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Ecuador to Mandate International Financial Reporting Standards for Businesses

QUITO, Ecuador - The Ecuadorian government has announced plans to require all businesses operating in the country to adopt international financial reporting standards (IFRSs) starting next year.

Timeline of Adoption

According to a report by the World Bank’s ROSC Accounting and Auditing Report, Resolution No. 08.G.DSC issued by the Superintendent of Companies will phase in the adoption of IFRSs for all companies over the next three years. The regulation was published in the Official Register on December 23, 2009.

• Starting January 1, 2010, all companies listed on the stock market and their external auditors must use IFRSs to prepare their financial reports.
• This will be followed by a gradual rollout of the requirement to other companies, with all businesses expected to adopt IFRSs by January 1, 2012.

Exceptions

However, banks and insurance companies in Ecuador are exempt from this requirement. Instead, they will continue to follow accounting standards set by the Superintendent of Banks and Insurance (Superintendencia de Bancos y Seguros). These standards differ from IFRSs, according to a circular published by the Superintendent in September 2008.

Benefits

The adoption of IFRSs is expected to:

• Improve transparency and consistency in financial reporting for Ecuadorian businesses
• Make it easier for investors and other stakeholders to compare financial performance across companies
• Align with international best practices, which may help attract more foreign investment to the country