Within the context of free trade and the seeking of incentives for the internationalization of the economic relations, Colombia has been trying to implement an accounting system which tends to the International Accounting Standards (IAS) for several years.

Despite the practical complexity that the implementation of a new accounting system implies, Law 1314 was issued on July 13, 2009. Such law authorizes certain Government entities to prepare the new principles and regulations relating to accounting and financial information, setting forth the general framework that will govern the rules which will be prepared by said entities.

Upon issuance of the new law, the Government’s actions in this regard must be aimed at making the regulations relating to accounting and financial information comply with international standards accepted worldwide.

The following are the main aspects and changes of the new law, under which Colombian authorities must issue the new accounting regulations:

Scope

It The new law is applicable to all persons and entities deemed to have accounting, to accountants and to all other persons in charge of preparing financial statements and other financial information.
 

Simplified accounting, financial statements and abbreviated disclosures  

Depending on the volume of assets, income, number of employees, legal structure and the socio-economic circumstances of some persons or entities deemed to have accounting, the Government shall authorize the simplified accounting, the issuance of financial statements or abbreviated disclosures of accounts, as well as the assurance of financial information.

Electronic Accounting

The Law authorizes the issuance of a regulation that allows the electronic preparation, conservation and distribution of financial statements, accounting books and accounting supports, among others.

Regulatory frame of the accounting and of the assurance of information

The Ministries of Finance and of Commerce, Industry and Tourism are empowered to jointly issue the accounting principles, regulations, interpretations, and guides for accounting, financial information and assurance of information, based on the suggestion submitted by the Technical Council of Public Accounting.

Parameters of the Technical Council of Public Accounting

The draft regulations submitted by the Technical Council of Public Accounting to the Ministries of Finance and of Commerce, Industry and Tourism shall comply with international accounting standards and practices recognized worldwide .

Enforceability of the new regulations for accounting and assurance of financial information

The regulations jointly issued by the Ministries of Finance and of Commerce, Industry and Tourism, will be in force as of January 1st of the second fiscal year after their issuance, unless it is determined that such term may be different due to the complexity of the regulations.

Additional duties for surveillance authorities

In addition to the powers granted by other regulations, the Government surveillance authorities shall perform the following duties, in furtherance of their inspection, surveillance and control powers:

• Ensure that the accounting principles and regulations are fulfilled and impose any applicable penalties derived from the breach of such regulations.

• Issue technical regulations, interpretations and guides accounting, financial information and assurance of financial information.

Inabilities, impediments and incompatibilities regime:

The inabilities, impediments and incompatibilities regime as well as other regulations contained in Law 734 of 2002 are applicable to personnel belonging to the Public General Accounting Office (Contaduría General de la Nación), the Ministries of Finance and of Commerce, Industry and Tourism and the Technical Council of Public Accounting.