Strengthening Financial Transparency: The Dominican Republic’s New Audit Requirements

The Dominican Republic has recently enhanced its audit requirements for financial institutions, with a focus on promoting financial transparency and accountability. This move aims to ensure that companies operating in the country adhere to strict accounting and auditing standards.

Key Changes to Audit Requirements

• All companies with capital exceeding 100 times the monthly minimum wage must present audited financial statements.
• Businesses entering into contracts with the Dominican State worth more than RD$50,000 must undergo external audits conducted in accordance with the auditing standards issued by the Instituto de Contadores Públicos Autorizados de la República Dominicana (ICPARD).

International Financial Reporting Standards (IFRS) and International Standards on Auditing (ISA)

The ICPARD has adopted IFRS and ISA, which will be applied to all non-regulated entities. The use of IFRS for Small- and Medium-sized Entities (SMEs) was introduced in 2014, with the ICPARD defining SMEs as companies that do not have a public financial reporting obligation or trade debt or equity on a public market.

Regulatory Oversight

Regulators such as the Superintendence of Securities (SIV), Superintendence of Banks (SB), and Superintendence of Pensions (SIPEN) are enforcing stricter audit requirements for entities under their supervision. While banks, listed companies, insurance companies, and pension funds must annually submit audited financial statements, the use of IFRS is not mandatory in all cases.

Boosting Investor Confidence

The implementation of these regulations aims to boost investor confidence and promote a more transparent financial landscape in the Dominican Republic. However, there are concerns that the lack of clear guidance on auditing standards for some regulators may create uncertainty and inconsistencies in the application of these new requirements.

Overall, the strengthening of audit requirements in the Dominican Republic is a step towards promoting financial transparency and accountability, which can ultimately contribute to a more stable and investor-friendly environment.