Mexico

Member Organizations

Member Organization Associate Other PAOs

  Instituto Mexicano de Contadores Públicos, A.C.

Legal and Regulatory Environment

  • Overview of Statuatory Framework for Accounting and Auditing

    While the General Law for Commercial Enterprises of 1934 provides broad rules on the form of the financial information to be provided to shareholders, Article 5 of the Mexican Constitution grants legal authority to the local professional accountancy organizations and their federal umbrella, the Instituto Mexicano de Contadores Públicos (IMCP), to set applicable accounting and auditing standards for their members.

    The IMCP has delegated the accounting standard-setting process to the Mexican Board for Research and Development of Financial Reporting Standards (CINIF). The CINIF was established on August 21, 2001, as an independent, nonprofit entity that conducts research and related activities for the purpose of developing and issuing Mexican financial reporting and accounting standards that are consistent with international standards. Since 2004, the CINIF has issued Mexican Financial Reporting Standards (MFRS) that are being converged with IFRS and has published an analysis of main differences. Although CINIF plans to eliminate the differences between MFRS and IFRS, it is unclear when full convergence may be achieved.

    Financial sector regulators—the National Banking and Securities Commission (CNBV), and the National Insurance and Surety Commission (CNSF)—are empowered to set sector-specific accounting rules for the companies they regulate. Listed companies are required to use standards issued by the CNBV which are the IFRS. Financial institutions and insurance companies apply MFRS in addition to certain requirements issued by the CNBV and the CNSF—the insurance regulator.

    In accordance with the current Mexican tax law, since 2014, a statutory audit is no longer mandatory for non-regulated companies. Companies with gross income exceeding MXN 100 million, assets exceeding MXN 79 million, or with at least 300 employees may file a special report prepared by an independent public accountant with the tax authority.

    Article 5 of the Mexican Constitution grants legal authority to the IMCP to issue auditing standards that its members must apply in all audits they conduct. ISA have been adopted without modification by the IMCP’s Committee on Standards of Auditing and Assurance, effective since January 1, 2012 for all mandatory audits, including listed companies, banks, and insurance companies. The financial sector regulators are empowered to set sector-specific audit rules for the companies they regulate. Both the CNBV and CNSF accept the auditing standards issued by the IMCP such that all audits of listed companies, financial institutions, and insurance companies—effectively the public interest entities (PIEs) in Mexico—are conducted in accordance with ISA. Only IMCP-certified public accountants designated as CPA (Contador Publico Certificado—CPC) can perform audits of PIEs.

  • Regulation of Accountancy Profession

    The only requirement to practice accountancy in Mexico is to have a bachelor’s degree in accounting from a higher education institution. The Ministry of Education (MoE) licenses professional accountants to practice public accountancy and universities set the curriculum for accounting degrees. Individual professionals may voluntary join a state level accountancy organization, which are authorized to issue regulations for its members in accordance with the Mexican Constitution. Several professional accountancy organizations exist in Mexico with voluntary membership; however, apart from Instituto Mexicano de Contadores Públicos (IMCP), it is not clear whether they have established membership requirements and regulate their members.

    The Instituto Mexicano de Contadores Públicos (IMCP) is a federation composed of 60 state level accountancy organization that bring together professional accountants from around the country. The MoE license is the only requirement for applying for the IMCP membership. The IMCP, alongside its state professional organizations, carries out the following regulatory activities for its members: (i) setting auditing standards; (ii) establishing ethical standards; (iii) setting and enforcing continuing professional development CPD requirements; (iv) implementing an investigation and discipline system; and (v) establishing and operating a quality assurance QA review system.

    The IMCP introduced the certified public accountant (CPA; Contador Publico Certificado—CPC) qualification, which the IMCP states is in line with the IES requirements. The CPC qualification is mandatory for auditors of public interest companies registered with the National Banking and Securities Commission (CNBV) and the National Insurance and Surety Commission (CNSF), effectively the principal public interest entities in Mexico.

    In addition, auditors providing services to the CNBV and the CNSF are subject to their ethical guidelines specifying independence requirements, and to additional investigation and discipline procedures. The CNBV and CNSF have legal powers to dismiss, or impose administrative sanctions on, auditors of entities under their respective supervision for violation of applicable accounting, auditing, and reporting rules and standards.

    Lastly, professional accountants who intend to carry out audits for tax purposes need to register with the Federal General Administration of Tax Audit, a division of Mexico’s Internal Revenue Department. Any practitioner affiliated with a state professional accountancy organization is eligible for inclusion in the list of qualified auditors maintained by the tax authorities. The Internal Revenue Department has the power to impose civil and criminal penalties on auditors who certify misleading or inaccurate numbers about a client’s taxable profits. In addition, if a tax authority is dissatisfied with the performance of any auditors, their names may be sanctioned, suspended, or struck from the list.

  • Audit Oversight Arrangements

    There is no independent audit oversight in Mexico. Only auditors providing services to companies regulated by the National Banking and Securities Commission (CNBV) and the National Insurance and Surety Commission (CNSF) are subject to audit oversight. The CNBV and CNSF have legal powers to dismiss, or impose administrative sanctions on, auditors of entities under their respective supervision for violation of applicable accounting, auditing, and reporting rules and standards. The CNBV and CNSF may impose the following disciplinary penalties against errant auditors: monetary penalties, admonishment, reprimand, or dismissal. In cases of fraud, the regulators can initiate judicial proceedings for criminal actions.

    In order to conduct audits for these entities, individuals must be certified as a Contador Publico Certificado–CPC by the Instituto Mexicano de Contadores Públicos (IMCP)—a federal umbrella organization for professional accountancy associations in Mexico. As a certified member of IMCP, individuals are subject to the IMCP’s regulations in accordance with the Mexican Constitution. The IMCP, along with its state professional organizations, carries out the following regulatory activities for auditors: (i) setting auditing standards; (ii) establishing ethical standards; (iii) setting and enforcing continuing professional development (CPD) requirements; (iv) implementing an investigation and discipline system; and (v) establishing and operating a quality assurance (QA) review system.

  • Professional Accountancy Organizations

    The Instituto Mexicano de Contadores Públicos (IMCP)

    The IMCP is an umbrella federation composed of 60 professional associations that bring together professional accountants from around the country. Membership in the IMCP is voluntary and consists of certified and non-certified members. Certified members are those who have earned the IMCP’s certification of (Contador Publico Certificado–CPC). Only IMCP-certified public accountants can perform audits of public interest entities registered with the National Banking and Securities Commission and the National Insurance and Surety Commission.

    The IMCP, along with its state professional organizations, carries out the following regulatory activities for its members: (i) setting auditing standards; (ii) establishing ethical standards; (iii) setting and enforcing continuing professional development (CPD) requirements; (iv) implementing an investigation and discipline system; and (v) establishing and operating a quality assurance (QA) review system.

    In addition to being an IFAC member, the IMCP is a member of the Inter-American Association of Accountants.

    Other PAOs

    Recently other institutions have been created as a result of a split from the IMCP; however, there is limited information about the associations’ activities and members.

  • Projects or Other Information

    Audit Oversight Arrangements

Adoption of International Standards

  • Quality Assurance

    There is no legal foundation for the establishment and implementation of quality assurance (QA) reviews for all audits of financial statements. Although the Securities Market Law and the National Banking and Securities Commission (CNBV)’s Official Circular for Issuers recognize that entities must ensure that their independent auditors comply with quality assurance requirements, these requirements are not specified and, as of 2018, no specific rules or procedures have been issued regarding a QA system.

    In 2012, the Instituto Mexicano de Contadores Públicos (IMCP) adopted ISQC 1 as quality control standards and introduced a mandatory QA system for its members that the institute reports is in line with the SMO 1 requirements. Only the IMCP’s members that receive the institute’s certification of Certified Public Accountant (CPA; Contador Publico Certificado–CPC) and member firms can perform audits of listed companies, financial institutions, and insurance companies registered with the CNBV and the National Insurance and Surety Commission—effectively the principal public interest entities in Mexico.

    Current Status: Adopted

  • International Education Standards

    Entry requirements for all professional fields are regulated by Article 5 of the Mexican Constitution. The only requirement to practice the accounting profession is to have a bachelor’s degree in accounting from a higher education institution. The Ministry of Education (MoE) and universities set initial professional development (IPD) requirements for professional accountants in Mexico. The MoE licenses professional accountants to practice public accountancy and universities set the curriculum for accounting degrees.

    Individuals who then voluntarily join one of Mexico’s state level professional organizations might be subject to its continuing professional development (CPD) requirements. The MoE license is the only requirement for applying for the Instituto Mexicano de Contadores Públicos (IMCP) membership. The IMCP requires its members to fulfill continuing professional development (CPD) requirements.

    The IMCP has set CPD requirements for its members at 65 CPD credits per year. In addition, the IMCP has implemented its own Certified Public Accountant (CPA; Contador Publico Certificado–CPC) certification as a prerequisite to audit public interest entities, as required by the National Banking and Securities Commission and the National Insurance and Surety Commission. The IMCP states that the certification is in line with the revised IES requirements.

    The IMCP has also collaborated with the National Association of Colleges and Schools of Accounting and Management (ANFECA), an organization representing more than 400 institutions of higher education in Mexico, to adopt the IES requirements effective since May 2016. As of the date of the assessment, ANFECA institutions are incorporating the revised IES requirements into their curricula.

    Several other PAOs exist in Mexico; however, apart from IMCP, it is not clear whether they have established educational requirements for their members.

    Current Status: Partially Adopted

  • International Standards on Auditing

    Article 5 of the Mexican Constitution grants legal authority to the Instituto Mexicano de Contadores Públicos (IMCP) to issue auditing standards that its members must apply in all audits. ISA have been adopted without modification by the IMCP’s Committee on Standards of Auditing and Assurance, effective since January 1, 2012 for all mandatory audits, including audits of listed companies, banks, and insurance companies. When the IAASB issues new and revised ISA, the standards are reviewed, translated, and published by the IMCP. As of 2018, the 2016–2017 ISA are being applied.

    In addition, financial sector regulators—the National Banking and Securities Commission, and the National Insurance and Surety Commission—are empowered to set sector-specific audit rules for the companies they regulate. In turn, the regulators accept the auditing standards issued by the IMCP.

    Current Status: Adopted

  • Code of Ethics for Professional Accountants

    Professional accountants in Mexico are eligible to practice with a university degree in accounting and license from the Ministry of Education (MoE) and are not subject to any ethical requirements by the MoE. Individual professionals may voluntary join a state professional accountancy organization (PAO), and become subject to their regulation which may include ethical requirements.

    The Instituto Mexicano de Contadores Públicos (IMCP) is a federation composed of 60 PAOs and requires its members to follow its Code of Ethics, which, according to the IMCP, fulfills all of the requirements of the 2014 IESBA Code.

    In addition, members of IMCP who perform audits of companies regulated by the National Banking and Securities Commission and the National Insurance and Surety Commission are subject to their ethical guidelines specifying independence requirements.

    Several other professional accountancy organizations exist in Mexico with voluntary membership; however, apart from IMCP, it is not clear whether they have established ethical requirements for their members.

    Current Status: Partially Adopted

  • International Public Sector Accounting Standards

    The General Law of Governmental Accounting 2008 created the National Council of Accounting Harmonization (CONAC) as the accounting standard- setter for the public sector. As reported by the Instituto Mexicano de Contadores Públicos, IPSAS have not been adopted despite the transition period established in the law. As of the date of the assessment, there is no stated timeline for IPSAS adoption and implementation.

    State-owned enterprises are required to apply the Governmental Accounting Standards (accrual basis) in the preparation of their financial statements. In addition, since 2014, the CONAC has authorized that Mexican Financial Reporting Standards and IPSAS may be used as a supplementary standards for certain entities.

    Current Status: Partially Adopted

  • Investigation and Discipline

    Professional accountants in Mexico are eligible to practice with a university degree in accounting and license from the Ministry of Education (MoE) and are not legally subject to a formal professional investigative and disciplinary (I&D) system. Individual professionals may voluntary join a state level accountancy organization, and become subject to their regulation which may include I&D procedures.

    The Instituto Mexicano de Contadores Públicos (IMCP) is a federation composed of 60 PAOs. Chapter VII of the IMCP’s by-laws sets the I&D requirements for its members. The IMCP and the local professional accountancy organizations under its umbrella operate that system through a National Honor Board and the 60 local Honor Committees.

    The IMCP has developed a comparison of the local professional accountancy organizations’ I&D systems and processes against the requirements of SMO 6. Through this assessment it has concluded that two areas of the SMO 6 requirements—separate disciplinary committee and enhancing the administrative processes (timeframe targets for disposal of all cases and tracking mechanisms to monitor progress in I&D cases)—have not been incorporated and require further harmonization between its members.

    In addition, members of IMCP who perform audits of companies regulated by the National Banking and Securities Commission (CNBV) and the National Insurance and Surety Commission (CNSF) are subject to additional investigation and discipline procedures. The CNBV and CNSF have legal powers to dismiss, or impose administrative sanctions on, auditors of entities under their respective supervision for violation of applicable accounting, auditing, and reporting rules and standards. The CNBV and CNSF may impose the following disciplinary penalties against errant auditors: monetary penalties, admonishment, reprimand, or dismissal. In cases of fraud, the regulators can initiate judicial proceedings for criminal actions.

    Lastly, the Internal Revenue Department has the power to impose civil and criminal penalties on auditors who certify misleading or inaccurate numbers about a client’s taxable profits. In addition, if a tax authority is dissatisfied with the performance of any auditors, their names may be sanctioned, suspended, or struck from the list.

    Several other professional accountancy organizations exist in Mexico with voluntary membership; however, apart from IMCP, it is not clear whether they have established I&D systems for their members.

    Current Status: Partially Adopted

  • International Financial Reporting Standards

    Article 5 of the Mexican Constitution grants legal authority to the local professional accountancy organizations (PAOs) to establish regulations for their members. In this regard, the 60 state PAOs and their federal umbrella organization, the Instituto Mexicano de Contadores Públicos (IMCP), may issue accounting standards for their members. The IMCP delegated its standard-setting process to the independent Mexican Board for Research and Development of Financial Reporting Standards (CINIF).

    CINIF issues Mexican Financial Reporting Standards (MFRS) that are being converged with IFRS and CINIF has published an analysis of main differences. Although CINIF plans to eliminate the differences between MFRS and IFRS, it is unclear when full convergence may be achieved.

    CINIF has not adopted the IFRS for Small- and Medium-sized Enterprises (SMEs). As reported by the IFRS Foundation, CINIF has stated that it does not believe that different recognition and measurement criteria from full IFRS are appropriate for SMEs. CINIF has a project to create a Reduced Disclosure Regime for SMEs.

    Financial sector regulators—the National Banking and Securities Commission (CNBV) and the National Insurance and Surety Commission (CNSF)—are empowered to set sector-specific accounting rules for the companies they regulate. Listed companies are required to use standards issued by the CNBV which are the IFRS. Financial institutions and insurance companies apply MFRS in addition to certain requirements issued by the CNBV and the CNSF.

    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: 10/2018
We welcome feedback. Please email compliance@ifac.org

Thank you for your interest in our publications. These valuable works are the product of substantial time, effort and resources, which you acknowledge by accepting the following terms of use. You may not reproduce, store, transmit in any form or by any means, with the exception of non-commercial use (e.g., professional and personal reference and research work), translate, modify or create derivative works or adaptations based on such publications, or any part thereof, without the prior written permission of IFAC.

Our reproduction and translation policies, as well as our online permission request and inquiry system, are accessible on the Permissions Information web page.

For additional information, please read our website Terms of Use. ALL RIGHTS RESERVED.