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Ecuador’s Accountancy Profession: A Mixed Bag of Adoption

QUITO, Ecuador - The accountancy profession in Ecuador is a complex landscape with varying degrees of adoption when it comes to international standards and best practices.

Ethical Requirements

According to the Colegio de Contadores Públicos de Pichincha y del Ecuador (CCPPE), financial sector regulators have not issued specific regulations related to ethical requirements. However, professional accountancy organizations (PAOs) like the CCPPE and Federación Nacional de Contadores del Ecuador (FNCE) set their own ethical standards for members.

  • The CCPPE has adopted the 2018 International Code of Ethics issued by the International Ethics Standards Board for Accountants (IESBA).
  • The FNCE has its own Code of Ethics, although it is unclear to what extent it aligns with the IESBA Code.

Accounting Standards

The Ministry of Economy and Finance (MoF) is responsible for setting standards for the public sector. It adopted International Public Sector Accounting Standards (IPSAS) through Agreement No. 67 of 2016, with a deadline for implementation in 2020.

  • However, the adoption of IPSAS by private companies is not mandatory, leaving it up to individual organizations to decide whether or not to adopt the standards.

Investigation and Discipline

The financial sector regulators - Superintendence of Companies, Securities and Insurance (SCVS) and Superintendence of Banks (SB) - have authority over auditors and audit firms providing services to certain regulated companies. However, it is unclear how well their enforcement systems align with best practices.

  • Professional accountancy organizations like the CCPPE and FNCE also have investigative and disciplinary mechanisms in place for members.
  • However, there are some gaps identified by the CCPPE, such as a lack of transparency and sanctions due to constitutional restrictions.

International Financial Reporting Standards (IFRS)

The SCVS has adopted IFRS and IFRS for Small and Medium-sized Entities (SMEs) by reference without modification. However, banks and other financial institutions are required to prepare their financial statements in accordance with accounting norms issued by the SB, which include IFRS as a supplement.

Conclusion

While Ecuador’s accountancy profession has made some progress towards adopting international standards, there is still much work to be done to ensure full compliance and adherence to best practices.