El Salvador

Member Organizations

Member Organization Associate Other PAOs

  Instituto Salvadoreño de Contadores Públicos

Legal and Regulatory Environment

  • Overview of Statuatory Framework for Accounting and Auditing

    The financial reporting framework in El Salvador is established under the Commercial Code, Decree No. 671 of 1970 as amended. The Code establishes the obligation for companies to keep books of accounts and provides the basic legal framework for accounting. The Code requires all companies—other than financial institutions—to prepare annual audited financial statements in accordance with the accounting and auditing standards issued by the Oversight Board of the Profession of Public Accounting and Auditing (CVPCPA), which was established under the Public Accountant Law, Decree No. 828 of 2000, as amended.

    In 2009, the CVPCPA issued Resolution No. 113 adopting IFRS for listed companies as translated into Spanish and published by the IFRS Foundation without modifications and IFRS for Small- and Medium-sized Entities for all other companies. The decree, however, does not apply to banks, insurance companies, or pension funds which are subject to accounting regulations issued by the Superintendent of the Financial System (SSF).

    In accordance with the Law of the Financial System No. 592 of 2011, SSF regulates listed companies, banks, insurance companies, and pension fund administrators and establishes the financial reporting requirements for these entities. For listed companies, the SSF requires the application of accounting standards as issued by the CVPCPA. Meanwhile, for banks, insurance companies, and pension funds, SSF has established accounting standards known as “regulatory GAAP,” which are not aligned with IFRS. However, it does require that the financial statements of these regulated entities state the main differences between “regulatory GAAP” and IFRS

    Regarding auditing requirements, all companies are required by law to appoint an external auditor. Since 2006, the CVPCPA has adopted the Spanish translations of ISA and adopted the new auditor’s reporting standards by resolution R16/2016. SSF’s External Audit Standards for Banks and Insurance Companies (NPR-16) require the application of ISA. Subsequently, in 2010, the SSF required ISA as adopted by the CVPCPA for listed companies in accordance with the Resolution RCTG No.1.

    In El Salvador, companies are required to provide financial information to several other institutions, including the Superintendent of Corporate Obligations, the Ministry of Economy, tax authorities, and line ministries for public procurement. Furthermore, the Tax Code Decree No. 230 of 2001 requires companies with assets more than 10 million Colones and revenues more than five million Colones to provide a certification by an independent auditor —registered with the CVPCPA— on their compliance with their tax obligations.

  • Regulation of Accountancy Profession

    The profession is regulated at the state level in El Salvador by the Oversight Board of the Profession of Public Accounting and Auditing (CVPCPA) and the Superintendent of the Financial Systems (SSF).

    The CVPCPA was created by the Public Accountant Law, Decree No. 828 of 2000, as amended in 2017, to regulate the accounting and auditing profession. Individuals wishing to obtain a public accountant or auditor license from the CVPCPA must be Salvadoran, have a bachelor’s degree in accounting, and complete one year of practical experience for a public accountant and two years for auditors to practice. Additionally, to maintain the license, individuals must complete annual continuing professional development (CPD) requirements.

    The CVPCPA’s responsibilities include: (i) maintaining a registry of public accountants and auditors; (ii) overseeing implementation of professional and technical practices and ensuring practitioners are registered; (iii) establishing and operating a quality assurance (QA) review system for audits, aside from audits regulated by the SSF; (iv) setting accounting and auditing standards for companies other than financial institutions; (v) setting CPD requirements; (vi) setting ethical standards for the profession; and (vii) implementing an investigation and discipline (I&D) system for the profession.

    In addition, SSF regulates auditors that provide services to entities under its supervision, which includes listed companies, banks, insurance companies, and pension funds. External auditors are subject to specific regulations under the SSF’s External Audit Standards for Banks and Insurance Companies (NPR-16). The SSF is authorized to: (i) register auditors providing services to entities under its supervision; (ii) establish and operate a QA review system for auditors of regulated entities; (iii) set auditing standards for SSF-registered auditors, and (iv) investigate and discipline auditors providing services to regulated companies. Auditors of regulated companies can incur a fine or have their license suspended or repealed by the SSF for non-compliance with their obligations.

  • Audit Oversight Arrangements

    The Oversight Board of the Profession of Public Accounting and Auditing (CVPCPA), as established under the Public Accountant Law, Decree No. 828 of 2000, as amended in 2017, is responsible for overseeing the audit profession in El Salvador. The CVPCPA’s responsibilities include (i) maintaining a registry of public accountants and auditors; (ii) overseeing implementation of professional and technical practices and ensuring practitioners are registered; (iii) establishing and operating a quality assurance (QA) review system for audits, aside from audits regulated by the SSF; (iv) setting accounting and auditing standards for companies other than financial institutions; (v) setting CPD requirements; (vi) setting ethical standards for the profession; and (vii) implementing an investigation and discipline (I&D) system for the profession.

    The CVPCPA is not a member of the International Forum of Independent Audit Regulators.

    In addition, the SSF regulates auditors that provide services to entities under its supervision which includes listed companies, banks, insurance companies, and pension funds. External auditors are subject to specific regulations SSF regulates auditors that provide services to entities under its supervision, which includes listed companies, banks, insurance companies, and pension funds. External auditors are subject to specific regulations under the SSF’s External Audit Standards for Banks and Insurance Companies (NPR-16). The SSF is authorized to: (i) register auditors providing services to entities under its supervision; (ii) establish and operate a QA review system for auditors of regulated entities; (iii) set auditing standards for SSF-registered auditors, and (iv) investigate and discipline auditors providing services to regulated companies. Auditors of regulated companies can incur a fine or have their license suspended or repealed by the SSF for non-compliance with their obligations.

  • Professional Accountancy Organizations

    The Instituto Salvadoreño de Contadores Públicos (ISCP)

    The ISCP was constituted in 1997 through the merger of three professional associations. The ISCP is a voluntary professional organization, comprised of public accountants and auditors. The ISCP represents and promotes the accountancy profession, develops training activities, and promotes improvements to professional practices. In addition, the ISCP supports the adoption and implementation of international standards and regulation of the profession through its participation in the Oversight Board of the Profession of Public Accounting and Auditing (CVPCPA).

    In addition to being a member of IFAC, the ISCP is a member of the Inter-American Accounting Association.

    Other PAOs

    Apart from the ISCP, there are three other voluntary professional accountancy organizations in the country. The Corporación de Contadores de El Salvador (CCES), the Asociación de Auditores Independientes de El Salvador (AIDES), and the Red de Contadores de El Salvador (the Red), all established by general consensus. Overall, the PAOs represent and promote the accountancy profession, develop training activities, and promote improvements to professional practices; similar to those of the ISCP.

  • Projects or Other Information

    In the public sector, the Government of El Salvador is working on a project, funded by the United States Agency for International Development, which includes IPSAS training and exploring the possibility of adopting IPSAS.

Adoption of International Standards

  • Quality Assurance

    In accordance with the Public Accountant Law, Decree No. 828 of 2000, as amended in 2017, the Oversight Board of the Profession of Public Accounting and Auditing (CVPCPA) is responsible for establishing a quality assurance (QA) review system for all mandatory audits, other than audits of companies supervised by the Superintendent of the Financial System (SSF) mentioned below. Accordingly, since 2009, the CVPCPA has established and operated a QA review system.

    In addition, the SSF, as empowered by the Law of the Financial System No. 592 of 2011, has established a QA system for audits of listed companies, banks, insurance companies, and pension funds.

    The Instituto Salvadoreño de Contadores Públicos states that both QA systems operating in the jurisdiction fulfill the requirements of SMO 1.

    Current Status: Adopted

  • International Education Standards

    In El Salvador, universities and the Oversight Board of the Profession of Public Accounting and Auditing (CVPCPA), in accordance with the Public Accountant Law, Decree No. 828 of 2000, as amended in 2017, have a role in setting initial professional development and continuing professional development (CPD) requirements for professional accountants. The Public Accounting Law stipulates that the main requirement for obtaining a public accountant or auditor license is a bachelor’s degree in accounting, one year of practical experience for a public accountant and two years for auditors. To maintain licenses, individuals must fulfill annual CPD requirements that are aligned with the revised IES. Salvadoran universities have authority over the accounting curriculum and issuing of professional degrees.

    The Instituto Salvadoreño de Contadores Públicos reports that in 2003 the CVPCPA adopted the IES by the resolution R01/0603/2003 for all professional accountants; nevertheless, because the CVPCPA lacks authority over the universities and the curriculum of the accounting programs, the IES requirements are only viewed as guidelines by universities.

    No minimum standard has been set for the content of university accounting curricula, nor is there any requirement to pass a competency exam.

    Although some of the requirements of the revised IES have been incorporated into the national requirements, such as a university accounting degree, CPD, and practical experience, the full extent of adoption of the IES requirements is unclear.

    Current Status: Partially Adopted

  • International Standards on Auditing

    The Public Accountant Law, Decree No. 828 of 2000, as amended in 2017, empowers the Oversight Board of the Profession of Public Accounting and Auditing (CVPCPA) to set auditing standards for audits of all companies, other than regulated companies. The CVPCPA has adopted the Spanish translations of ISA since 2006. The CVPCPA adopted the new auditor’s reporting standards by resolution R16/2016.

    The Law of the Financial System No. 592 of 2011 authorizes the Superintendent of the Financial System (SSF) to set auditing standards for audits of the entities under its supervision which include listed companies, banks, insurance companies, and pension funds. The SSF’s External Audit Standards for Banks and Insurance Companies (NPR-16) require the application of ISA. Subsequently, in 2010, the SSF required ISA as adopted by the CVPCPA for listed companies in accordance with the Resolution RCTG No.1.

    Current Status: Partially Adopted

  • Code of Ethics for Professional Accountants

    The Public Accountant Law, Decree No. 828 of 2000, as amended in 2017, grants authority to the Oversight Board of the Profession of Public Accounting and Auditing (CVPCPA) to adopt ethical requirements for the accountancy profession in El Salvador. Through Resolution No. 16 of 2019, the CVPCPA has adopted the 2014 IESBA Code of Ethics.

    Current Status: Partially Adopted

  • International Public Sector Accounting Standards

    In accordance with the Legislative Decree No. 516 of 1995, the Director General of Government Accounting (GOES) within the Ministry of Finance is responsible for setting the public sector accounting standards. IPSAS have not been adopted in El Salvador.

    The Salvadoran government is working on a project funded by the United States Agency for International Development that includes, among other objectives, IPSAS training and exploring the possibility of adopting IPSAS.

    In addition, the project aims to reformulate the general accounts chart of the GOES, which now conform with the IPSAS. Based on available information, the GOES estimates that the implementation process has advanced by 50%, and it is anticipated that the process will be concluded by 2024.

    Current Status: Not Adopted

  • Investigation and Discipline

    In accordance with the Public Accountant Law, Decree No. 828 of 2000, as amended in 2017, the Oversight Board of the Profession of Public Accounting and Auditing (CVPCPA) is responsible for implementing investigative and disciplinary procedures (I&D) procedures for the accountancy profession in El Salvador. As reported by the Instituto Salvadoreño de Contadores Públicos, the CVPCPA has implemented an I&D system that is not in line with the SMO 6 requirements and has gaps in areas such as, not being linked with the results of QA reviews and members of the I&D committee do not include non-accountants, among others.

    The Superintendent of the Financial System (SSF) is also legally empowered by the Law of the Financial System No. 592 of 2011 to investigate and discipline auditors providing services to regulated companies. The extent of fulfillment of the SSF’s I&D system with the best practices of SMO 6 needs further clarification.

    Current Status: Partially Adopted

  • International Financial Reporting Standards

    The Oversight Board of the Profession of Public Accounting and Auditing (CVPCPA) is responsible for setting accounting standards for all companies, other than financial institutions, in accordance with the Public Accountant Law, Decree No. 828 of 2000, as amended in 2017.

    The CVPCPA issued Resolution No. 113 of 2009 requiring the adoption of IFRS by reference and without modifications for listed companies, and of IFRS for Small- and Medium-sized Entities (SMEs) for all other companies. The decree does not apply to other companies regulated by the Superintendent of the Financial System (SSF).

    For listed companies, the SSF requires the application of accounting standards issued by the CVPCPA, which are the IFRS. Meanwhile, for banks, insurance companies, and pension funds, SSF has established accounting standards known as “regulatory GAAP,” which are not aligned with IFRS. However, it does require that the financial statements of these regulated entities state the main differences between “regulatory GAAP” and IFRS.

    Current Status: Partially Adopted

Disclaimer

IFAC bears no responsibility for the information provided in the SMO Action Plans prepared by IFAC member organizations. Please see our full Disclaimer for additional information.

Methodology

Methodology
Last updated: 08/2019
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