D. Setting Accounting and Auditing Standards

24. Under the Colombian Constitution, only Congress has the authority to issue generally accepted accounting principles (GAAP). Congress can delegate this authority to the executive branch and other institutions through an act of law. Law 43 of 1990 created the Technical Council for Public Accounting under the Central Board of Accountancy to issue technical guidance on accounting standards. The Council developed a set of accounting principles that they termed Colombian GAAP. The President of Colombia issued Decree 2649 of 1993, which mandated Colombian GAAP as the accounting standards for all enterprises in Colombia. And in Law 222 of 1995, Congress allowed governmental agencies and regulators to issue the accounting standards necessary to perform their regulatory duties. At present there are approximately 43 different sets of accounting standards in Colombia, including those issued by the Superintendent of Banking and the Superintendent of Securities.

25. Colombian GAAP was developed by the Technical Council in early 1990s on the basis of U.S. GAAP and International Accounting Standards. Colombian GAAP is not consistent with the U.S. GAAP and other international standards. For example, several accounting standard areas, which are presented in detail over many pages under U.S. GAAP or IAS, are shortened to only basic provisions but no substantive directions in brief paragraphs under the Colombian GAAP. Disclosure is not addressed at all in the Colombian GAAP. The Technical Council has not updated Colombian GAAP to reflect changes in U.S. GAAP and IAS since 1993.

26. There are no legally binding financial statement audit standards in Colombia. Law 43 of 1990 requires the revisor fiscal to conduct work in accordance with Colombian GAAP, but it does not specify any other auditing standards or procedures. It provides only one page of general guidance on auditing requirements. The absence of auditing standards for financial statement audit reflects the fact that Colombian law recognizes the work of the revisor fiscal only. There is no concept of independent audit of financial statements. No law has yet been passed to streamline the legal framework regarding development and issuance of auditing standards.