Nicaragua

The financial reporting framework in Nicaragua is established under the Commercial Code and its subsequent amendments. The Commercial Code requires all companies to annually prepare a balance sheet and an inventory report that is to be published in the Official Gazette; however, accounting and auditing standards to be used are not specified.

Nicaragua does not have legally binding corporate financial reporting standards. However, in practice, the standards established by the Colegio de Contadores Públicos de Nicaragua (CCPN) are being applied. The CCPN, as empowered by the Law on the Practice of Public Accounting, Law No. 6 of April 14, 1959, issues accounting and auditing standards for its members. In 2002, the CCPN adopted ISA and in 2011, the CCPN formally adopted IFRS for application by its members providing services to public interest entities (PIEs) and IFRS for Small- and Medium-sized Entities (SMEs) for all other non-PIEs.

Separately, the Superintendent of Banks and Other Financial Institutions (SIBOIF) is authorized to regulate listed companies, banks, and insurance companies, in accordance the Law No. 244 and 245 of 1940 and amendments. In 2017, the SIBOIF issued Resolution No. CD-SIBOIF-1020-1-OCT10-2017, requiring the application of IFRS for all companies under its supervision—listed companies, banks, and insurance companies—effective as of January 1, 2019.

Regarding applicable auditing standards, SIBOIF adopted ISA as the auditing standards for its regulated companies. There are no other requirements for statutory audits for other companies in Nicaragua; however, the SIBOIF does require financial institutions to obtain audited financial statements from debtors for loans greater than US$750,000.

In Nicaragua, the accountancy profession is regulated at the state level by the Ministry of Education (MoE) as established by the Presidential Agreement No. 41–J, included in the Official Gazette No. 112 of 1967, and at the professional level by the Colegio de Contadores Públicos de Nicaragua (CCPN). Under Nicaraguan Law, the MoE is responsible for issuing a license to professional accountants, who are then permitted to use the title of authorized public accountants (CPA). A university accounting degree and membership in CCPN are the only entry requirements established by the MoE in order to practice as a CPA and conduct audits.

In accordance with the Law on the Practice of Public Accounting, Law No. 6 of April 14, 1959, the CCPN is authorized to carry out certain regulatory responsibilities for its members, , such as: (i) establishing initial professional development (IPD) and continuing professional development (CPD) requirements for CPAs; (ii) setting accounting, auditing, ethical, and other professional standards for its members; (iii) monitoring its members’ compliance with the ethical requirements; (iv) carrying out investigative and disciplinary procedures; (v) maintaining a registry of accountancy professionals; (vi) providing training programs for its members; and (vii) overall efforts to advance the profession.

In order to practice as an auditor, the MoE has recognized the CCPN membership classification and designation of an authorized public accountant (CPA) for which the CCPN has established IPD requirements. To qualify as a CPA and be eligible to join CCPN, individuals need to have a university degree in accountancy, two years’ practical experience, to pass an entry competence exam, and subsequently receive a registration approval from the MoE. The CCPN also issues another certification of Public Accountant (PA). The PA designation only requires a university accounting degree, and with the PA designation, individuals can only offer professional services other than an audit. For all members, the CCPN has established mandatory CPD requirements. Additionally, the CPA certification requires individuals to obtain and maintain a 5,000 NIO insurance policy.

While all individuals must register with the CCPN to receive MoE approval initially, they do not have to maintain an active membership, apart from CPAs. Furthermore, to work as a professional accountant in a private business or for the government, individuals do not need to join CCPN’s membership.

The Superintendent of Banks and Other Financial Institutions (SIBOIF) also maintains registries of PAs, CPAs, and audit firms providing services to companies under its supervision.

There are no independent audit oversight arrangements in Nicaragua and auditors in the country are regulated at the state level by the Ministry of Education (MoE) and at the professional level by the Colegio de Contadores Públicos de Nicaragua (CCPN). Please see the

The Colegio de Contadores Públicos de Nicaragua (CCPN)

The CCPN, established by the Law on the Practice of Public Accounting, Law No. 6 of April 14, 1959, is the only institution legally recognized as the representative body of the accountancy profession in Nicaragua. Its membership is comprised of public accountants and authorized public accountants (CPAs). It is authorized to carry out regulatory responsibilities such as: (i) establishing initial professional development (IPD) and continuing professional development (CPD) requirements for CPAs; (ii) setting accounting, auditing, ethical, and other professional standards for its members; (iii) monitoring its members’ compliance with the ethical requirements; (iv) carrying out investigative and disciplinary procedures; (v) maintaining a registry of accountancy professionals; (vi) providing training programs for its members; and (vii) overall efforts to advance the profession.

In addition to being an IFAC Member, the CCPN is a member of the Inter-American Accounting Association and the Integration Committee Europe—Latin America.

As of 2022, there are several initiatives underway that would impact the accountancy profession.

The Government of Nicaragua is implementing a World Bank-funded project to develop a new Commercial Code. In October 2014, the Colegio de Contadores Públicos de Nicaragua (CCPN) submitted its comments on the section that relates to accounting and auditing standards. The CCPN proposed the application of IFRS and ISA as national standards and that the role of CCPN as a technical body responsible for regulating all the accountancy profession and the certified public accountants be formalized in the Law. In 2015, the Government of Nicaragua submitted the proposed Commercial Code to the National Assembly for approval; however, as of 2022, the Commercial Code has not been approved.

In addition, a proposed new Law on the Accounting Profession has been drafted by the CCPN and submitted to the National Assembly. The Law seeks to bring the requirements to be a professional accountant in line with international developments. It would require certified public accountants to undergo a quality control review at least once every three years in order to renew their license. The proposed Law also increases the amount of the required insurance policy and extends the terms of the CCPN-elected Board of Directors; however, as of 2022, the Law has not been approved by the National Assembly. The CCPN will continue to promote the Law to the National Assembly of Nicaragua for approval.

There is no legal requirement to establish a quality assurance (QA) review system for all audits of financial statements in Nicaragua. However, the Law on the Practice of Public Accounting, Law No. 6 of April 14, 1959 does empower the Colegio de Contadores Públicos de Nicaragua (CCPN) as the regulator for authorized public accountants (CPAs)—the only individuals permitted to carry out audits in the jurisdiction—and, as such, it is taking steps to establish a QA review system.

Since 2018, the CCPN reports that it has been planning the design of a mandatory QA system in line with the SMO 1 requirements for its members. Furthermore, as auditing standard-setter for its members, the CCPN has adopted ISQC 1 and ISA 220.

Current Status: Not Adopted

In Nicaragua, the Ministry of Education (MoE), universities, and the Colegio de Contadores Públicos de Nicaragua (CCPN), in accordance with the Law on the Practice of Public Accounting, Law No. 6 of April 14, 1959 have a role in setting initial professional development (IPD) and continuing professional development (CPD) requirements for professional accountants.

In order to practice as an auditor, the MoE has recognized the CCPN membership classification and designation of an authorized public accountant (CPA) for which the CCPN has established IPD requirements. To qualify as a CPA and be eligible to join CCPN, individuals need to have a university degree in accountancy, two years’ practical experience, to pass an entry competence exam, and subsequently receive a registration approval from the MoE. The CCPN also issues another certification of Public Accountant (PA). The PA designation only requires a university accounting degree and PA offers practice services other than an audit. For all members, the CCPN has established mandatory CPD requirements.

A proposed new Law on the Accounting Profession has been drafted by the CCPN and submitted to the National Assembly. The Law seeks to further align national educational requirements with the IES requirements for all professional accountants; however, as of 2022, the Law has not been approved by the National Assembly.

Only a selection of the IES requirements appear to have been adopted as part of national accountancy education requirements. Further clarification on how these address the most recent version of the IES (the 2019 Handbook accompanied by revisions to IES 2, 3, 4, and 8 effective in 2021) is also necessary.

Current Status: Partially Adopted

The Colegio de Contadores Públicos de Nicaragua (CCPN) has the mandate to set auditing standards for its members—which include all auditors in the jurisdiction—according the Law on the Practice of Public Accounting, Law No. 6 of April 14, 1959. The CCPN has adopted ISA by reference since 2004.

In addition, under the Decree Law No. 244 and 245 of 1940 and amendments, the Superintendent of Banks and Other Financial Institutions (SIBOIF) is authorized to set standards for audits of its regulated entities, which include listed companies, banks, and insurance companies, and requires the application of currently effective ISA as issued by the IAASB. Companies that borrow more than USD $750,000 are also subject to SIBOIF’s auditing standards.

Current Status: Adopted

The Law on the Practice of Public Accounting, Law No. 6 of April 14, 1959 authorizes the Colegio de Contadores Públicos de Nicaragua (CCPN) to set ethical requirements for its members, which include public accountants (PAs) and authorized public accountants (CPAs—the only individuals authorized to audit). Accordingly, the CCPN has developed its own Code of Ethics based on the 2009 IESBA Code of Ethics.

There is no reported timeline for converging with the 2021 International Code of Ethics—the currently effective Handbook as of the date of the assessment.

Current Status: Partially Adopted

The Constitution of Nicaragua establishes the Ministry of Finance and Public Credit as the accounting standard-setter for the public sector. Nicaragua has adopted cash-basis IPSAS with no modifications as the national public sector accounting standards (IFAC/CIPFA International Public Sector Financial Accountability Index 2020).

Current Status: Partially Adopted

The Law on the Practice of Public Accounting, Law No. 6 of April 14, 1959 authorizes the Colegio de Contadores Públicos de Nicaragua (CCPN) to establish an investigative and disciplinary (I&D) system for its members, which include public accountants (PAs) and authorized public accountants (CPAs—the only individuals authorized to audit).

The institute has I&D procedures in place. While some components of the SMO 6 requirements seem to have been incorporated—for example, means of initiating an investigation, applicable sanctions—the full extent of fulfillment with the SMO 6 requirements requires further clarification.

Current Status: Partially Adopted

Although the Code of Commerce sets basic accounting requirements, corporate accounting standards to be applied are not specified. According to the Law on the Practice of Public Accounting, Law No. 6 of April 14, 1959, the Colegio de Contadores Públicos de Nicaragua (CCPN) is empowered to set accounting standards for its members, which include public accountants (PAs) and authorized public accountants (CPAs—the only individuals authorized to audit).

The CCPN adopted IFRS for application by its members providing services to public interest entities (PIEs) and IFRS for Small- and Medium-sized Entities (SMEs) for all other non-PIEs. The CCPN has adopted the Spanish translations of IFRS issued by the IASB and IFRS for SMEs since 2011.

Additionally, in 2017, the Superintendence of Banks and Other Financial Institutions (SIBOIF) issued Resolution No. CD-SIBOIF-1020-1-OCT10-2017, requiring the application of IFRS for all companies under its supervision—listed companies, banks, and insurance companies—effective as of January 1, 2019.

Current Status: Adopted

Relevant Organizations

• Colegio de Contadores Públicos de Nicaragua (CCPN)
• Ministry of Education (MoE)
• Superintendent of Banks and Other Financial Institutions (SIBOIF)

Relevant Legislation

• CCPN, IFRS resolution
• CCPN, IFRS for SMEs resolution
• Presidential Decree No. 6 of 14 April 1959
• MoE, Certified Public Accountants (CPA) requirements

Relevant Publications

• BID – FOCAL, “Contabilidad gubernamental en América Latina y convergencia a las normas internacionales de contabilidad del sector público (NICSP),” August 2019
• CCPN, SMO Action Plan, 2022.
• CCPN, Code of Ethics, April 2018.
• IFAC/CIPFA International Public Sector Financial Accountability Index 2020
• IFRS Foundation, “IFRS Application Around the World, Jurisdictional Profile: Nicaragua,” June 2016.
• PwC, Doing Business in Nicaragua, 2019.
• World Bank, Report on the Observance of Standards and Codes (ROSC), Accounting and Auditing: Nicaragua, March 2011.