The Role of Latin American Bodies to the International Standard Setting: Who Are They and What Are They Doing?

The Role of Latin American Bodies to the International Standard Setting: Who Are They and What Are They Doing?

Ana Isabel Lopes (University Institute of Lisbon, Portugal)
DOI: 10.4018/978-1-4666-8453-9.ch001


This chapter presents an overview, on a twofold perspective, of the role of Latin American (LATAM) countries in the process of setting international standards. Firstly, at the international level, it checks who are the LATAM bodies and persons who have a seat in the structure of IFRS Foundation and the IASB's advisory bodies, highlighting their role and the required individual skills. Secondly, at the regional and local levels, it looks at the accountancy bodies in each LATAM country, to identify what they are doing regarding the process of convergence and adoption of international accounting standards. The topics discussed conclude that (1) overall Brazil seems to assume the leading position and the most prominent role, (2) Brazil, Mexico, Argentina, and Venezuela are the most engaged with IASB's work, and (3) Brazil and Mexico have the most diverse and available information on the activities developed by local accountancy's bodies and respective consequences for financial reporting.
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Accounting in Latin American countries has the potential to become an important topic for research. These countries, integrated in emerging economies, have increased the importance of their role in the global economy. Notwithstanding their economic importance, there is still a relatively low knowledge about the accounting issues within Latin American countries.

However, the diffusion and application of international accounting standards issued by the International Accounting Standard Board (IASB) have been supported by local standard setters and other regional boards in Latin America. This decision has placed these countries in the spotlight of several institutional corporations and regulators, since it implies a new process of preparing information for investors and managers, perhaps similar to the one used by European Union countries. Well-established literature supports the evidence of regional, country wealth and cultural similarities among Latin American countries (Leuz, 2010). This does not mean that the financial reporting advances are equal in all the countries belonging to the same cluster, but rather that they have to be accompanied with a specific approach for each country. This approach would take into account the existing heterogeneity as well as institutional characteristics that, similar to guidance on growth-enhancing policies (Daude, 2012), are often key to understanding the success or failure of accounting policies. But one thing can already be taken for granted: the recent changes on financial reporting in Latin American countries tell that the support to the IASB is far from being a passive process - but rather a really pro-active, participative and powerful compromise.

The main objective of this study is to highlight the role, efforts and influence of multiple standard-settings, and supervisory entities from Latin American (LATAM) countries on the process making of IASB standards, with particular emphasis from 2010. This study thus offers an overview of what is happening with the development, adoption and endorsement of accounting standards in the recent strengthening of the relationship between the LATAM countries and the IASB. Not just regional bodies in which each country has representations will be focused, but rather the attention will be placed on each country, corporation and/or person, when their work on this subject is prominent. The study is only able to obtain information from the public domain, namely, information released in the websites of each board that will be mentioned.

The objective of this study is directly related with its usefulness for academic purposes, for the accounting profession, and for investors or parties with economic or work interests in LATAM countries. A related contribution was offered by Fortin, Barros and Cutler, who published in 2010 a book describing the status, development of accounting and the auditing profession in Latin America and Caribbean, under the aegis of The World Bank. Notwithstanding being published in 2010, it was completed during the global financial crisis between 2007 and 2009. However, as stated by Professor Eliseu Martins, “…Obviously, it does not report some very big changes in this region which occurred in several countries in 2009 and 2010 [and] some extraordinary changes in the region occurred after the book was completed. Various tables in the book on the countries’ specific situations regarding different requirements are also outdated, although this is due to the speed with which changes have been taking place in the region” (Martins, 2011: 1482). One of the main changes that took place in the majority of LATAM countries was the adoption of International Financial Reporting Standards (IFRSs) since 2009/2010. This study offers additional contributions with updated, accurate and relevant information taking into account the reality and the status of LATAM countries in the process of convergence with the international standards. One of the most important secondary purposes of this study is to provide the information to the public in a coherent, interpretative and accessible manner, since the original information provided in their websites by LATAM accounting setters and other bodies are in Portuguese and Spanish, but not in English.

In order to achieve the objectives of this study, a threefold perspective will be adopted, namely, (i) the participation of LATAM countries in the IASB’ organization, (ii) the profile of use of IFRSs in each LATAM country, and (iii) the role and works of the main organizations/boards at a local and/or regional level to fulfill the objectives of international convergence within LATAM countries.

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