In Accounting in Argentina, there are different normative possibilities when it comes to the valuation and exhibition of distinct elements of financial statements. Specifically, the norms which can be applied are the following:
- International Financial Reporting Standards (IFRS)
- International Financial Reporting Standards for Small and Medium-sized entities (IFRS for SME´s)
- Professional accounting norms issued by the Argentine Federation of Professional Councils in Economic Sciences (FACPCE) (Technical Resolutions – TR)
In the first case, the IFRS are mandatory when preparing the financial statements of issuers of shares and tradable bonds, included in the Law of Capital Markets (entities under supervision of the National Securities Commission – NSC). Furthermore, by provision of the Central Bank of the Argentine Republic (CBAR), starting in 2018 financial entities must draw up their financial statements, in accordance with the IFRS, each fiscal year, starting on January 1st. It is worth noting that the entities with public interest which still remain outside the mandatory scope of the IFRS are insurance companies. These companies, by provision of the Nation´s Insurance Superintendency, shall start applying IFRS in 2020.
On the other hand, SME´s can choose to apply the following norms when preparing their financial statements:
- Complete IFRS
- IFRS for SME´s
- TRs FACPCE
In the case that the SME´s decide to present their financial statements by applying the compete IFRS, they must do so in a comprehensive manner and without modifications. They will proceed in the same way if they decide to apply IFRS for SME´s.
Finally, those entities which cannot be classified as SME because of their characteristics, and neither operate under the NSC or the CBAR, have two options to prepare their financial statements:
Given the mandatory aspect of the IFRS for some taxpayers and the liberty to choose for others, there will be economic activity for which some taxpayers will decide to apply IFRS and others will not. In any case, there will be taxpayers with a similar economic-financial situation that will present financial statements with different assets, liabilities, and results, depending on the application or not of the IFRS.
For example, considering the recent resolution which obliges the application of an adjustment for inflation in Argentina, it’s important to mention that both the TR 6 (FACPCE) and the IAS 29 (IFRS) follow a similar methodology and objective. In that case the quantitative effect of the application of one norm or the other does not differ significantly. However, there can be some differences when it comes to the exhibition and notes (revelation), which should be taken into account by those entities which have the possibility of choosing one or the other.
The possibility to choose different norms when preparing financial statements makes the role of the accounting expert of vital importance when it comes to drawing up, analyzing and supporting the economic figures of Argentine firms.