Bolivia Moves Closer to Financial Transparency

Bolivia Moves Closer to Adopting International Financial Reporting Standards

A Step Towards Greater Transparency and Consistency in Financial Reporting

La Paz, Bolivia - In a significant move towards greater transparency and consistency in financial reporting, Bolivia is poised to adopt the International Financial Reporting Standards (IFRS) for small and medium-sized enterprises (SMEs).

Current Accounting Framework in Bolivia

Currently, Bolivia requires all companies domiciled in the country to follow Bolivian Generally Accepted Accounting Principles (GAAP), with some exceptions.
Foreign companies are permitted to use IFRS Standards for consolidation purposes only, while Bolivian national companies that are subsidiaries of foreign companies may also use IFRS Standards for consolidation.

Adoption of IFRS for SMEs

Bolivia is set to adopt the IFRS for SMEs Accounting Standard for medium-sized companies starting in 2016 and small and micro-sized companies starting in 2017.
The National Technical Committee of Auditors and Accountants (CTNAC) has already adopted the standard into Bolivian accounting standards, pending approval from the government regulatory body.

Benefits of Adopting IFRS for SMEs

The adoption of IFRS for SMEs is expected to bring numerous benefits to Bolivia’s business community, including:

Improved financial reporting transparency
Enhanced comparability across companies
Increased investor confidence

Training and Certification Program

The country’s accounting profession will also benefit from a comprehensive training and certification program being offered by the Colegio de Auditores o Contadores Públicos de Bolivia.

Adoption of Full IFRS Standards in Bolivia

While the adoption of IFRS for SMEs is significant, Bolivia has not yet endorsed or required the use of full IFRS Standards for domestic companies whose securities trade in public markets. However, foreign companies whose debt or equity securities trade in public markets are permitted to use IFRS Standards in their consolidated financial statements.

Dual Reporting

The country’s auditor’s report and/or basis of presentation footnote states that financial statements have been prepared in conformity with Bolivian GAAP, but does not allow for “dual reporting” (conformity with both IFRS Accounting Standards and the jurisdiction’s GAAP).

Conclusion

Overall, Bolivia’s move towards adopting IFRS for SMEs is a positive step towards greater financial transparency and consistency in the country.