International Accounting in Colombia (South America) - Research Paper Example

The desire to keep abreast with the information needs that globalization brought about, motivated Colombia to adopt these standards. In the whole of South America, Colombia has the most advanced accounting system, having incorporated the accrual basis of accounting in its Public Sector Accounting Standards. Accounting profession entails the process of communicating financial information of an organization, a corporation, or a business entity to the stakeholders and other interested parties. This communication serves to ensure that those stakeholders who do not have any accounting or financial knowledge gets to understand the financial position of the entity and can thus participate in decision making regarding the entities financial issues(Neal,125).

The role of accounting profession therefore is to look into all transactions of the entity and ensure they are accurate, and then report this information to the entity’s stakeholders, who can use this information for their decision-making purposes. In Colombia, a law enacted in July 2009 guides accounting regulations. This law requires that the national accounting standards of that country tally with the International Financial Reporting Standards (IFRS). . A good example is the fact that Columbia has shortened the requirements of the IFRS into very brief provisions and directions, although they appear explained in many pages.

This shortening of the IFRS requirements comes with elimination of some of its sections. A good example of this, is the elimination of the Disclosure requirements of the IFRS in the Columbian accounting standards and practices (Elliot,7). Most notable is the fact that there are no legally binding financial statement audit standards requirements in Colombia (Pixley,4). Any auditing practice and procedures in Colombia occurs according to the Colombian GAAP and not in accordance with the requirements of the IFRS.

The general requirements of IFRS auditing requirement practices and procedures have been reduced to a one-page guideline. The requirements of the IFRS general auditing standards such as undertaking of audit of books of accounts of an entity by an independent auditor has been eliminated in the Columbian audit guidelines (Willies). The laws of Columbia does not provide for any development and issuance of auditing standards. Thus, Columbian organizations, business entities, and corporations determine the nature of auditing practice and procedures to appear in their books of accounts.

The law does not bind these practices and procedures. The difference between accounting in Columbia and in the USA is in the fact that, while in the USA all accounting practices follows the provisions and requirements of the IFRS, in Columbia, there are issued decrees that requires the local entities to apply the IFRS only voluntarily (Pixley,4). Thus, observation of the IFRS standards of accounting is not a requirement in Columbia. Better still, even when the local entities in