In a current globalized economy, it is of vital importance for users to be able to clearly and accurately interpret the financial information about an economic entity that offers certainty about the economic decisions that they want to make in any country in the world.
Faced with this need for communication between potential capital investors and the administrations of multinational companies located in various countries of the world, there are adversities to overcome that originate from the very diverse accounting standards that exist in each country that prevent informing the various stakeholders on the financial situation of a local or multinational entity, and that could require a great effort to be able to reasonably interpret whether or not it is convenient to invest resources in an economic entity located in another country.
That is why it is analyzed through this reflection, the benefits that can be obtained by the various users of financial information from any country in the world, that public accountants are trained in an organized and continuous manner and apply in a mandatory and comprehensive manner, based on in ethical training or by legal imposition by the State, the accounting standards of your country, in this case in Mexico, so that reliable financial statements are issued in a truthful and timely manner, and that to the extent that the accounting standards of each country are unified through a convergence with international accounting standards can be interpreted by all stakeholders worldwide in a clear and precise way, with the minimum of costs and time, in order to allow economic decisions to be made about an entity.
The obligation to prepare financial information by Mexican public accountants based on the Financial Reporting Standards issued by the CINIF, an objective achieved? or a dream to achieve?
Need to use financial information prepared with heterogeneous global accounting standards.
Since the twentieth century, in the nineties, we have observed significant changes in the world economy, based on a process of internationalization of economic activity carried out by multinational companies, known as global player's, in order to obtain financial resources of origin world.
This need to obtain resources from international sources has led to a need to obtain financial information from multinational companies for interpretation by users responsible for making economic decisions about said companies, however, it is frequent that users of the information find themselves in different countries and face the fact that the financial information has been prepared with different accounting principles and standards.
The fact that the financial information is prepared based on accounting principles other than the accounting standards of the country in which an investor who wishes to invest his capital in an economic entity located in another country resides, becomes a difficult task to solve, since it prevents fluid communication between those who issue and receive financial information and, according to the predominant paradigm in this science from the sixties of the 20th century, is none other than providing useful information to users to adequately inform economic decision-making.
It is essential that users and preparers of financial information, which will be used in different countries, should know, among other sources:
1. The Financial Information Standards applicable to the private and public sector issued in your country.
2. The International Accounting Standards (IAS) and the International Financial Reporting Standards (IFRS-IFRS)
3. The International Auditing Standards (ISA)
4. The international auditing procedures (SAS).
5. The foreign currency translation (FASB).
6. Globalization, as a real fact in business.
7. The structure and objectives of the International Federation of Public Accountants (IFAC).
The integration of the client portfolio of individuals or corporations of small and medium economic capacity determined by their number of workers, in the Local Firms of Public Accountants in Mexico, considered as small and medium-sized, is another factor of analysis that results in low interest to apply the NIF in the preparation of financial information, since due to the lack of promotion of its usefulness by the Public Accounting Office, most of the business owners do not show apathy in the analysis of financial statements and other information that is different from fiscal results since they consider that the analysis of the financial statements from a "financial approach" is considered today a waste of time.
Process of convergence of generally accepted accounting principles with international financial reporting standards.
In our country, as of June 1, 2004, an international convergence process began to adapt to the current environment in which the regulations of generally accepted accounting principles are governed in an organized and gradual process, first harmonizing them with the denomination called Financial Information Standards in order to issue particular accounting standards and thereby discarding proposals based merely on experience, use or customs, which were established by the Mexican Council for the research and development of financial information standards (CINIF). The first step was reviewing and adapting the fundamental concepts of the concepts contained in the Mexican Conceptual Framework to international accounting regulations and seeking their worldwide unification.
For more than 30 years, the Accounting Principles Commission of the Mexican Institute of Public Accountants (IMCP) was in charge of issuing the accounting regulations in the country under the name Generally Accepted Accounting Principles (GAAP).
This set of bulletins (GAAP) undoubtedly established the foundations of financial accounting on which the development of particular standards was based, which allowed responding to controversies arising from the issuance of financial statements of economic entities.
Since the beginning of the international convergence process that the CINIF has carried out, it is an independent body in its assets and operation, since its constitution in 2002, which, in congruence with the world trend, assumes the function and responsibility of the issuance of accounting regulations in Mexico instead of the Accounting Principles Commission (CPC) of the IMCP.
The purpose of the CINIF is: to develop the Financial Information Standards (NIF) with a high degree of transparency, objectivity and reliability that are useful for issuers and users of financial information.
The CINIF is directly in charge of conducting investigation and monitoring processes among the financial and business community, and other interested sectors, resulting in the issuance of documents called "Financial Information Standards (NIF)" or, where appropriate, "Interpretations of the NIF´S ”which are clarifications and implementation guides of the NIF´S.
The philosophy of the NIF is: 1. Achieve the harmonization of the local standards used by the various sectors of our economy and 2. Converge as much as possible with the International Financial Reporting Standards (IFRS) issued by the International Standards Council Accounting Standards (IFRS) of the International Accounting Standards Board (IASB).
When the NIF is made generic, it should be understood that they comprise both the standards issued by the CINIF and the bulletins issued by the CPC that have been transferred to the CINIF on May 31, 2004.
Therefore, from the 1st. As of January 2006, the structure of the NIF is as follows:
a) NIF and INIF issued by the CINIF.
b) the bulletins issued by the CPC, which have not been modified, replaced or repealed by the new NIF´S; and
c) the NIF applicable in a supplementary manner (NIF A-8)
The circulars are recommendations issued by the CPC that become standards when approved by the votes of at least two-thirds of the members of the CINIF Issuing Council.
The NIF have been classified as:
a) Conceptual standards, which make up the so-called Conceptual Framework (MC);
b) Specific rules; and
c) Interpretations to particular standards.
Accounting standards are dynamic and adapt to the changes experienced in the environment under which entities carry out their activity.
However, even though this effort that the Mexican Institute of Public Accountants, which in its constitutive bylaws, in Chapter I, section 1.03, subsection m), indicates that the IMCP aims, among others: “To adopt as fundamental provisions, consequently of obligatory observance for the partners of the Institute, the Financial Information Standards issued by the Mexican Council for Research and Development of Financial Information Standards (CINIF)….. "
In our country the study and mandatory application in a comprehensive manner of the Financial Reporting Standards issued by the CINIF is carried out by a reduced group of public accountants who generally belong to International Firms of Public Accountants, which have integrated teams in charge of providing internal training periodically to all its members, which is necessary so that the personnel that make up the firm of public accountants can provide a quality service that derives in confidence in the financial information prepared or audited from its clients, which may be Mexican companies or companies of foreign origin belonging to multinational companies.
The aforementioned situation denotes that there are great contrasts in relation to the training of the majority of public accountants who belong to medium or small firms in our country that lack a solid infrastructure of continuous training for their professional staff, which without a detriment recognition of the effort made by the partners and staff members of these accounting firms, often results in deficient results in adequate and sufficient training, which ensures that the Financial Reporting Standards issued by the CINIF are fully understood and applied, during the process of preparing reliable financial information requested by the partners or administrators of their clients.
Analysis of the professional certification process for public accountants.
Currently, the Public Accounting Office organized in Mexico is making an effort for public accountants to apply the Financial Information Standards issued by the CINIF in a mandatory manner, through continuous training processes in the fundamental technical areas that make up their professional work.
It should be remembered that the Public Accountant Certification process is the means by which the public accountant "makes certain or demonstrates certainty" of the quality of the service provided; It is the link that occurs between society and the Public Accounting professional, given the necessary participation of the latter in the different economic nuclei that are part of the structure of a country: companies, offices, research institutes, schools and universities, government agencies and entities, financial institutions, or charitable or non-profit organizations.
On May 1, 1998, the Public Accountant Certification Regulations come into force and are presented to the Mexican Committee for International Accounting Practice (COMPIC). This body agrees that the Mexican Institute of Public Accountants is the only professional entity with its support to certify Accountants, in recognition of the seriousness and institutionalism of said organization.
Currently, there are Colleges of Accountants that do not belong to the IMCP, and that are authorized by the DGP to issue the certification of the public accountant, such as: the Mexican Association of Public Accountants Professional College in the Federal District, AC, and some Affiliated Colleges The National Federation of the Mexican Association of Colleges of Public Accountants has also obtained the corresponding authorization from the DGP.
However, it is necessary to carry out an additional analysis to evaluate the results that have been obtained with the process of "professional certification" that the majority of public accountants who are members of large, medium and small firms of public accountants have had because Public Accounting in Mexico is currently fragmented, a situation that creates uncertainty in the Mexican business community, since public accounting firms, or independent public accountants, are members of Public Accountants Colleges located in the States, which are affiliated with various national organizations that bring together public accountants who participate professionally in firms or firms or independently, such as: (a) the Instituto Mexicano de Contadores Públicos, AC(body that brings together most of the Public Accounting Office); (b) the National Federation of the Mexican Association of Colleges of Public Accountants AC; (c) the Mexican Association of Public Accountants Professional College in the Federal District, AC or (d) to other independent Public Accountants Associations.
The application of the NIF, an ethical or legal obligation?
Currently, the application of the Financial Information Standards issued by the CINIF, I consider that they are complied with in an obligatory way within the “ethical” framework; However, its application only obliges the members registered in the IMCP and its lack of application or omission due to error, omission or professional negligence does not have "legal effects" for public accountants in the exercise of their professional practice in Mexico, every time, which, as I already mentioned, if we analyze, for example, the constitutive statutes of the IMCP, in Chapter I, section 1.03, subsection m), it would be understood by conclusion that only public accountants who only belong to this Institute must comply with them.
Now, this reflection made on the scope of the obligation to continuously train and fully apply the Mexican accounting regulations in the NIF issued by the CINIF, the auditing standards and procedures issued by the CONPA of the IMCP, and the regulations government accountant issued by the Governing Bodies of the Mexican State or Federal State, should it be necessary to impose obligations on all public accountants who practice their profession in Mexico, through the General Directorate of Professions (DGP), of the Ministry of Education Public (SEP) at the time of issuing the professional license for the purposes of being able to exercise the profession of public accountant as a patent ?; Likewise,Should the obligation be imposed to permanently affiliate with a Federated College authorized by the SEP based on its current guidelines ?; And will it be necessary for the DGP to demand that the public accountant must be certified in various disciplines to ensure that he is properly trained, and must he deliver the respective certificates periodically to the DGP in order to be able to endorse the right to exercise his profession through the Annual endorsement of your professional license with the risk of losing that right if you ignore the fulfillment of these obligations imposed by the DGP, which is a Federal Organ of the Mexican State.and must deliver the respective certificates periodically to the DGP in order to be able to endorse the right to exercise their profession by means of the annual endorsement of their professional license with the risk of losing that right if they ignore the fulfillment of these obligations imposed by the DGP that is a Federal Organ of the Mexican State ?.and must deliver the respective certificates periodically to the DGP in order to be able to endorse the right to exercise their profession by means of the annual endorsement of their professional license with the risk of losing that right if they ignore the fulfillment of these obligations imposed by the DGP that is a Federal Organ of the Mexican State ?.
It is worth mentioning that the new proposal to be certified in various disciplines was made by Ceneval and by the IMCP, as summarized below:
Ceneval and the Mexican Institute of Public Accountants (IMCP) recently signed an agreement for the creation, maintenance, and application of certification exams in six accounting disciplines: accounting and costs, finance, tax, control, government accounting, and government oversight.
As the governing body of the tests, an Evaluation Council for Certification will act, composed of the president and members of the National Executive Committee of the IMCP, the president of the Business Coordinating Council, the national president of the Mexican Institute of Finance Executives (IMEF), the president of the National Association of Faculties and Schools of Accounting and Administration (ANFECA), the president of the Research and Development Center of the Mexican Council for Research and Development of Financial Information Standards (CINIF), the president of the Academia de Estudios Prosecutors of the Public Accounting Office, the head of the Government Audit Unit of the Ministry of Public Function,the central administrator of Strategic Audit of the Tax Administration Service (SAT) and the special auditor of Financial Compliance of the Superior Audit of the Federation.
Therefore, even considering a summary of the efforts made by the various groups that represent Accounting in Mexico, there is currently a legal vacuum that allows the possibility that there may be “oversights in the quality of the work performed by the public accountant in our country ”, which could be caused by the lack of continuous technical updating and which could result in omissions during the application of the FRS to prepare reliable financial information, because as already indicated above, there is currently no process, or a body regulator, which in a concrete way can reasonably assure Mexican and international society that it uses financial information for decision-making, and if it finds,omissions is capable in its scope of responsibility conferred by the Mexican State or by the authorized members of the Public Accounting Office in our country, they can impose from an injunction to economic or punitive sanctions by the CINIF to Public Accountants who did not apply or omit said regulations accounting, whether due to carelessness or professional negligence, and that would have affected the economic interests of the users of financial information such as: investors, or the Shareholders of an economic entity that will be directly affected when making economic decisions about an economic entity.may impose anything from an injunction to financial or punitive sanctions by the CINIF to Public Accountants who did not apply or omit said accounting regulations, either due to carelessness or professional negligence, and that would have affected the economic interests of the users of financial information such as: investors, or the Shareholders of an economic entity that will be directly affected when making economic decisions about an economic entity.may impose anything from an injunction to financial or punitive sanctions by the CINIF to Public Accountants who did not apply or omit said accounting regulations, either due to carelessness or professional negligence, and that would have affected the economic interests of the users of financial information such as: investors, or the Shareholders of an economic entity that will be directly affected when making economic decisions about an economic entity.
Need to institute a regulatory body in Mexico.
It is worth mentioning that currently the possibility of establishing a regulatory body in Mexico has been discussed, as it works in the United States in which some Public Accountant Firms have established internal quality control mechanisms to provide accounting, auditing, consulting services, legal or otherwise, however, the global trend has been to regulate it. It is known that, in the case of the Sarbanes Oxley law, the PCAOB (Public Client Accounting Oversight Board) has been created, and that in the registration process there was a pre-review of the firms to approve their registration. The following is a summary of part of an interview with a KPMG audit partner:
Q. Why is it important for audit firms to have a quality control system? A: I would begin by remembering our fundamental responsibility as Public Accountants, which consists of giving credibility to the Financial Statements of our clients and, therefore, this does not only have to do with the particular client, but also with the various users of the themselves.
Based on this responsibility, we Public Accountants have to act independently. The quality control system in the firms becomes a matter of utmost importance in our personal actions and in that of the firms themselves.
This is the significance of our work, so quality is a very important element to consider; I would say that it is of fundamental importance.
P. It has been understood that some firms have established internal quality control mechanisms, however, the global trend has been to regulate it. It is known that, in the case of the Sarbanes Oxley law, the PCAOB (Public Client Accounting Oversight Board) has been created, and that in the registration process there was a pre-review of the firms to approve their registration.
How did you see that pre-review process, was it positive, negative, and what do you think of this process? A: The formation of organizations such as the PCAOB in the United States is becoming a trend in other countries of the world. We would have to wait a while to evaluate results; However, in general I consider it good because they are external eyes that will see and analyze the quality controls established by the Public Accountant firms. I trust that some aspect not considered or something that can be perfected will come out of those reviews. I believe that the Public Accountant firms are very aware of our responsibility and that quality control is essential, as I mentioned earlier.
Q. How would you see a regulatory body in Mexico?
A: It is a worldwide trend, it was formed in the United States, in Canada, in other countries and it is to be expected that Mexico is no exception; especially in light of the importance that our country has in international markets and the close relationship with our northern neighbors. I consider that it is something positive as long as it is given the place it deserves to the "Mexican Council for Quality Control Surveillance of the Firms of Mexican Public Accountants", which is in training (the Mexican PCAOB), so that Its most important achievement is that international organizations rely on it to monitor the firms of Public Accountants and prevent direct interventions from them. In short, I see it as positive. However, I am concerned about some aspects of the creation of the aforementioned Council,but the fundamental points can be taken so that it operates effectively.
Personally, I consider that the idea of establishing as soon as possible this Mexican Council for the Surveillance of Quality Control of the Firms of Mexican Public Accountants, could provide certainty that the financial information that was prepared in Mexico for local analysis or abroad, would enjoy international professional quality; in fact, it is foreseen that said Regulatory Body will be constituted by the IMCP, as indicated in the following constitutive statutes: “1.13 The Institute will monitor compliance with the fundamental provisions on quality control, either directly, or, through its participation as a constituent of the Mexican Council for the Surveillance of the Quality Control of Public Accountant Firms or whatever name is designated by it ”.However, the proposal for its creation and regulation, I believe, should be jointly analyzed and discussed by the members of the Public Accounting Office and the DGP of the Mexican State, as well as other organizations that have direct influence in its regulation, such as entities leaders of the public and private sectors that make up the CINIF Associates Assembly.
Conclusions
In summary, it is public knowledge that this effort has not managed to unify Public Accounting in Mexico. The foregoing is observed in the lack of agreements between the IMCP and the official agencies of the State that issue federal certificates to exercise Public Accounting as a patent by the General Directorate of Professions, belonging to the Ministry of Public Education. Some of the points that I consider necessary to regulate so that public accountants can exercise their profession in Mexico with freedom, quality and full recognition of the Company are the following:
1. Obligatory process before the General Directorate of Professions, of the Ministry of Public Education (SEP) the professional certificate that guarantees that the Public Accountant has fulfilled the requirements demanded by the University from which it comes and by the SEP itself to in order to be able to freely exercise their profession.
2. Obligatory registration in a Federated College of Public Accountants of the Federative State where they reside.
3. Obtain the Mandatory Certification for each Public Accountant in the IMCP is through the Continuing Professional Education Standard (NEPC), issued by the Continuing Professional Education Commission (CEPC), which has been approved by the National Executive Committee of the IMCP, and that should be required by the General Directorate of Professions, of the Ministry of Public Education (SEP) at the time of issuing the federal professional license. This certification can be obtained from other Institutes approved by the DGP.
4. To be recertified every two years so that the Public Accountant is professionally updated in the minimum technical areas and offer a quality service to the community, and that the General Directorate of Professions of the Ministry of Public Education (SEP).
5. That the Mexican State, through the General Directorate of Professions of the Ministry of Public Education, could reconcile the interests of the different groups that represent public accountants and thus unify into a single representative group all Mexican public accountants who They are currently affiliated through their Federal Associations in: (a) the Instituto Mexicano de Contadores Públicos, AC (the body that brings together most of the Public Accounting Office); (b) the National Federation of the Mexican Association of Colleges of Public Accountants AC; (c) the Mexican Association of Public Accountants Professional College in the Federal District, AC or (d) other independent Public Accountants Associations; also,that these groups that bring together and represent the interests of public accountants be integrated as members of the CINIF with voice and vote.
6. That the criteria for issuing auditing standards and procedures and standards for assurance be evaluated by the CINIF or another body similar to this body, with the premise that it is not governmental, but that it is independent of the IMCP or any Agency that represents currently to the Public Accounting Office.
This brief, which I consider does not include all the steps to follow for a solution to such a vast and complex problem to regulate our professional activities as a Public Accountant in Mexico, and I am even aware that it does not contemplate other regulatory processes that are currently implemented. by the Ministry of Finance and Public Credit, the Mexican Institute of Social Security, INFONAVIT, the Public Financial Sector, among others, to regulate the training and certification of registered public accountants, and that I recommend reviewing in order to standardize in a logical process, transparent, of low economic cost for its compliance with regard to continuous training and easy compliance by the Public Accounting Office in Mexico.
Sin embargo, cabe la reflexión de que si el contador público mexicano dentro de un marco ético regido por un organismo responsable de la capacitación continua y del proceso de certificación de la práctica profesional de la Contaduría Pública en México, no pudiera enfrentar el reto de convencer de utilizar en forma voluntaria la aplicación integral del marco normativo contable mexicano deberá aceptar posiblemente que un organismo público imponga en forma obligatoria la aplicación “legal” en forma integral de las Normas de Información Financiera armonizadas con la normatividad contable internacional al elaborar información financiera para usuarios de carácter público o privado en México, y en caso de omitir su aplicación que se impongan sanciones de tipo preventivo y correctivo que permita hacer conciencia y la aplicación de dichas normas contables en forma voluntaria en el futuro dentro de un carácter “ético”.
It is necessary to evaluate the benefits of promoting the study and application of Financial Reporting Standards (NIF) homologated with International Financial Reporting Standards (IFRS) in the preparation of financial information by company administrators through training programs continues through colleges of public accountants or other organizations that are focused on promoting its use by public accountants, businessmen or other professionals who need to prepare and use financial statements to make decisions in economic entities in our country and internationally.
The lack of in-depth study of the FRS, its improper application due to lack of training and lack of dissemination of its importance by the accountants who are responsible for the preparation of financial information in the users of financial information, is considered as the cause of greatest impact in the current crisis in the application of financial reporting standards to prepare certified quality financial statements.
The collegiate bodies that bring together the majority of public accountants in Mexico have adopted the trend of International Financial Reporting Standards in the FRS, however, currently they have not found, from my particular point of view, massive training mechanisms and to integrate into their professional training the proper use of NIFs in the various circumstances to prepare financial information, since these bodies have only been limited to implementing “administrative” processes for the certification of the professional quality of public accountants that have only originated in many cases inconvenience due to the high costs they represent for members to achieve compliance, which sometimes results in not registering as an active member, completing the certification processnot be updated due to the high cost of technical books and courses, which in conclusion leads to some public accountants deciding to process the final discharge as a result of the high economic cost that it represents to keep up to date in compliance with the multiple requirements and that It has originated that there is a feeling in the Public Accounting Office that belonging to a Federated College affiliated to the groups that represent the fragmented Public Accounting Office, only results in economic benefits for said groups and that they have not worried about solving the real underlying problem of adequately train its members in the mandatory application of the Financial Reporting Standards among other areas that are essential for professional and responsible actions in all economic, educational,of the private or public initiative in which the public accountant in Mexico can participate.
The effects of the lack of application of FRS by public accountants in the preparation of financial statements are of incalculable effects and can be classified as irresponsible from the ethical point of view, since the risks of offering incorrectly prepared and presented information, can lead to incorrect decisions being made by the shareholders of a company or the various stakeholders in an economic entity in our country and internationally.
