Over the past 15 years, adopting international standards in Latin American countries has made tremendous strides—primarily auditing standards, private sector financial reporting standards, and the International Code of Ethics. Adopting these standards drives universal understanding of financial information for all stakeholders, including global investors, regulars and other stakeholders.
Implementing these standards remains another journey. In part, regional challenges stem from needing to translate standards into local languages on a timely basis, publish the new changes, and regularly engage regulators to ensure ongoing adoption of the most recent standards.
In most Latin American countries, there is no strong legal and regulatory frameworks, which would facilitate the authority of professional accountancy organizations (PAOs) to ensure the adoption and implementation of standards. This absence adds another obstacle. For example, although laws permit establishing PAOs, their ability to undertake core regulatory functions—such as setting applicable standards and enforcing compliance—is limited.
Nonetheless, there are overall positive indications of PAOs’ capacity to drive change and seek out solutions for these challenges. PAOs are developing strong collaborative relationships within their jurisdiction and across borders to drive adoption and ensure implementation of international standards.
Many PAOs have developed cooperation agreements, such as the Ibero-American Cooperation Framework (IberAM) and the Latin American Accounting Standard Setters Group, (GLENIF), to assist with implementation. IberAM was established to produce a single, unified, high-quality Spanish translation of auditing and ethical standards (IberAM is currently determining a new, fit-for-purpose operating model). GLENIF provides comments to all International Accounting Standards Board Exposure Drafts from its members—17 regional accounting standard setters, including nine IFAC member organizations. These agreements support the development the accountancy profession within the region.
Replicating this cooperative success for audit and ethics standards is a key opportunity for Latin America. For adoption and implementation to progress and remain current, the region needs to intentionally come together to influence and contribute to the International Auditing and Assurance Standards Board (IAASB) and the International Ethics Standards Board for Accountants (IESBA) standard-setting processes. Replicating the GLENIF model specifically would allow professionals to share their experiences and perspectives by commenting on exposure drafts and nominating highly-qualified candidates to the standard-setting boards. This is essential to ensuring that the international standards can truly be applied worldwide.
This model could look like in practice during a forum developed alongside CReCER (Contabilidad y Responsabilidad para el Crecimiento Económico Regional or Accounting and Accountability for Regional Economic Growth) conference in San Jose, Costa Rica. The forum brought together more than 60 representatives—representing national standard-setters, regulators, PAOs, and audit firms—from 16 different Latin American countries to share their views on the revisions to and restructure of the IESBA International Code of Ethics for Professional Accountants, the IAASB discussion paper on audits of less complex entities, and the IAASB’s proposed revisions to its quality control standards. The forum allowed speakers and attendees to raise awareness on the updated standards, further understand regionals challenges, create a dialogue with the region, and promote involvement in the standard-setting process.
Working together and intentionally will achieve far more for Latin America’s accountancy profession, the regional economies, and the public interest than acting in isolation. PAOs should strive to influence key stakeholders to move from passively adopting standards to actively transforming the standard-setting adoption and implementation environment. Their voices, needs, and recommendations need to be included in the process.