Faced with the possibility of adopting international accounting standards under the terms of globalization, there are two alternatives to analyze: being a participant in this process or refusing before the possibility of emerging in an open market for businesses and securities. For this reason, it is essential to analyze the consequences of this, especially in the tax field, moreover, knowing that the Colombian accounting structure is fundamentally oriented towards compliance with legal requirements and not for the fair presentation of the financial situation.
General framework of standardization
It is no secret to anyone that the world is turning around Globalization, and in the accounting field this implies adopting a single body of accounting standards, specifically aimed at financial accounting (IASC 2000 version), financial auditing (IFAC version 2000) and professional accounting (IFAD-UNCTAD version). In this way, the concern arises within the nations to keep up with this process, and to benefit from it in the best way, taking into account the multiple “shortcomings” that each economic system presents in relation to the world economy.
In Colombia, different opinions have been heard about Accounting Standardization under the globalization scenario, about the implications that its adoption would have and the changes that it would have to adhere to if it decided to join and make the national economy one of broad competition in an open market of business and values.
For developed countries it is important to unify parameters that allow the countries that intervene in the economy to use the same financial structure and change the “traditional” schemes that they manage, and thus facilitate negotiations between them under the same conditions. The process of adopting the so-called “financial architecture” in the Colombian national territory implies very high costs, which has slowed down the standardization process.
It is important to recognize that Colombia is far from the general framework that globalization contains and that it does not have the necessary elements to impose conditions; which practically forces you to adopt the standards if you want to become competitive in the market.
Tax implications in Colombia
On the issue of international accounting harmonization, one of the major concerns of the governments that intervene in the process is the possible effects on the bases that determine national taxes, given the accounting structure of each country, and Colombia is no exception…
In the process of preparing and presenting reports, the information available is taken into account, according to the requirements of each user, in the case of IASC, it is clear that international accounting standards refer only and exclusively to the preparation and presentation of the statements. financial
In Colombia, all stakeholders (Superintendencies and DIAN) are putting their hand into accounting, generating technical inconsistencies. With a good accounting system, it is relatively easy to prepare different reports, either for the public (financial statements), for taxes (tax returns) or for regulation (reports for Superintendencies).
The Colombian accounting structure is strongly influenced by the regulations issued by the tax authorities. This influence has led to the use of accounting as an administrative control tool by the National Government, where the accounting system is mainly oriented towards compliance with legal requirements and not the fair presentation of the financial position.
Today there are great differences between accounting practice and standards, largely due to conflicting interests between the state and individuals. The issue is not damaging the accounting to justify the delivery of reports that sometimes do not know what they say or what they are going to serve.
It must be clear as to what guidance should be given to accounting, since the problem is that they have "known" to use it mainly with two different approaches; for fair presentation purposes and for compliance with legal requirements.
The distinction between fair presentation and compliance with legal requirements, which countries have impregnated in various uses of accounting, can be seen in the following examples:
1) Depreciation expense, which is determined based on the decrease in the utility of an asset (obsolescence) over its economic useful life (fair presentation), or the amount allowed for tax purposes (compliance with legal requirements);
2) Leases that are in substance purchase of properties are treated as such (fair presentation) or as regular operating leases (compliance with legal requirements); and 3) pensions, with accrued cost as earned by the employee (fair presentation) or expenses based on what was actually paid (compliance with legal requirements). Additionally, deferred taxes never arise when the comprehensive bases of financial and tax accounting are the same. (Choi 1999, pp. 52)
With the above, it is possible to show the different positions in the issuance of international accounting standards that influence them; on one side is the private sector that is aimed at the “fair presentation” of financial information, and on the other side is the state that is directed towards “compliance with legal requirements”.
In addition to this, there are great conceptual differences between accounting and tax measurement, it is found in a contradictory way that tax regulations on measurement and recording of some economic events have an effect on general purpose financial reports.
In this sense, if it is intended to harmonize the accounting standards for financial reports and those established in tax matters with international accounting standards, it is necessary to review all those fiscal rules that have a direct impact on commercial accounting, in order to separate the interests on the financial information that individuals have over that held by the State for tax control.
It should be understood that at the present time, the issue Globalization, or, in other words, adopt the standards of IASC, IFAC and IFAD-UNCTAD and participate in the global economy. or close and perish. Let's be clear: it's about adopting. The issue is not to adapt. Although it sounds harsh, local conditions do not matter: the issue is adoption.
On the other hand, it is necessary to eliminate the so-called tax accounting that has done a lot of damage to the accounting profession, practiced by a large number of companies, in which the facts are recognized and measured in accordance with the tax rules and objectives and not in accordance with generally accepted accounting principles. Absolute independence between accounting and tax matters must be sought, as expressed in the Economic Intervention Bill, in the following terms:
“Independence between accounting and tax matters: Tax regulations will not have effect on information other than that issued for tax purposes. In their financial statements and other disclosure mechanisms, the economic entities will make the acknowledgments, the disclosures and will include the reconciliations provided for in the accounting standards.
For tax purposes, financial information must be prepared as determined in the tax rules, applying the accounting rules only when there are no tax rules that regulate such information, or when the tax rules expressly refer to accounting "•
IAS 12 Income Tax
Under the scheme of international accounting standards, an allusion is made to the accounting treatment that has to do with the tax part, embodied in IAS 12, which was initially published in 1994, revised and published again in October 1996 whose validity for The financial statements would begin on January 1, 1998, its last modification originated in April 2000 and was finally approved in October of the same year. This is effective as of January 1, 2001.
With the foregoing, it is highlighted that a rule of this type can make a big difference in a country whose interest is primarily that of fiscal control. This international standard proposes the accounting treatment that should be given to income tax, as it is called in Colombia, IAS 12 in its content expresses the following verbatim: "
The original IAS 12 required companies to account for deferred taxes using the deferral method or the liability method, also known as the income statement-based liability method. IAS 12 (revised) prohibits the deferral method and requires the application of another variant of the liability method, known as the balance-based liability method ”.
As can be seen, there are two methods for the accounting treatment of the differences between the comprehensive bases of measurement and recognition for financial reports and for taxation. They are the deferred method that is based on the income statement, focused on temporary differences (“ Timing differences ”) of income and expenses and the asset / liability method, which is based on the balance sheet, also considers temporary differences (“ Temporary differences ”,) arising from assets as well as payable liabilities. The international accounting standard only accepts the asset / liability method as of January 1, 1998.
It is important to understand the conceptual scope of the two methods. “ Timing ” means temporary, for example, high season and low season of a hotel, the earnings of December and January are different from those of February and March for the season. They are from the income statement. They are differences between tax and accounting profit, which originate in one period and revert to another or subsequent ones.
" Temporary " means that they are not permanent, momentarily, then it can change.
Example: Subsidiaries and joint ventures that have not distributed their earnings among partners or investors. They are from the Balance. Temporary (momentary) differences are the differences between the tax base of an asset or liability and its value charged on the balance sheet. (Different comprehensive bases). The tax base of an asset or liability is the value associated with the same assets and liabilities for tax reasons.
Finally, IAS 12 implies that all temporary differences are also temporary differences. However, it explains which temporary differences do not give rise to temporary differences, such as assets that are revalued for accounting purposes, without making a similar adjustment for tax purposes.
Accounting standards for tax purposes, in measurement, have specific rules for situations. This situation means that the recognition of temporary tax differences with the asset / liability method has material repercussions in the determination of the profits of the companies and its implementation, if it occurs, it should be gradual and allowed in a minimum space two years as did the international accounting standard IAS 12.
Conclusions
- Colombia, in accordance with its legal tradition, does not have accounting information oriented towards the public securities market. It tends to be more traditional in nature, which makes the standardization process difficult. It must be thought with a futuristic vision, which allows the adoption of the new financial structure. Accounting standards in Colombia do not have an expanded conceptual development, which makes it difficult to compare it with international standards In Colombia, there is an overlap of accounting and tax standards, which makes it difficult to completely separate the conceptual framework of the comprehensive bases of general purpose financial reports from the comprehensive bases of taxation. deferred method to that of the asset liability,represents material variations in the determination of the accounting profits of companies and can have a strong impact on some companies.
Bibliography
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International Accounting Standard No. 12 (IAS 12) (revised in 2000) Income Tax
