG is a member of the Inter-American Accounting Association (AIC), the Group of Latin American Accounting Standard Setters (GLENIF), and the Committee of Integration for Latin Europe and America (CILEA).

The Instituto Guatemalteco de Contadores Públicos y Auditores (IGCPA)

The IGCPA, established in 1968, is a professional accountancy organization with voluntary membership. As a voluntary PAO, IGCPA represents and promotes the accountancy profession, develops training activities, and drives improvements to professional practices. Candidates who wish to join the IGCPA are required to be members of the CCPAG.

The IGCPA is a member of IFAC and the AIC.

There is no legal requirement to establish a quality assurance (QA) review system for all audits of financial statements in Guatemala. However, the Tax Legislation Decree No. 10 of 2012, requires medium and large-sized companies to present annual audited financial statements. Empowered by this law, the Superintendencia de Administración Tributaria (SAT) has established a quality assurance (QA) review system for auditors providing services to these entities. More information is required to assess the extent of alignment with the SMO 1 best practices. The Superintendence of Banks (SIB) will conduct reviews only when a suspicion or risk is identified. As reported by the PAOs in Guatemala, the processes are not aligned with the SMO 1 best practices.

In addition, Decree No. 72 of 2001 empowers the Colegio de Contadores Públicos y Auditores de Guatemala (CCPAG) as the profession's regulator; as such, it has been taking steps to establish a QA review system since 2013. As of the time of the assessment, no policy or procedure to establish the QA system has been developed, and no implementation plan is available.

In 2007, the CCPAG adopted ISA through a Resolution, which was included in the Guatemalan Official Gazette, that included a provision stating the ongoing adoption of all subsequent revisions and updates as issued by the IAASB without modifications and including the IAASB-stated effective date.

Current Status: Partially Adopted

In accordance with Decree No. 72 of 2001, all professional accountants are required to be a member of the Colegio de Contadores Públicos y Auditores de Guatemala (CCPAG) to practice. Individuals who wish to join the CCPAG are required to complete an accounting degree. In addition, in 2022, the CCPAG has adopted mandatory continuing professional development (CPD) requirements for its members.

Universities set the curriculum for accounting degrees and a requirement to obtain two years of practical experience before graduation. In 2015, the CCPAG adopted the IES for all professional accountants; nevertheless, because the CCPAG lacks legal authority in this area, the IES are viewed only as guidelines by universities.

Finally, professional accountants regulated by the Tax Administration, the Superintendence of Banks, and the Securities and Commodities Market are subject to the respective rules of each agency. Regulators require these individuals to have relevant practical experience and be a member of the CCPAG.

Some of the requirements of IES appear to have been incorporated into the national requirements; however, not all of the latest IES requirements, and therefore the jurisdiction is assessed as Partially Adopted.

Current Status: Partially Adopted

In accordance with the Decree No. 72 of 2001, the Colegio de Contadores Públicos y Auditores de Guatemala (CCPAG) is empowered to set auditing standards for its members. In 2007, the CCPAG adopted ISA through a Resolution, which was included in the Guatemalan Official Gazette, that included a provision stating the ongoing adoption of all subsequent revisions and updates as issued by the IAASB without modifications and including the IAASB-stated effective date.

The Superintendencia de Administración Tributaria and the Securities and Commodities Market require companies under their supervision—medium and large sized companies that file special purpose financial statements and listed companies, respectively—to have their statements audited in accordance with standards issued by the CCPAG.

The Superintendence of Banks (SIB) requires auditors providing services to entities under its supervision to prepare annual audited financial statements in accordance with ISA as issued by the IAASB.

Current Status: Adopted

Decree No. 72 of 2001 grants authority to the Colegio de Contadores Públicos y Auditores de Guatemala (CCPAG) to adopt ethical requirements for all professional accountants. In March 2013, the CCPAG adopted the IESBA Code of Ethics through a Resolution published in the Guatemalan Official Gazette. The Resolution states that any changes to the Code will automatically be adopted as issued by the IESBA.

Current Status: Adopted

The National Constitution of the Republic of Guatemala establishes the Accounting Administration Authority of the Ministry of Public Finance (MoF) as the accounting standard-setter for the public sector. Accordingly, the MoF has adopted national standards on an accrual basis with reference to the IPSAS (IFAC/CIPFA International Public Sector Financial Accountability Index 2020) through Decree No. 109 of 2019.

Current Status: Partially Adopted

Decree No. 72 of 2001 authorizes the Colegio de Contadores Públicos y Auditores de Guatemala (CCPAG) to establish an investigative and disciplinary (I&D) system for all professional accountants. Accordingly, the CCPAG has established I&D procedures for all professional accountants, which its Honor Tribunal leads.

As indicated by CCPAG and the IGCPA, the CCPAG I&D system incorporates some of the SMO 6 requirements; it would require an update of the Decree No. 72 of 2001 to align the I&D system entirely with the SMO 6 requirements for all professional accountants.

Current Status: Partially Adopted

As stipulated in the Code of Commerce, all companies must prepare financial statements in accordance with generally accepted accounting principles (Guatemalan GAAP); however, this does not refer specifically to IFRS, and the Code does not define Guatemalan GAAP either. Therefore, companies prepare financial statements based on the Tax Legislation Decree No. 10 of 2012.

The Tax Legislation Decree requires medium and large-sized companies to present annual audited financial statements using income tax rules for calculating taxable income. Financial statements prepared in accordance with the Tax Legislation Decree are considered special purpose financial statements. In addition, the tax administration—Superintendencia de Administración Tributaria (SAT)—also permits companies to prepare statements using IFRS or IFRS for Small- and Medium-sized Entities (SMEs).

In accordance with the Decree No. 72 of 2001 authorizes the Colegio de Contadores Públicos y Auditores (CCPAG), a professional accountancy organization with mandatory membership, to set accounting standards for its members. The CCPAG adopted IFRS through a Resolution on December 20, 2007 and IFRS for SMEs in 2010. However, the CCPAG's resolutions are not legally binding.

In addition, the Superintendence of Banks (SIB), empowered by the Banks Act No. 19 of 2002, requires banks, other financial institutions, and insurance companies to prepare financial statements based on the SIB accounting manual, which contains some differences from IFRS Standards. Any issues not addressed by the SIB manual should be addressed using IFRS. The SIB also sets requirements for companies within the Guatemalan financial system with loans or financing over US$ 650,000. These companies are mandated to present audited financial statements using IFRS or IFRS for SMEs.

Lastly, listed companies that are supervised by the Securities and Commodities Market (BVNSA) are also permitted but not required to use IFRS.

Current Status: Partially Adopted

Relevant Organizations

• Colegio de Contadores Públicos y Auditores de Guatemala (CCPAG)
• Instituto Guatemalteco de Contadores Públicos y Auditores (IGCPA)
• Superintendence of Banks (SIB)
• Securities and Commodities Market
• Tax Administration

Relevant Legislation

• Banks Act No. 19, 2002
• CCPAG resolutions
• Law of Mandatory Professional Association, Decree No. 72, 2001
• Tax Legislation Decree No. 10 of 2012

Relevant Publications

• CCPAG, SMO Action Plan, 2023.
• IGCPA, SMO Action Plan, 2023.
• IFRS Foundation, "IFRS Application Around the World?Jurisdictional Profile: Guatemala," June 2016.
• FOCAL and BID, “Contabilidad Gubernamental en América Latina y Convergencia a las Normas Internacionales de Contabilidad del Sector Público (NICSP),” August 2019.