Panama

Member Organizations

Member Organization Associate Other PAOs

  Colegio de Contadores Públicos Autorizados de Panamá

Legal and Regulatory Environment

  • Overview of Statuatory Framework for Accounting and Auditing

    In Panama, the Companies Law of 1927 establishes the types of legal companies while the Code of Commerce of 1916 and subsequent amendments obliges companies to keep books of accounts and provides the basic legal framework for accounting.

    The Law 57 of 1978 on the Accounting Profession authorizes the Technical Board of Accounting (JTC), an agency under the Ministry of Commerce and Industries, to set accounting and auditing standards. For this purpose the JTC created the Commission of Financial Accounting Standards to recommend regulation regarding the accounting and auditing standards in Panama for all companies, aside from regulated companies. The Law No. 6 of 2005 requires the application of IFRS and IFRS for Small- and Medium-sized Entities (SMEs) since 2006. For tax purposes, the tax authority require IFRS and IFRS for SMEs through modification to the Tax Code of 1956 and amendments.

    In addition, financial sector regulators—i.e., the Superintendent of Banks (SBP), Superintendence of Insurance and Reinsurance (SSRP), and the National Securities Commission (SMV)—are empowered to set sector-specific accounting rules for the companies they regulate. Listed companies and financial institutions are required to use IFRS or U.S. Generally Accepted Accounting Principles, in accordance with the SBP Agreement No. 4 of 1999 and SMV Agreement No. 8 of 2000, respectively. Insurance companies are required to apply IFRS as per SSRP Law No. 12 of 2012.

    The Tax Code requires mandatory statutory audits of companies that meet the following criteria: capital exceeding PAB 100,000 or with an annual sales or gross income greater than PAB $50,000. Audits of these companies must follow auditing standards applicable in Panama and signed by a Panamanian Certified Public Accountant. The JTC has adopted ISA for all mandatory audits, other than regulated companies, since 2006, in accordance the Law 6 of 2005. Financial institutions are required to use ISA or U.S. Generally Accepted Auditing Standards issued by the Auditing Standards Board of the American Institute of Certified Public Accountants, in accordance the SBP Agreement No. 4 of 2010. Listed companies and insurance companies are required to use ISA in accordance with the SMV regulation and SSRP Law No. 12 of 2012.

  • Regulation of Accountancy Profession

    The accountancy profession in Panama is regulated by the Law No. 57 of 1978 on the Accounting Profession. The Law recognizes the Technical Board of Accounting (JTC), an agency under the Ministry of Commerce and Industries, as the entity responsible for regulating the accountancy profession. Individuals wishing to qualify as a Panamanian Certified Public Accountant (CPA) and be authorized to practice as a public accountant or auditor must be registered with the JTC. Registration requirements include completing a bachelor’s degree in accounting and not having a criminal record. The local universities set the curriculum for accounting degrees.

    The JTC carries out the following regulatory activities: (i) setting accounting and auditing standards; (ii) setting ethical standards for the profession; (iii) issuing professional licenses; (iv) maintaining a registry of CPAs; and (viii) implementing an investigation and discipline system for the profession.

    In addition, individual professionals may voluntary join a professional accountancy organization (PAO) and be self-regulated through the requirements of the PAO. The PAOs in the jurisdiction promote the adoption and implementation of international standards, represent and promote the accountancy profession, develop trainings, and promote improvements to professional practices. The Colegio de Contadores Públicos Autorizados de Panamá and the Association of Women Authorized Public Accountants have established a quality assurance system and mandatory continuing professional development requirements for their members. Apart from these organizations, it is unclear whether other PAOs have established membership requirements and regulate their members.

    Lastly, the Superintendent of Banks (SBP) and the Superintendence of Insurance and Reinsurance (SSRP) have registers of audit firms providing services to entities under their supervision. The regulators are authorized to: (i) register auditors providing services to entities under its supervision; (ii) establish ethical requirements for their registered auditors; and (iii) prescribe educational requirements, such as relevant practical experience for registered auditors. In addition, the SBP, SSRP, and the National Securities Commission are authorized to set sector-specific accounting and auditing standards for professionals providing services to entities under their supervision.

  • Audit Oversight Arrangements

    There are no independent audit oversight arrangements in Panama. According to the Law No. 57 of 1978 on the Accounting Profession the only requirements for becoming a Panamanian Certified Public Accountant (CPA) and thereby authorized to practice as public accountant or auditor is to register with the Technical Board of Accounting (JTC) after completing a bachelor’s degree in accounting and not having a criminal record.

    The Law recognizes the JTC, an agency under the Ministry of Commerce and Industries, as the entity responsible for regulating the accountancy profession. The JTC carries out the following regulatory activities for auditors: (i) setting auditing standards; (ii) setting ethical standards for the profession; (iii) issuing professional licenses; (iv) maintaining a registry of CPAs; and (viii) implementing an investigation and discipline system for the profession.

    In addition, individuals that offer audit services may voluntarily join a professional accountancy organization (PAO) and therefore be subject to the membership requirements of the PAO. The Colegio de Contadores Públicos Autorizados de Panamá and the Association of Women Authorized Public Accountants have established a quality assurance system and mandatory continuing professional development requirements for their members. Apart from these organizations, it is unclear whether other PAOs have established membership requirements and regulate their members.

    Lastly, the Superintendent of Banks (SBP) and the Superintendence of Insurance and Reinsurance (SSRP) have registers of audit firms providing services to entities under their supervision. The regulators are authorized to: (i) register auditors providing services to entities under its supervision; (ii) establish ethical requirements for their registered auditors; and (iii) prescribe educational requirements, such as relevant practical experience for registered auditors. In addition, the SBP, SSRP, and the National Securities Commission are authorized to set sector-specific accounting and auditing standards for professionals providing services to entities under their supervision.

  • Projects or Other Information

    The Colegio de Contadores Públicos Autorizados de Panamá (CCPAP) has been promoting a legislative reform for the accountancy profession and working with the government and holding discussions with stakeholders. The proposed law seeks to address the major regulatory gaps and adopt international best practices. The CCPAP will continue using their best endeavors to implement a new law with the government of Panama, however, as of 2018 the legislative reform has not been approved by the government and it is unclear the timeline to adopt the proposed changes.

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. In the absence of legal requirements, the Colegio de Contadores Públicos Autorizados de Panamá (CCPAP) and the Association of Women Authorized Public Accountants—professional accountancy organizations which include auditors and other professionals that join on a voluntarily basis—created the Alliance for Quality initiative, and since 2016, have introduced a voluntary QA system for their member firms.

    As reported by the CCPAP, the adopted QA system partially aligns with the SMO 1 requirements. Gaps include missing the link between the investigation and disciplinary system in the jurisdiction and cooperation with the Technical Board of Accounting, the regulator of the profession, which has not officially endorsed the QA review system.

    Current Status: Partially Adopted

  • International Education Standards

    The accountancy profession in Panama is regulated by the Law No. 57 of 1978 on the Accounting Profession. The Law recognizes the Technical Board of Accounting (JTC), an agency under the Ministry of Commerce and Industries, as the entity responsible for regulating the accountancy profession. Individuals that wish to qualify as a Panamanian Certified Public Accountant and thereby be authorized to practice as public accountant or auditor must be registered with the JTC after completing a bachelor’s degree in accounting and not have a criminal record. The universities set the curriculum for accounting degrees.

    In addition, some of the professional accountancy organizations (PAOs) with voluntary membership operating in the jurisdiction, such as, the Colegio de Contadores Públicos Autorizados de Panamá and the Association of Women Authorized Public Accountants, have established mandatory continuing professional development (CPD) requirements for their members. Apart from these organizations, it is unclear whether other PAOs have established educational requirements for their members.

    Lastly, auditors providing services to financial sector regulators—the Superintendent of Banks, and Superintendence of Insurance and Reinsurance—are subject to additional practical experience requirements as established by the regulators.

    Although some of the requirements of IES appear to have been incorporated into the national requirements, such as some initial educational—i.e. university degree, and CPD for PAO members—and practical experience requirements for some auditors providing services to companies subject to supervision of the regulators, it is does not appear that any other national requirements exist that incorporate the 2015 revised IES.

    Current Status: Partially Adopted

  • International Standards on Auditing

    The Law No. 57 of 1978 on the Accounting Profession empowers the Technical Board of Accounting, an agency under the Ministry of Commerce and Industries, to set auditing standards for audits of all companies, aside from regulated companies. The Law No. 6 of 2005 has adopted ISA since 2006, which includes a provision stating the ongoing adoption of all subsequent revisions and updates as issued by the IAASB without modifications and with the IAASB-stated effective date.

    In addition, financial sector regulators—the Superintendent of Banks (SBP), Superintendence of Insurance and Reinsurance (SSRP) and the National Securities Commission—are empowered to set sector-specific auditing rules for the companies under their purview. Financial institutions are required to use ISA or U.S. Generally Accepted Auditing Standards issued by the Auditing Standards Board of the American Institute of Certified Public Accountants in accordance the SBP Agreement No. 4 of 2010. Listed companies and insurance companies are required to use ISA in accordance with the SMV regulation and SSRP Law No. 12 of 2012.

    Current Status: Adopted

  • Code of Ethics for Professional Accountants

    The Law No. 57 of 1978 on the Accounting Profession empowers the Technical Board of Accounting (JTC), an agency under the Ministry of Commerce and Industries, to adopt ethical requirements for the accountancy profession in Panama. Through the Decree No. 26 of 1984 the JTC established the Code of Ethics for accountants in Panama. As reported by the Colegio de Contadores Públicos Autorizados de Panamá, the current Code is not based on the IESBA Code of Ethics.

    In addition, auditors providing services to companies under the supervision of the Superintendent of Banks (SBP) and the Superintendence of Insurance and Reinsurance are subject to additional ethical requirements. The SBP Agreement No. 4 of 2010 and the SSRP Agreement No. 6 of 2013 adopt the IESBA Code of Ethics, by reference, for auditors on their registries. It is unclear if the National Securities Commission has established any other ethical requirements for auditors providing services to companies under their purview.

    Current Status: Partially Adopted

  • International Public Sector Accounting Standards

    In accordance with the Law No. 32 of 1984, the National Comptroller Office (CGR) of Panama is responsible for setting public sector accounting standards. The CGR has adopted IPSAS through the Decree No. 288 of 2014, which included a provision stating the ongoing adoption of all subsequent revisions and updates as issued by the IPSASB without modifications and with the IPSAS-stated effective date. The government, municipalities, and state-owned enterprises all adopt these standards.

    Current Status: Adopted

  • Investigation and Discipline

    The Law No. 57 of 1978 on the Accounting Profession empowers the Technical Board of Accounting (JTC), an agency under the Ministry of Commerce and Industries, to establish and implement investigative and disciplinary (I&D) procedures for the accountancy profession in Panama. As reported by the Colegio de Contadores Públicos Autorizados de Panamá the JTC has implemented an I&D system but it is not in line with the SMO 6 requirements. Differences include information about the types of misconduct which may bring about investigative actions and the results of the investigative and disciplinary proceedings are not publicly available.

    Current Status: Partially Adopted

  • International Financial Reporting Standards

    The Technical Board of Accounting, an agency under the Ministry of Commerce and Industries, is responsible for setting accounting standards for all companies, aside from certain regulated companies, in accordance with the Law No. 57 of 1978 on the Accounting Profession.

    The JTC issued Law No. 6 of 2005 requiring the application of IFRS and IFRS for Small- and Medium-sized Entities (SMEs) since 2006. For tax purposes, the tax authority require IFRS and IFRS for SMEs through modification to the Tax Code of 1956 and amendments. The Law No. 6 of 2005 included a provision stating the ongoing adoption of all subsequent revisions and updates as issued by the IASB without modifications and with the IASB-stated effective date.

    In addition, financial sector regulators—the Superintendent of Banks, Superintendence of Insurance and Reinsurance and the National Securities Commission—are empowered to set sector-specific auditing rules for the companies they regulate. Listed companies and financial institutions are required to use IFRS or U.S. Generally Accepted Accounting Principles in accordance with the SBP Agreement No. 4 of 1999 and SMV Agreement No. 8 of 2000, respectively. Insurance companies are required to apply IFRS in accordance the SSRP Law No. 12 of 2012.

    Current Status: 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: 07/2018
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