El Salvador

The financial reporting framework in El Salvador is established under the Commercial Code, Decree No. 671 of 1970, as amended. The Code establishes the obligation for companies to keep books of accounts and provides the basic legal framework for accounting. The Code requires all companies—other than financial institutions—to prepare annual audited financial statements in accordance with the accounting and auditing standards issued by the Oversight Board of the Profession of Public Accounting and Auditing (CVPCPA), which was established under the Public Accountant Law, Decree No. 828 of 2000, as amended.

In 2009, the CVPCPA issued Resolution No. 113 adopting IFRS for listed companies as translated into Spanish and published by the IFRS Foundation without modifications and IFRS for Small- and Medium-sized Entities for all other companies. The decree, however, does not apply to banks, insurance companies, or pension funds subject to accounting regulations issued by the Superintendent of the Financial System (SSF).

In accordance with the Law of the Financial System No. 592 of 2011, SSF regulates listed companies, banks, insurance companies, and pension fund administrators and establishes the financial reporting requirements for these entities. For listed companies, the SSF requires the application of accounting standards as issued by the CVPCPA. Meanwhile, for banks, insurance companies, and pension funds, SSF has established “regulatory GAAP” accounting standards, which are not aligned with IFRS. However, it requires that these regulated entities' financial statements state the main differences between “regulatory GAAP” and IFRS.

Regarding auditing requirements, all companies are required by law to appoint an external auditor. Since 2006, the CVPCPA has adopted the Spanish translations of ISA. SSF’s External Audit Standards for Banks and Insurance Companies (NPR-16) require the application of ISA. In 2010, the SSF required ISA as adopted by the CVPCPA for listed companies in accordance with Resolution RCTG No.1.

In El Salvador, companies are also required to provide financial information to several other institutions, including the Superintendent of Corporate Obligations, the Ministry of Economy, tax authorities, and line ministries for public procurement. Furthermore, the Tax Code Decree No. 230 of 2001 requires companies with assets of more than 10 million Colones and revenues of more than five million Colones to provide a certification undertaken by an independent auditor —registered with the CVPCPA— regarding compliance with tax obligations.

The profession is regulated at the state level by the Oversight Board of the Profession of Public Accounting and Auditing (CVPCPA) and the Superintendent of the Financial Systems (SSF).

The CVPCPA was created by the Public Accountant Law, Decree No. 828 of 2000, as amended in 2017, to regulate the accounting and auditing profession. Individuals wishing to obtain a public accountant or auditor license from the CVPCPA must be Salvadoran, have a bachelor’s degree in accounting, and complete one year of practical experience for a public accountant license or two years for an auditor license. Additionally, individuals must complete annual continuing professional development (CPD) requirements to maintain the license.

The CVPCPA’s responsibilities include: (i) maintaining a registry of public accountants and auditors and ensuring practitioners are registered; (ii) overseeing the implementation of professional and technical practices; (iii) establishing and operating a quality assurance (QA) review system, aside from audits regulated by the SSF; (iv) setting accounting and auditing standards for companies other than financial institutions regulated by the SSF; (v) setting CPD requirements; (vi) setting ethical standards for the profession; and (vii) implementing an investigation and discipline (I&D) system for the profession.

The SSF regulates auditors that provide services to entities under its supervision, which includes listed companies, banks, insurance companies, and pension funds. External auditors are subject to specific regulations under the SSF’s External Audit Standards for Banks and Insurance Companies (NPR-16). The SSF is authorized to: (i) register auditors providing services to entities under its supervision; (ii) establish and operate a QA review system for auditors/firms of regulated entities; (iii) set auditing standards for SSF-registered auditors, and (iv) investigate and discipline auditors providing services to regulated companies. Auditors of regulated companies can incur a fine or have their license suspended or repealed by the SSF for non-compliance with their obligations.

The Oversight Board of the Profession of Public Accounting and Auditing (CVPCPA), as established under the Public Accountant Law, Decree No. 828 of 2000, as amended in 2017, is responsible for overseeing the audit profession in El Salvador. The CVPCPA’s responsibilities are described in the

The Superintendent of the Financial Systems (SSF) also regulates auditors that provide services to entities under its supervision, including listed companies, banks, insurance companies, and pension funds. Its responsibilities are also further described in the

The Instituto Salvadoreño de Contadores Públicos (ISCP)

The ISCP was established in 1997 through the merger of three professional associations. The ISCP is a voluntary professional organization comprising public accountants and auditors. The ISCP represents and promotes the accountancy profession, develops training, and promotes improvements to professional practices. In addition, the ISCP supports the adoption and implementation of international standards and regulations of the profession through its participation in the Oversight Board of the Profession of Public Accounting and Auditing (CVPCPA).

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

Other PAOs

Apart from the ISCP, the country has three other voluntary professional accountancy organizations. The Corporación de Contadores de El Salvador (CCES), the Asociación de Auditores Independientes de El Salvador (AIDES), and the Red de Contadores de El Salvador (the Red), were all established by general consensus. Overall, the PAOs undertake similar initiatives as the ISCP does.

In accordance with the Public Accountant Law, Decree No. 828 of 2000, as amended in 2017, the Oversight Board of the Profession of Public Accounting and Auditing (CVPCPA) is responsible for establishing a quality assurance (QA) review system for all mandatory audits, other than audits of companies supervised by the Superintendent of the Financial System (SSF) described below.

Since 2009, the CVPCPA has established and operated a QA review system. The CVPCPA has adopted through Resolution No. 129 of 2022 the quality management standards (ISQM 1 and 2 and ISA 220 (Revised)), effective for audits of financial statements starting on or after January 1, 2023.

In addition, the SSF, as empowered by the law of the Financial System No. 592 of 2011, has established a QA system for audits of listed companies, banks, insurance companies, and pension funds.

The Instituto Salvadoreño de Contadores Públicos states that both QA systems operating in the jurisdiction fulfill the requirements of SMO 1.

Current Status: Adopted

In El Salvador, universities and the Oversight Board of the Profession of Public Accounting and Auditing (CVPCPA), in accordance with the Public Accountant Law, Decree No. 828 of 2000, as amended in 2017, have a role in setting initial professional development and continuing professional development (CPD) requirements for professional accountants. The Public Accounting Law stipulates that the main requirement for obtaining a public accountant or auditor license is a bachelor’s degree in accounting, one year of practical experience for a public accountant or two years for an auditor. To maintain licenses, individuals must fulfill annual CPD requirements that are aligned with the revised IES. Salvadoran universities have authority over the accounting curriculum and degrees.

The Instituto Salvadoreño de Contadores Públicos reports that in 2003 the CVPCPA adopted the IES by the resolution R01/0603/2003 as the educational requirements to be met by all professional accountants; nevertheless, because the CVPCPA lacks authority over the universities and the curriculum of the accounting programs, the IES requirements are only viewed as guidelines by universities.

No minimum standard has been set for the content of university accounting curricula, nor is there any requirement to pass a final competency exam or guidelines for practical experience and competencies.

Only some of the revised IES (2019 IES) requirements have been incorporated into national conditions, such as a university accounting degree, CPD, and some practical experience.

Current Status: Partially Adopted

The Public Accountant Law, Decree No. 828 of 2000, as amended in 2017, empowers the Oversight Board of the Profession of Public Accounting and Auditing (CVPCPA) to set auditing standards for audits of all companies other than SSF-regulated companies. The CVPCPA has adopted ISA by reference since 2006.

The law of the Financial System No. 592 of 2011 authorizes the Superintendent of the Financial System (SSF) to set auditing standards for audits of the entities under its supervision, which include listed companies, banks, insurance companies, and pension funds. The SSF’s External Audit Standards for Banks and Insurance Companies (NPR-16) require the application of ISA. In 2010, the SSF required ISA as adopted by the CVPCPA for listed companies in accordance with the Resolution RCTG No.1.

Current Status: Adopted

The Public Accountant Law, Decree No. 828 of 2000, as amended in 2017, grants authority to the Oversight Board of the Profession of Public Accounting and Auditing (CVPCPA) to adopt ethical requirements for the accountancy profession in El Salvador. Through Resolution No. 129 of 2022, the CVPCPA has adopted the IESBA Code of Ethics by reference.

Current Status: Adopted

In accordance with the Legislative Decree No. 516 of 1995, the Director General of Government Accounting (GOES) within the Ministry of Finance is responsible for setting the public sector accounting standards. The GOES has adopted national standards with reference to IPSAS (IFAC/CIPFA International Public Sector Financial Accountability Index 2020) and adopted in 2022, IPSAS 1,2,12,14 and 31 directly. The national standards are on a partial accrual basis.

Current Status: Partially Adopted

In accordance with the Public Accountant Law, Decree No. 828 of 2000, as amended in 2017, the Oversight Board of the Profession of Public Accounting and Auditing (CVPCPA) is responsible for implementing investigative and disciplinary procedures (I&D) procedures for the accountancy profession in El Salvador. As reported by the Instituto Salvadoreño de Contadores Públicos, the CVPCPA has implemented an I&D system that is not in line with the SMO 6 requirements and has gaps in areas such as no linkage with the results of QA reviews and members of the I&D committee do not include non-accountants, among others.

The Superintendent of the Financial System (SSF) is also legally empowered by the law of the Financial System No. 592 of 2011 to investigate and discipline auditors providing services to listed companies, banks, insurance companies, and pension funds. Auditors of these companies can incur a fine or have their license suspended or repealed by the SSF for non-compliance with their obligations.

Current Status: Partially Adopted

The Oversight Board of the Profession of Public Accounting and Auditing (CVPCPA) is responsible for setting accounting standards for all companies, other than listed companies & financial institutions, in accordance with the Public Accountant Law, Decree No. 828 of 2000, as amended in 2017.

The CVPCPA issued Resolution No. 113 of 2009 requiring the adoption of IFRS by reference and without modifications for listed companies and of IFRS for Small- and Medium-sized Entities (SMEs) for all other companies. The decree does not apply to other companies regulated by the Superintendent of the Financial System (SSF).

For listed companies, the SSF does require the application of accounting standards issued by the CVPCPA, which are the IFRS. Meanwhile, for banks, insurance companies, and pension funds, SSF has established “regulatory GAAP” accounting standards, which are not aligned with IFRS. However, it requires that these regulated entities' financial statements state the main differences between “regulatory GAAP” and IFRS.

Current Status: Partially Adopted

Relevant Organizations

• HYPERLINK "http://www.consejodevigilancia.gob.sv/" Consejo de Vigilancia de la Profesión de Contaduría Pública y Auditoria (CVPCPA)
• HYPERLINK "http://iscpelsalvador.com/" Instituto Salvadoreño de Contadores Públicos (ISCP)
• Ministry of Finance, El Salvador
• Superintendent of the Financial System (SSF)

Relevant Legislation

• CVPCPA, agreements and resolutions
• Financial System Law, Decree No. 592, 2011
• Public Accountant Law, Legislative Decree No. 828, 2000
• SSF, External Audit Standards for Banks and Insurance Companies (NBP2-07)
• Tax Code, Decree No. 230 of 2001

Relevant Publications

• ISCP, SMO Action Plan, 2023.
• IFRS Foundation, “IFRS Application Around the World, Jurisdictional Profile: El Salvador,” June 2016.
• World Bank, Report on the Observance of Standards and Codes, Accounting and Auditing: El Salvador, 2005.