In this chapter a review of the current financial accounting situation in Peru is reviewed. Accounting or any type of accountability system has been around in Peru for several centuries and a number of factors (cultural, legal, economic and financial, historical and political) have played an important role in its evolution. This chapter aims at analyzing the Peruvian accounting system with special emphasis on IFRS for SMEs. Qualitative and quantitative analysis of available data were applied for this research as well as surveys and interviews to relevant players in the Peruvian accounting system. The most important conclusions are: 1) A number of different accounting standards –not only full IFRS or IFRS for SMEs- are applied in Peru; 2) The claim that IFRS for SMEs are widely applied by Peruvian companies should be rejected and 3) It should be recognized that most of the SMEs in Peru use accounting for tax purposes only, and disregard the use accounting for decision making.
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This chapter aims at analyzing the current situation of Accounting in Peru and more specifically it focuses on the actual compliance (or not) of the IFRS for SMEs in Peru.
From 1994 to 1998 the Peruvian Accounting Standards Board (CNC) issued a series of resolutions through which it officially adopted IAS as the Peruvian GAAP for the purposes of statutory financial reporting.
However, not all the Peruvian companies comply with full IFRS. Peruvian companies must comply with accounting standards according to their size and industry (Tanaka, 2014). Table 1 summarizes the current situation of the accounting standards that companies must comply according to their characteristics.
Table 1. Accounting Standards Followed by Companies in Peru
| Type of Companies | Institutions that Set the Accounting Standards | Accounting Standards |
| Financial companies | SBS | SBS - specific accounting rules |
| Non-financial listed companies | IASB | IFRS |
| Some private companies | CNC | IFRS approved by the CNC |
| Small and medium sized private companies | CNC | IFRS for SMEs |
Source: Tanaka (2014)
Tanaka (2014) posits that in the case of a financial company, its accounting rules are determined by the Superintendence of Banking, Insurance, and Private Pension Fund Administrators (SBS –Superintendencia de Banca, Seguros y AFP in Spanish). However, if no rules are set by the SBS, companies must first apply IFRS. If there is no applicable IFRS, the US generally accepted accounting principles (GAAPs) must be used. It is important to mention that the rules set by SBS are generally more conservative than those set by IFRS, which is reflected in lower equity amounts.
Non-financial companies are classified in another way: listed (public) and non-listed (private) companies. Public companies (those that trade their securities in the stock market and are supervised by the Superintendence of the Securities Market (SMV, formerly known as CONASEV – Comisión Nacional Supervisora de Empresas y Valores in Spanish) must apply IFRS. Private companies, on the other hand, must implement the rules set by the Peruvian Accounting Standard Board (CNC – Consejo Normativo de Contabilidad in Spanish)). The CNC specifies the IFRS with which private companies must comply. Therefore, the difference between private and public companies is that all the IFRS issued by the IASB are mandatory for public companies. In contrast, only those approved by the CNC are required for private companies. If no applicable IFRS exists, the CNC can decide to implement the applicable US GAAP. As a reference, as of December in 2012, there are 282 companies listed on Lima Stock Exchange (LSE), out of a total of more than 200,000 companies legally existing in Peru.