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Peru

International Financial Reporting Standards

Summary
Adoption of the International Financial Reporting Standards (IFRSs), formerly known as the International Accounting Standards (IASs), started in Peru as early as 1994, as noted in the 2004 World Bank's Accounting and Auditing assessment. In a number of resolutions issued between 1994 and 1998, the Accounting Standards Board of Peru (CNC) officially adopted the IFRSs to serve as Peru's Generally Accepted Accounting Principles (GAAP). However, the World Bank assessment discloses that the adoption process was slowed by the CNC's inadequate resources and by frequent changes in the international standards. Finally, according to the information provided on the website of the National Public Accounting Department (DNCP), in 2005 Peru adopted all IFRSs that were issued as a result of the Improvements Project completed by the International Accounting Standards Board (IASB) in 2004. The effective date of the new standards was set for January 1, 2006. As of August 2007, IFRSs issued subsequently by the IASB, along with revisions made to some existing standards, had not yet been adopted in Peru. However, several publications on the issue suggest that the Peruvian authorities are committed to the full adoption of international standards.

    General Overview

    The 2005 Business and Investment Guide by Ernst & Young reports that Company Law requires companies to prepare financial statements in accordance with the Peruvian Generally Accepted Accounting Principles (GAAPs) and other regulations issued by the respective regulator (for banks, insurance companies, etc). Under Law on National Accounting System of 1987, Peruvian accounting standards applicable to both private and governmental companies are issued by the Accounting Standards Board (Consejo Normativo de Contabilidad, or CNC). The CNC is accountable to the National Accounting Office (Contaduria Publica de la Nacion, or CPN) of the Ministry of Economy and Finance (Ministerio de Economia y Fnanzaas, or MEF).
    According to the World Bank's 2004 assessment of accounting and auditing practices, "the CPN through the CNC has played a major role in the adoption of accounting standards of high quality. It has also made substantial contributions to their dissemination among corporation and the accounting profession by publishing guidance material on how to use the standards and organizing courses and seminars on the topic" (p. i). The same report added that IFRSs were adopted in Peru over the course of several years. In March 1994, IAS 1 to IAS 29 were introduced, followed by the adoption of IASs 30, 31, and 32 in 1996. By the time of the World Bank assessment in 2004, all IASs in effect as of December 2002 had been put in place in Peru. The 2004 World Bank assessment noted that the process of adoption was hindered by limited CNC resources, which delayed the publication of the standards, and by frequent revisions in the IFRSs themselves. However, as indicated on the website of the DNCP, all new IFRSs and all IASs that were revised as a result of the IASB's 2004 Improvements Project were adopted in Peru. As of August 2007, IFRSs 6 and 7, which had been adopted and revised by the IASB after 2005, had not yet been adopted.
    In describing the statutory framework for accounting and auditing in Peru, the 2004 World Bank accounting and auditing assessment reports that the Commercial Code of 1902 and the General Companies Law of 1997 contain general requirements for accounting, auditing and financial reporting. The Commercial Code requires corporations to keep basic accounting records. The General Companies Law obliges all companies to follow Peruvian GAAP, although the principles are not specified. However, corporate entities, defined in the assessment as "enterprises of any size which do not belong to the financial (i.e. banking, insurance, brokerages, investment management, etc.) sector" (p. 3), must follow IFRSs endorsed by the CNC.
    The 2004 World Bank report further notes that banks and insurance companies are regulated by the Superintendence of Banks, Insurance and Pension (Superintendencia de Banca, Seguros y AFP, or SBS), and, in addition to complying with the General Law of the Financial and Insurance Systems, must follow norms established by the SBS. Pension funds are subject to the Law on Private Pension System and SBS regulations. Further, listed companies and companies with a certain shareholder structure are regulated by the National Supervisory Committee of Enterprises and Securities (Comisión Nacional Supervisora de Empresas y Valores, or CONASEV), which requires the application of IFRSs and may set additional accounting rules within the general framework.
    The International Federation of Accountants (IFAC) website discloses that the Councils of Heads of Associations of Public Accountants of Peru is an IFAC member.


    The Principles

    IFRS 1: First-time Adoption of International Financial Reporting Standards (effective 2006)

    The DNCP website shows that IFRS 1, in effect as of March 2004, was adopted in Peru by Resolution 034-2005-EF93.01. The effective date of the standard is January 1, 2006. The Deloitte IAS Plus website notes that first-time Adoption of International Financial Reporting Standards was issued by the IASB in June 2003 and applies to an entity whose first IFRS financial statements cover a period beginning on or after January 1, 2004. IFRS 1 also applies to each interim financial report that the entity may present under IAS 34 Interim Financial Reporting for part of the period covered by its first IFRS financial statements.

    IFRS 2: Share-based Payment (effective 2005)

    The DNCP website reports that the original version of IFRS 2 Share-based Payment was adopted in Peru by Resolution 034-2005-EF93.01. The effective date of the standard is January 1, 2006. The Deloitte IAS Plus website notes that IFRS 2 was issued by the IASB in February 2004 and applies to annual periods beginning on or after January 1, 2005.

    IFRS 3: Business Combinations (effective 2004)

    The DNCP website reports that the original version of IFRS 3: Business Combinations was adopted in Peru by Resolution 034-2005-EF93.01. The effective date of the standard is January 1, 2006. According to the Deloitte IAS Plus website, IFRS 3 Business Combinations was issued in March 2004 and is applicable for business combinations for which the agreement date is on or after March 31, 2004.

    IFRS 4: Insurance Contracts (effective 2006)

    The DNCP website reports that the original version of IFRS 4: Insurance Contracts was adopted in Peru by Resolution 034-2005-EF93.01. The effective date of the standard is January 1, 2006. The Deloitte IAS Plus website discloses that IFRS 4 Insurance Contracts was issued in March 2004 and is applicable for annual periods beginning on or after January 1, 2005.

    IFRS 5: Non-current Assets Held for Sale and Discontinued Operations (effective 2005)

    Per the DNCP website, the original version of IFRS 5: Non-current Assets Held for Sale and Discontinued Operations was adopted in Peru by Resolution 034-2005-EF93.01. The effective date of the standard is January 1, 2006. The Deloitte IAS Plus website reports that IFRS 5 Non-current Assets Held for Sale and Discontinued Operations was issued in March 2004 and is applicable for annual periods beginning on or after January 1, 2005.

    IFRS 6: Exploration for and Evaluation of Mineral Resources (effective 2006)

    The DNCP website reports that, as of 2007, IFRS 6: Exploration for and Evaluation of Mineral Assets had not yet been adopted in Peru. The Deloitte IAS Plus website notes that IFRS 6: Exploration for and Evaluation of Mineral Assets was issued in December 2004 and is applicable for annual periods beginning on or after January 1, 2006.

    IFRS 7: Financial Instruments: Disclosures (effective 2007)

    The DNCP website reports that, as of 2007, IFRS 7: Disclosures had not been adopted in Peru. The Deloitte IAS Plus website notes that IFRS 7 was issued on August 18, 2005 and is applicable for annual periods beginning on or after January 1, 2007. However, Peru adopted IAS 30: Disclosures in the Financial Statements of Banks and Similar Financial Institutions (reordered 1994) with an effective date of January 1, 2006. IAS 30 was supplanted by IFRS 7 effective January 1, 2007.

    IAS 1: Presentation of Financial Statements (effective 2007)

    Per the DNCP website, IAS 1: Presentation of Financial Statements (revised 2003) was adopted in Peru by Resolution 034-2005-EF/93.01. The effective date of the standard is January 1, 2006. The Deloitte IAS Plus website reports that the revised IAS 1 Presentation of Financial Statements was issued in December 2003 and is applicable for annual periods beginning on or after January 1, 2005.

    IAS 2: Inventories (effective 2005)

    The DNCP website reports that IAS 2: Inventories (revised 2003) was adopted in Peru by Resolution 034-2005-EF/93.01. The effective date of the standard is January 1, 2006. Per the Deloitte IAS Plus website, the International Accounting Standards Board (IASB) revised IAS 2 in December 2003. The revised standard will be effective for the periods commencing on January 1, 2005.

    IAS 7: Cash Flow Statements (effective 1994)

    The DNCP website reports that IAS 7: Cash Flow Statements (modified in 1992) was adopted in Peru by Resolution 005-94-EF/93.01. The effective date of the standard is January 1, 1994. Per the Deloitte IAS Plus website, IAS 7 Cash Flow Statements is applicable for periods beginning on or after January 1, 1994.

    IAS 8: Accounting Policies, Changes in Accounting Estimates and Errors (effective 2005)

    The DNCP website reports that IAS 8: Accounting Policies, Changes in Accounting Estimates and Errors (revised 2003) was adopted in Peru by Resolution 034-2005-EF/93.01. The effective date of the standard is January 1, 2006. According to the Deloitte IAS Plus website, IAS 8 Accounting Policies, Changes in Accounting Estimates and Errors became effective for annual financial statements covering periods beginning on or after January 1, 1995. The International Accounting Standards Board (IASB) revised IAS 8 in December 2003. The revised standard will be effective for the periods commencing on January 1, 2005.

    IAS 10: Events after the Reporting Period (effective 2005)

    The DNCP website reports that IAS 10: Events After the Balance Sheet Date (revised 2003) was adopted in Peru by Resolution 034-2005-EF/93.01. The effective date of the standard is January 1, 2006. According to the Deloitte IAS Plus website, the International Accounting Standards Board (IASB) revised IAS 10 Events After the Balance Sheet Date in December 2003. The revised standard will be effective for the periods commencing on January 1, 2005.

    IAS 11: Construction Contracts (effective 1995)

    Per the DNCP website, Resolution 007-96-EF/93.01 ratified IAS 11 Construction Contracts (modified 1993) with an effective date of January 1, 1996. The Deloitte IAS Plus website reports that IAS 11 Construction Contracts is applicable for periods beginning on or after January 1, 1995.

    IAS 12: Income Taxes (effective 2001)

    The DNCP website reports that Resolution 028-2003-EF/93.01. ratified the IAS 12 Income Taxes (revised 2000). The standards has been effective since January 1, 2003. Per the Deloitte IAS Plus website, IAS 12 Income Taxes is applicable for periods beginning on or after January 1, 1998.

    IAS 14: Segment Reporting (effective 1998)

    Per the DNCP website, Resolution 023-2001-EF/93.01 ratified IAS 14 Segment Reporting (revised 1997). The standard has been effective since January 1, 2001. The Deloitte IAS Plus website reports that IAS 14 Segment Reporting is applicable for periods beginning on or after July 1, 1998.

    IAS 16: Property, Plant and Equipment (effective 2005)

    The DNCP website discloses that IAS 16: Property, Plant and Equipment (revised 2003) was adopted in Peru by Resolution 034-2005-EF/93.01. The effective date of the standard is January 1, 2006. According to the Deloitte IAS Plus website, the revised IAS 16 Property, Plant and Equipment was issued in December 2003 and is applicable to annual periods beginning on or after January 1, 2005.

    IAS 17: Leases (effective 2005)

    The DNCP website reports that IAS 17: Leases (revised 2003) was adopted in Peru by Resolution 034-2005-EF/93.01. The effective date of the standard is January 1, 2006. The Deloitte IAS Plus website discloses that the revised IAS 17 Leases was issued in December 2003 and is applicable to annual periods beginning on or after January 1, 2005.

    IAS 18: Revenue (effective 1995)

    The DNCP website reports that Resolution 007-96-EF/93.01 ratified IAS 18 Revenue (revised 1993). The standard has been effective since January 1, 1996. Per the Deloitte IAS Plus website, IAS 18 Revenue is applicable for periods beginning on or after January 1, 1995.

    IAS 19: Employee Benefits (effective 2006)

    The DNCP website reports that Resolution 028-2003-EF/93.01 ratified IAS 19 Employee Benefits (revised 2000). The standard has been effective in Peru since January 1, 2003. The Deloitte IAS Plus website notes that IAS 19 Employee Benefits is applicable for periods beginning on or after January 1, 1999.

    IAS 20: Accounting for Government Grants and Disclosure of Government Assistance (effective 1984)

    Per the DNCP website, Resolution 005-94-EF/93.01 approved IAS 20 Accounting for Government Grants and Disclosure of Government Assistance (reordered 1994). The Deloitte IAS Plus reports that the standard has been effective in Peru since January 1, 1994. IAS 20 Accounting for Government Grants and Disclosure of Government Assistance is applicable for periods beginning on or after January 1, 1984.

    IAS 21: The Effects of Changes in Foreign Exchange Rates (effective 2005)

    The DNCP website shows that IAS 21: The Effects of Changes in Foreign Exchange Rates (revised 1993) was adopted in Peru by Resolution 038-2005-EF/93.01. IAS 21 The Effects of Changes in Foreign Exchange Rates became effective for annual financial statements covering periods on or after January 1, 1995. According to the Deloitte IAS Plus website, the IASB revised IAS 21 The Effects of Changes in Foreign Exchange Rates in December 2003. The revised standard is effective for the periods commencing on January 1, 2005.

    IAS 23: Borrowing Costs (effective 1995)

    The DNCP website shows that Resolution 007-96-EF/93.01 ratified IAS 23 Borrowing Costs (modified in 1993). The effective date of the standard is January 1, 1996. Per the Deloitte IAS Plus website, IAS 23 Borrowing Costs is applicable for periods beginning on or after January 1, 1995.

    IAS 24: Related Party Disclosures (effective 2005)

    The DNCP website reports that IAS 24: Related Party Disclosures (revised 2003) was adopted in Peru by Resolution 034-2005-EF/93.01. The effective date of the standard is January 1, 2006. According to the Deloitte IAS Plus website, the revised IAS 24 Related Party Disclosures was issued in December 2003 and is applicable for annual periods beginning on or after January 1, 2005.

    IAS 26: Accounting and Reporting by Retirement Benefit Plans (effective 1998)

    The DNCP website, notes that Resolution 005-94-EF/93.01 ratified IAS 26: Accounting and Reporting by Retirement Benefit Plans (reordered 1994). The effective date of the standard is January 1, 1994. The Deloitte IAS Plus website reports that IAS 26 Accounting and Reporting by Retirement Benefit Plans is applicable for periods beginning on or after January 1, 1988.

    IAS 27: Consolidated and Separate Financial Statements (effective 2005)

    The DNCP website discloses that IAS 27: Consolidated and Separate Financial Statements (revised 2003) was adopted in Peru by Resolution 034-2005-EF/93.01. The effective date of the standard is January 1, 2006. According to the Deloitte IAS Plus website, the revised IAS 27 Consolidated and Separate Financial Statements was issued in December 2003 and is applicable to annual periods beginning on or after January 1, 2005.

    IAS 28: Investments in Associates (effective 2005)

    The DNCP website reports that IAS 28: Investments in Associates (revised 2003) was adopted in Peru by Resolution 034-2005-EF/93.01. The effective date of the standard is January 1, 2006. According to the Deloitte IAS Plus website, the revised IAS 28 Investment in Associates was issued in December 2003 and is applicable to annual periods beginning on or after January 1, 2005.

    IAS 29: Financial Reporting in Hyperinflationary Economies (effective 1990)

    The DNCP website reports that Resolution 005-94-EF/93.01 ratified IAS 29: Financial Reporting in Hyperinflationary Economies (reordered 1994). The effective date of the standard is January 1, 1994. According to the Deloitte IAS Plus website, IAS 29 Financial Reporting in Hyperinflationary Economies is applicable for periods beginning on or after January 1, 1990.

    IAS 31: Interests in Joint Ventures (effective 2005)

    The DNCP website reports that IAS 31: Interests in Joint Ventures (revised 2003) was adopted in Peru by Resolution 034-2005-EF/93.01. The effective date of the standard is January 1, 2006. According to the Deloitte IAS Plus website, the revised IAS 31 Interests in Joint Ventures was issued in December 2003 and is applicable to annual periods beginning on or after January 1, 2005.

    IAS 32: Financial Instruments: Disclosure and Presentation (effective 2005)

    The DNCP website reports that IAS 32: Financial Instruments: Disclosure and Presentation (revised 2003) was adopted in Peru by Resolution 034-2005-EF/93.01. The effective date of the standard is January 1, 2006. According to the Deloitte IAS Plus website, the revised IAS 32 Financial Instruments: Disclosure and Presentation was issued in December 2003 and is applicable for annual periods beginning on or after January 1, 2005.

    IAS 33: Earnings per Share (effective 2005)

    The DNCP website reports that IAS 33: Earnings per Share (revised 2003) was adopted in Peru by Resolution 034-2005-EF/93.01. The effective date of the standard is January 1, 2006. According to the Deloitte IAS Plus website, the revised IAS 33 Earnings per Share was issued in December 2003 and is applicable for annual periods beginning on or after January 1, 2005.

    IAS 34: Interim Financial Reporting (effective 1999)

    The DNCP website reports that the original version of IAS 34: Interim Financial Reporting was adopted in Peru by Resolution 014-98-EF/93.01. The effective date of the standard is January 1, 1999. According to the Deloitte IAS Plus website, IAS 34 Interim Financial Reporting is applicable for periods beginning on or after January 1, 1999.

    IAS 36: Impairment of Assets (effective 2004)

    The DNCP website reports that IAS 36: Impairment of Assets (modified in March 2004) was adopted in Peru by Resolution 034-2005-EF/93.01. The effective date of the standard is January 1, 2006. According to the Deloitte IAS Plus website, the revised IAS 36 Impairment of Assets was issued in March 2004. It is applied to goodwill and intangible assets acquired in business combinations after March 31, 2004, and to all other assets for annual periods beginning on or after March 31, 2004.

    IAS 37: Provisions, Contingent Liabilities and Contingent Assets (effective 1999)

    The DNCP website reports that the original version of IAS 34: Interim Financial Reporting was adopted in Peru by Resolution 019-2000-EF/93.01. The effective date of the standard is January 1, 2000. According to the Deloitte IAS Plus website, IAS 37 Provisions, Contingent Liabilities and Contingent Assets was issued in July 1998 and is applicable for periods beginning on or after July 1, 1999.

    IAS 38: Intangible Assets (effective 2004)

    The DNCP website discloses that IAS 38: Intangible Assets (modified in March 2004) was adopted in Peru by Resolution 034-2005-EF/93.01. The effective date of the standard is January 1, 2006. According to the Deloitte IAS Plus website, the revised IAS 38 Intangible Assets was issued in March 2004 and is applied to the accounting for intangible assets acquired in business combinations after March 31, 2004, and to all other intangible assets for annual periods beginning on or after March 31, 2004.

    IAS 39: Financial Instruments: Recognition and Measurement (effective 2006)

    The DNCP website reports that IAS 39: Financial Instruments: Recognition and Measurement (modified in 2003) was adopted in Peru by Resolution 034-2005-EF/93.01. The effective date of the standard is January 1, 2006. Per the Deloitte IAS Plus website, the revised IAS 39 Financial Instruments: Recognition and Measurement was issued in December 2003 and is applicable for annual periods beginning on or after January 1, 2005.

    IAS 40: Investment Property (effective 2005)

    The DNCP website reports that IAS 40: Investment Property (modified in December 2003) was adopted in Peru by Resolution 034-2005-EF/93.01. The effective date of the standard is January 1, 2006. According to the Deloitte IAS Plus website, the revised IAS 40 Investment Property was issued in December 2003 and is applicable to annual periods beginning on or after January 1, 2005.

    IAS 41: Agriculture (effective 2003)

    The DNCP website reports that the original version of IAS 41: Agriculture was adopted in Peru by Resolution 024-2001-EF/93.01. The effective date of the standard is January 1, 2003. According to the Deloitte IAS Plus website, IAS 41 Agriculture is applicable for periods beginning on or after January 1, 2003.

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    Sources of Assessment

    Councils of Heads of Associations of Public Accountants of Peru "Assessment of the Regulatory and Standard- Setting Framework," Self-assessment prepared as part of the International Federation of Accountants' (IFAC) Member Body Compliance Program, July 2006. Available from International Federation of Accountants website. Accessed August 20, 2007. (JDCCPP 2006)

    Councils of Heads of Associations of Public Accountants of Peru "Response to the IFAC Part 2, SMO Self-Assessment Questionnaire," Self-assessment prepared as a part of the International Federation of Accountants' (IFAC) Member Body Compliance Program, February 2007. Available from International Federation of Accountants website. Accessed on August 20, 2007. (JDCCPP 2007)

    Ernst & Young, "Business & Investment Guide - Peru," 2005. Available from Ernst & Young website. Accessed on August 20, 2007. (E&Y 2005)

    PricewaterhouseCoopers, "Doing Business and Investing in Peru," January 1, 2003. Available from PricewaterhouseCoopers website. Accessed on August 20, 2007. (PWC 2003)

    World Bank, "Report on the Observance of Standards and Codes - Accounting and Auditing" June 2004. Available from World Bank website. Accessed on August 20, 2007. (World Bank 2004a)

    World Bank, "Republic of Peru: Report on the Observance of Standards and Codes - Corporate Governance Country Assessment," June 2004. Available from World Bank website. Accessed on August 20, 2007. (World Bank 2004b)

    Wright I., "IFRS Developments in Latin America," IFRS News, Issue No. 26, January 2005. Available from PricewaterhouseCoopers website. Accessed on August 20, 2007. (Wright 2005)

    Relevant Organizations

    Accounting Standards Board - Consejo Normativo de Contabilidad (CNC) (website in Spanish only)

    Association of Public Accountants of Lima - Colegio de Contadores Publicos de Lima (CCPL) (website in Spanish only)

    Central Reserve Bank of Peru - Banco Central de Reserva del Peru (BCRP)

    Council of Heads of Associations of Public Accountants of Peru - Junta de Decanos de Colegios de Contadores Publicos del Peru (JDCCPP) (website in Spanish only)

    Lima Stock Exchange - Bolsa de Valores de Lima (BVL)

    Ministry of Economy and Finance - Ministerio de Economia y Fnanzas (MEF) (website in Spanish only)

    National Accounting Office - Contaduria Publica de la Nacion (CPN) (website in Spanish only)

    National Public Accounting Department - Dirección Nacional de Contabilidad Pública (DNCP)

    National Supervisory Committee of Enterprises and Securities - Comisión Nacional Supervisora de Empresas y Valores (CONASEV) (website in Spanish only)

    Superintendence of Banks, Insurance and Pension - Superintendencia de Banca, Seguros y AFP (SBS) (website in Spanish only)



    Relevant Legislation/Regulation

    Commercial Code No. 15, 1902 - Codigo de Comercio No. 15, 1902 (subsequently amended) (in Spanish only)

    General Companies Law No. 26887, 1997 - Ley General de Sociedades No. 26887, 1997 (in Spanish only)

    Law on National Accounting System No. 24680, 1987 - Ley del Sistema Nacional de Contabilidad No. 24680, 1987 (in Spanish only)

    Securities Markets Law No. 861, 1996 - Ley del Mercado de Valores No. 861, 1996 (in Spanish only)

    General Law of the Financial and Insurance Systems, Organic Law of the Superintendence of Banking and Insurance No. 26702, 1996 - Ley General del Sistema Financiero y del Sistema de Seguros y Orgánica de la Superintendencia de Banca y Seguros No. 26702, 1996

    Law on Private Pension System, 1997 - Ley del Sistema Privado de Administracion de Fondos del Pension, 1997 (updated on March 2005) (in Spanish only)

    Resolutions of the Peruvian Accounting Standards Board - Resoluciones del Consejo Normativo de Contabilidad (in Spanish only)

    International Financial Reporting Standards adopted for application in Peru



    Supplementary Sources

    Deloitte & Touche Tohmatsu IAS Plus website. Accessed on October 10, 2006. (Deloitte IAS Plus website)

    Elorrieta, A.M., "Disclosure and Transparency Accounting and Auditing," Paper Presented at the Third Meeting of the Latin American Corporate Governance Roundtable, Mexico City, April 8-10, 2002. Available from Organization for Economic Cooperation and Development website. Accessed on November 14, 2006.. (Elorrieta 2002)

    International Federation of Accountants website. Accessed on November 14, 2006. (IFAC website)
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