Financial Crime World

Peru Embraces Global Accounting Standards with Adoption of IFRS

Introduction

Lima, Peru - In a move to strengthen financial transparency and consistency, Peru has officially adopted International Financial Reporting Standards (IFRS) as issued by the International Accounting Standards Board (IASB). This development is expected to enhance the credibility and comparability of financial statements across the country.

Adoption Status

Peru has endorsed all IFRS standards issued by the IASB Board and effective as of 2015. Non-listed companies, except for financial institutions, are required to follow IFRS Standards as endorsed by the Accounting Standards Council (Consejo Normativo de Contabilidad or CNC). Listed companies, including banks, insurance companies, and pension funds, must comply with accounting standards issued by the Superintendencia de Banca y Seguros (Superintendency of Banks and Insurance).

Translation of IFRS

Peru applies the Spanish translation of IFRS Standards developed by the IFRS Foundation.

IFRS for SMEs Accounting Standard

The country has also adopted the IFRS for SMEs Accounting Standard, which is applicable to all Peruvian companies with total assets and/or net revenues less than approximately US$4 million. These small and medium-sized enterprises (SMEs) are permitted to use this simplified framework, while larger entities must adhere to full IFRS Standards as endorsed by the CNC.

Implementation

Companies applying IFRS Standards in Peru must consider national legal and fiscal requirements that may not be entirely consistent with IFRS Standards. For instance:

  • Tax legislation specifies useful lives of depreciable assets.
  • Financial statements were restated between 1998 and 2004 due to inflation, despite the Peruvian economy not qualifying as hyperinflationary according to IAS 29.

Conclusion

Peru’s adoption of IFRS Standards demonstrates its commitment to promoting transparency, consistency, and comparability in financial reporting. This development is expected to benefit investors, analysts, and other stakeholders by providing a clearer picture of the country’s economic situation.