Reflections on the law of economic intervention in Colombia 2003

PREAMBLE

On December 10, 2003, the Colombian government led an inter-institutional technical committee, made up of the following entities: Ministry of Finance and Public Credit, Ministry of Commerce, Industry and Tourism, Superintendent of Securities, Superintendent of Banking, Superintendent of Companies, Accountant General of the Nation, National Tax and Customs Directorate, National Planning Department, presents the economic intervention bill by means of which the mechanisms by which international accounting, auditing and accounting standards are adopted in Colombia are indicated.; the Commercial Code, the accounting regulations are modified, and other provisions related to the matter are issued;Said bill renders without purpose the four bills regarding accounting science that are currently underway in the Congress of the Republic, added to this, the entire history of professional accounting practice in Colombia disappears; both in its normative historical component and in its technical and methodological historical component.

The accounting profession in Colombia has a long history of transformations, but you will be presented with what may be its most profound change, changing from its issuing source; because unlike the previous variations and reforms, these will not be of Colombian origin but global, generated by internationally recognized organizations, for standardized and ideal circumstances, typical of international levels, which surely will not coincide with the circumstances of our nation; In other words, the Colombian accounting profession will be forced to wear shoes made with international last.

The scope of these events is described in article 6 of the economic intervention law as follows:

"Article 6. Limits to economic freedom: The economic intervention carried out in accordance with this Law, imposes obligations on public authorities, economic entities, their administrators, owners or controllers, those who exercise the accounting profession, to the technical and disciplinary entities of the accounting industry and the general public. "

Impactando en los anteriores términos a los contadores que se desempeñan profesionalmente, a los estudiantes de la ciencia contable, a los comerciantes y a sus estados financieros y, a nivel macro, a la profesión contable y a la economía en general. El impacto tendrá repercusiones tales cómo: a) el reaprender el cuerpo básico de conocimiento contable en lo concerniente a la contabilidad, auditoría y contaduría, y b) reconcebir el quehacer profesional contable en el mercado laboral.

According to the statistics managed by the Central Board of Accountants, in Colombia there are currently approximately 110,000 Public Accountants practicing the profession; enough number to have representation in the Congress of the Republic but, paradoxically, it seemed that they did not take for granted that the draft exposed to public discussion of the economic intervention law brought as a deadline February 13, 2004 for the committee The interinstitutional agency would receive the comments and observations of the interested parties, seeking to gather these contributions in favor of the improvement and adjustment of said draft.

This document is written so that stakeholders can learn about the bill and join its review; so that they contribute their knowledge and opinions, actively participate in the destiny that will become the accounting profession and, in this way, answer the question: where are the public accountants in Colombia in the face of the new economic intervention law?

We present the analysis of this law in its most significant changes for the authors in order to communicate them and, in turn, provide their own points of view. For this purpose, we extracted from the bill some articles that develop the changes, therefore it is necessary that this document be complemented by a full reading of the bill, a file that will be attached to the sending of this document.

The analysis of changes will be treated in two groups: a) those generated by the repealing article 38; article in which most of the significant changes are concentrated and that will guide the reading of other articles chosen to develop the theme and, b) other changes.

I. ARTICLE 38 REPEALS OF THE LAW OF ECONOMIC INTERVENTION

In order to analyze the changes in this economic intervention law, we will begin with the study of the repeals presented in article 38. Text below:

“Article 38. Repeal: With the entry into force of this law, the following entities are abolished, as well as the administrative units, if applicable: the Technical Council of Accounting, the Permanent Council for the Evaluation of Accounting Standards and the Central Board of Accountants.

By virtue of the validity of this law, the following regulations are repealed, as well as the provisions that have modified them:

Paragraph: The expressions "statutory auditor" or "statutory auditor" that are contained in current regulations shall be understood to be replaced by the expressions "audit of financial statements" or "auditor of financial statements" respectively ".

A. Suppression of the Technical Council of Accounting and the Permanent Council for the Evaluation of Accounting Standards

By reading article 38, the suppression of the Technical Council of Accounting and the Permanent Council for the Evaluation of Accounting Standards is recognized, which will be replaced in the terms presented in articles 9 and 27.

"Article 9. Competent national body to determine the adoption of the international standard: Within the framework of the provisions of articles 150 numeral 21, 189 numeral 24, 333, 334 and 335 of the Political Constitution, the State will intervene in the economy assigning the functions and recognizing as technically competent to determine the adoption of the international standard in the terms of this law, and consequently, decide on the adoption of international accounting, auditing and accounting standards, the following:

1. The National Government, through general regulations, on international accounting, auditing and accounting standards that all economic entities must comply with.

2. The Accountant General of the Nation, on the international accounting standards that should govern in the country for public sector entities.

3. The Comptroller General of the Republic, on the code of ethics and auditing standards for the government sector.

Paragraph: The Accountant General of the Nation, the Comptroller General of the Republic and any other entity defined as competent to carry out adoption processes, must establish the appropriate internal mechanisms that allow them to ensure the observance of the principle of autonomy enshrined in number 1 of the Article 7 of this law.

"Article 27. Senior Accounting Committee: The Senior Accounting Committee aims to support the National Government in guiding entities required to prepare, present and disclose financial information in relation to the application of international accounting, auditing and accounting standards, adopted as stipulated in this law. The Higher Accounting Committee will comply with the following composition and functions:

1. Composition: The Higher Accounting Committee will meet at least twice a year, or when summoned by the National Government, will prepare its own regulations and will be chaired by the Minister of Finance and Public Credit or by the Vice Minister to whom the Minister of Finance and Public Credit delegate for this purpose. The Committee will be made up of the following officials:

a) The Minister of Finance and Public Credit, or the Vice Minister whom the Minister designates for this purpose;

b) The Minister of Commerce, Industry and Tourism, or the Vice Minister whom the Minister designates for this purpose;

c) The Banking Superintendent;

d) The Superintendent of Securities;

e) The Superintendent of Home Public Services;

f) The Director of National Taxes and Customs; and, g) The Accountant General of the Nation.

Paragraph 1: The Higher Accounting Committee may establish in its regulations the possibility of inviting other entities to its meetings if, in the opinion of its members, it is necessary for the fulfillment of its objectives or functions. In any case, when the Committee deals with issues related to auditing for the government sector, the Comptroller General of the Republic must be invited as one of its members.

Paragraph 2: The Superintendent of Companies, or whoever takes his place, will have the right to participate in the meetings of the Higher Accounting Committee, with voice but without vote.

2. Functions: The Superior Accounting Committee will have the following functions:

a) Promote the homogenization of derived standards issued by the supervisory entities, in accordance with the power established in article 11 of this Law;

b) Request the National Government, by means of a motivated act, to postpone the application of any international standard that, in its opinion, is contrary to the public interest, does not comply with the purposes, principles, objectives and requirements indicated in this law or injures seriously the whole of an economic sector. In no case may this power be exercised for the benefit of a particular economic entity or to modify any international standard; and, The others established in its own regulations. "

Opinion: in our opinion, the disappearance of the Technical Council of Accounting and the Permanent Council for the Evaluation of Accounting Standards is a strategic move to allow entry to Colombia without difficulty, but also without technical criteria, of the standards international accounting, auditing and accounting.

Public accounting professionals must be careful to allow these bodies to disappear without any argument, since it is counterproductive since those called to participate and verify the adoption of international standards, must be public accounting professionals without any bias and with a high technical and academic knowledge; These are the best people to watch over the profession. In addition, the organizations to be abolished are currently financially viable and function in a functional manner, being these characteristic of the profession.

B. Suppression of the Central Board of Accountants

The elimination of the Central Board of Accountants is visualized in the study of article 38, under the conditions presented in articles 28 and 29.

"Article 28. Competence: The Superintendency of Companies will exercise the functions of supervision of the Accredited Professional Accountants in the terms indicated in this law."

“Article 29. Functions: With regard to the supervision of the Accredited Professional Accountants, the basic function of the Superintendency of Companies will be to monitor the access and maintenance processes in the profession, in accordance with the terms indicated in this law. For such purposes, it will have the following functions:

1. Carry out the registration and renewal of the professional card under the terms of this law;

2. Monitor, in a particular and specific way, the auditors of financial statements;

3. Monitor the access and maintenance processes in the profession, as well as the professional practice of Accredited Professional Accountants;

4. Give their technical opinion for the design and application of the access exams and professional updating carried out by the competent governmental body;

5. Evaluate the quality control systems of the Accredited Professional Accountant as a legal entity;

6. Accredit the auditors of financial statements in the quality of their services, 7. Advise government entities in relation to the application of international accounting practice standards;

8. Act as a consultant to the government on technical matters related to the practice of public accounting; and, 9. The others contemplated in this Law. "

Opinion: in our opinion, we see that the government wants to eliminate the autonomy necessary to control and monitor the accounting profession, ignoring the accumulation of appropriate experiences over many years of serious and responsible work, with which the Central Board of Accountants has assumed the commitment to the accounting profession, without being less than the responsibility assigned by the national government. Therefore, we consider that the Central Board of Accountants is the most qualified body to continue controlling, monitoring and judging the actions of those who practice the accounting profession.

We must be clear that the new powers assumed by the Superintendency of Companies by virtue of article 29 will generate little credibility since it is not possible to be judge and party.

C. Repeal of Law 145 of 1960, Law 43 of 1990, Regulatory Decree 2649 of 1993, Regulatory Decree 2650 of 1993 and the other regulations related to them.

In article 38, in its second paragraph, appears the announcement "By virtue of the validity of this law, the following regulations are repealed, as well as the provisions that have modified them:". To determine which laws are repealed, we must refer to articles 8, 9, 10, 11 and 37; Articles that are transcribed below, except for article 9, presented above, regarding this article we conclude that the laws, decrees and regulations to be repealed are the current legislation in force of the accounting profession in what corresponds to accounting, auditing and accounting, that is Law 145 of 1960, Law 43 of 1990, Regulatory Decree 2649 of 1993, Regulatory Decree 2650 of 1993 and the other regulations related to them.

“Article 8 Recognition of international standards and their issuers: Because they have been recognized by the international community through the United Nations (UN) system and are technically competent entities, for the purposes of this law, international standards and the issuers listed below:

1. Regarding international accounting standards:

to). For economic entities of level one (1) scalability, the International Accounting Standards Board (IASB), or whoever replaces it, and its standards issued under the name technical International Financial Reporting Standards (IFRS) (International Financial Reporting Standards - IFRS) and the so-called International Accounting Standards (IAS) (International Accounting Standards - IAS), as well as their related interpretations, the subsequent amendments to those standards and related interpretations, issued or adopted by the International Accounting Standards Board (IASB).

b). For economic entities at levels two (2) and three (3) of scalability, and until the International Accounting Standards Board (IASB) or whoever replaces it defines the international accounting standards for said entities, the Intergovernmental Working Group of Experts on International Standards of Accounting and Reporting (ISAR) of the United Nations Conference on Trade and Development (UNCTAD) (Intergovernmental Working Group of Experts on International Accounting and Reporting Standards) United Nations on Trade and Development) or whoever replaces him,and its standards issued under the technical name Accounting and Financial Reporting Guidelines for Level II, as well as their related interpretations, subsequent amendments to those standards and related interpretations, issued or adopted by Intergovernmental Working Group of Experts on International Standards of Accounting and Reporting (ISAR).

c). For public sector entities, the Public Sector Committee (PSC) of the International Federation of Accountants (IFAC), or whoever replaces it, and its standards issued under the technical name International Public Sector Accounting Standards (IPSAS) (International Public Sector Accounting Standards - IPSAS), as well as their related interpretations, subsequent amendments to those standards and related interpretations, issued or adopted by the Public Sector Committee (PSC).

2. Regarding international auditing standards:

to). For the audit of financial statements of economic entities, the International Auditing and Assurance Standards Board (IAASB) of the International Federation of Accountants (IFAC), or whoever replaces it, and its standards issued under the technical name International Standards on Quality Control, Auditing, Assurance and Related Services (ISQCAARS) (International Standards on Quality Control, Auditing, Assurance and Related Services - NICCAASR) and particularly the so-called International Standards on Auditing (ISA) (International Standards on Auditing - ISA), subsequent amendments to those standards, and future standards, issued or adopted by the International Auditing and Assurance Standards Board (IAASB).

b). For internal auditing in economic entities, the Institute of Internal Auditors (IIA) or whoever replaces it, and its standards issued under the technical name International Standards for the Professional Practice of Internal Auditing (ISPPIA) for the Professional Practice of Internal Auditing - NIEPAI), subsequent amendments to those standards, and future standards, issued or adopted by the Institute of Internal Auditors (IIA).

3. Regarding international accounting standards:

to). Regarding professional ethics of accountants to the Ethics Committee (EtC) of the International Federation of Accountants (IFAC), or whoever replaces it, and its standards issued under the technical name Code of Ethics for Professional Accountants, as well as their related interpretations, subsequent amendments to those standards, and related interpretations issued by the Ethics Committee (EtC).

b). Regarding the qualifications of accountants, the Education Committee (EdC) of the International Federation of Accountants (IFAC), or whoever replaces it, and its standards issued under the technical name International Education Standards (IES) (International Standards of Education - EIE], as well as their related interpretations, subsequent amendments to those standards and related interpretations issued by the Education Committee (EdC).

c). Regarding the rules applicable to the competition in the markets of professional services to the World Trade Organization (WTO), or whoever replaces it, and trade agreements for professional accounting services ratified by the Congress of the Republic.

Paragraph 1: The existence of a code of ethics and auditing standards for the government sector, issued by the International Organization of Supreme Audit Institutions (INTOSAI) (International Organization of Supreme Audit Institutions) is recognized. These standards will be mandatory to the extent that they are adopted by the Comptroller General of the Republic.

Paragraph 2: The National Government may recognize the technical competence of an international body for the issuance of international standards that replace or add those mentioned in this article, as well as to modify the technical name of its standards, provided that it is recognized by the international community through the United Nations (UN) system. "

“Article 10. Adoption Mechanism: The adoption of international standards, as indicated in Article 9 of this law, will be carried out through a public procedure that allows the effective participation and discussion of any person interested in their adoption.

Without prejudice to the direct participation foreseen by the competent bodies, the competent national body to determine the adoption of the standard will present to the issuer of international standards the observations and comments resulting from internal deliberation. For this purpose, it will participate in the discussions, disseminate its studies and drafts for presentation, promote their analysis, systematize the comments and observations of the interested parties, communicate the position of the Colombian State, disseminate the approved standards and transmit the concerns related to the proposal of new standards.

Once a standard has been issued by the international body, the competent national body for its adoption shall present to the general public a duly motivated adoption proposal and shall provide a term to receive comments and observations from the interested parties. The national body may not modify the standards or adopt them partially; It may only postpone its entry into force, when the standard is contrary to the purposes, principles, objectives and requirements indicated in this Law or in higher standards, in which case it will inform the international issuing body about it and seek its modification.

The incorporation of an international standard will be carried out through the issuance of a decree, agreement or resolution, as appropriate, that adopts the corresponding standard, fully and in Spanish, which must be motivated and will be mandatory by virtue of its promulgation.. Its entry into force will begin, at least, in the accounting period after its promulgation. The standards incorporated by virtue of the adoption mechanism indicated in this article, will be subject to legality control before the contentious administrative jurisdiction for ignoring the purposes, competencies, principles, scope and limits of the economic intervention and the objectives and requirements indicated in the present Law.

Paragraph 1: The National Government will regulate the terms that must be observed to guarantee due process in the adoption mechanism indicated in this article.

Paragraph 2: The National Tax and Customs Directorate, or the body responsible for the design and management of the tax policy, will analyze the impact of the adopted standards and must propose to the National Government the presentation of bills whose approval is necessary to safeguard said politics.

Transitory Paragraph: The international standards that have been issued by the issuer of international standards at the time of entry into force of this law will enter into force as indicated in article 35 of this law. Regarding them, the competent national body to determine the adoption of the international standard may only designate a term of adoption after said date, as indicated in the third paragraph of this article, and no earlier than one (1) year. "

"Article 11. Issuance of derived standards: The competent national bodies to determine the adoption of the international standards mentioned in Article 9 of this Law, may issue general rules of accounting, auditing or accounting, according to the scope of their competence, of subsidiary and subordinate to the international accounting, auditing and accounting standards adopted in accordance with this Law.

In the same way, the organisms in charge of the supervision of economic entities, may issue rules of the industry or sector to which the entities under their jurisdiction belong, in a subsidiary and subordinate way to what is indicated in the international accounting, auditing or accounting standards. and in the general rules established by the National Government. "

“Article 37. Regulatory transition regime: While the regulation is issued by the National Government and the competent national bodies to determine the adoption of international standards, the current regulations will continue in force. The regulations issued in compliance with the provisions of this Law, must try to expressly indicate the regulations that are repealed.

Opinion: the functionality that the adoption of international standards may or may not have is unpredictable, but what is true is that the accounting profession has been built with the efforts of many governments, giving rise to transformations in legislation and technique accounting in order to reach an optimal point of functionality and operation that responds to the needs and circumstances of Colombia.

With regard to the mechanisms of adoption, we see that the professional nature of the accounting standards proposed by the draft of the economic intervention law, implies that it does not rely on Public Law as it should (example: the directives of the Union That arise from the agreement between organizations of accounting experts), but in a tax way, through the standard.

This economic intervention bill contains in its content an alleged participation of public opinion; We support the affirmation of “supposed” given the little time that the government granted to those interested in the accounting profession to comment on the draft of this economic intervention law and the absence of real mechanisms for monitoring and participation that ensure transparency in the development of this bill.

D. Disappearance of the tax audit institution

We observe in article 38 the disappearance of the fiscal audit institution and its work, expressed in its paragraph as follows: "The expressions" fiscal auditor "or" fiscal auditor "that are contained in current regulations shall be understood to be replaced by the expressions "audit of financial statements" or "auditor of financial statements" respectively. Regarding this change, it is necessary to complement it with article 33; by which article 207 of the Commercial Code is modified.

Article 33. Statutory Audit: The provisions of this article modifies the existing legislation and regulations on the matter of statutory audit, and constitutes a basic criterion for the interpretation and application of the norms that remain in this regard.

Article 207 of the Commercial Code will read as follows:

1. In scalability level one economic entities, the financial statement auditor will be appointed directly by the audit committee, if there is one, or otherwise by the shareholders 'or partners' meeting and must report to said committee. The sole function of the financial statement auditor will be to audit the financial statements and issue the corresponding opinion according to international auditing standards, which must contain an explicit and unequivocal statement of compliance with international auditing standards.

The inspection, surveillance and control entities may not assign additional functions to the financial statement auditor, but they may require them to certify tax or financial information contained in the accounting information system.

2. In the economic entities of levels two and three of scalability, in addition to the function of auditing and issuing a report on the financial statements, the auditor of financial statements may exercise advisory and business counseling functions aimed, in any case, on organizational strengthening and financial management of the economic entity. In case the auditor of financial statements exercises additional functions:

a) Your opinion must contain a clear and unequivocal statement that the audit of financial statements that you carry out is not independent and does not meet international auditing standards.

b) This fact is not considered a violation of Colombian professional standards.

c) The inspection, control and surveillance entities may require you to certify the tax or financial information contained in the accounting information system.

Paragraph: In economic entities in which the position of auditor of financial statements is merely optional, the latter shall exercise the functions expressly indicated by the statutes or the governing bodies, with the vote required for the creation of the position. In the absence of express stipulation in the statutes and specific instructions of the governing bodies, it will exercise the functions indicated in this article. However, if you are not an Accredited Professional Accountant, you will not be able to authorize financial statements with your signature, or rule on them.

The explanation and analysis regarding the classification of economic entities by levels will be dealt with later. As can be deduced from article 33, the statutory auditor disappears as we know it, but also limits the work of the figure that replaces it, called the “financial statement auditor”, precisely to the review of the financial statements; disappearing the comprehensive approach achieved by the statutory auditor and marking a great difference between the professional accounting service provided to an economic entity of level one and the entities of other levels.

Other changes that the bill brings with respect to what we know as fiscal auditing, and which will change to "audit of financial statements", are the requirements to be able to perform in this practice. Thus, article 2, in number 5, sets out the philosophical framework that will be developed in articles 17 and 25, which are presented below:

"Article 2. Purposes of State intervention in the economy: The State shall intervene in the economy in accordance with the mandates of this law, under the framework of the provisions of Articles 333, 334 and 335 of the Political Constitution, with the end of:

5. Seek to increase the credibility of financial information through its verification by an independent and qualified professional, in such a way that it contributes to the establishment and efficient functioning of financial markets; and,"

"Article 17. Quality control of the auditor: In order to ensure a good quality of the audit of financial statements that manifests itself in a greater credibility of the financial information published through compliance with correct reliability procedures that provide better protection to owners, investors, creditors and other security holders, and to guarantee to the general public and public authorities that the performance of the financial statement auditor is carried out at a level that meets international auditing standards, the National Government is empowered to establish and regulate a national accreditation system for the audit of financial statements that allows the auditor to certify the quality of their services.

The Superintendency of Companies will establish the technical standards or specifications that are considered essential to evaluate the quality control system of the exercise of the accounting profession as a legal entity, and to qualify the quality of the financial statement audit services. In the same way, the respective supervisory entity of an economic entity of level one (1) of scalability may, in coordination with the Superintendency of Companies, indicate technical standards or particular specifications that allow qualifying the quality of the audit services performed to the entities of its competition.

The auditor of financial statements interested in accrediting their quality characteristics will submit to the consideration of the Superintendency of Companies, the tests of compliance with the technical standards or the specifications so that they can be evaluated and the corresponding certificate may be issued, if they are satisfactory.. The Superintendency of Companies may establish that a third party carries out the aforementioned accreditation, in accordance with the regulations that the National Government indicates for this purpose. The accreditation will have a temporary term defined by the Superintendency of Companies.

The legal person registered as an Accredited Professional Accountant must renew its registration with the Superintendency of Companies in accordance with the procedure indicated in paragraph 2 of article 24 of this Law.

The National Government may establish a consultative accreditation body to which it defines its regulations, functions and integration, giving participation to supervisory entities, union representatives and the academic community. "

"Article 25. Public Accredited Professional Accountant: In attention to the public interest that covers the exercise of the accounting profession as a Public Accredited Professional Accountant, the person who accredits such quality, must comply with the following rules:

1. The Public Accredited Professional Accountant will fulfill the auditing functions in compliance with the international auditing standards adopted under the terms of this law and will guarantee an independence that justifies public confidence in the reliability of their reports.

2. Based on the conclusions obtained in their audit work, the auditor must express in the audit report, clearly and in writing, his opinion in relation to the financial statements considered in their entirety, clearly stating whether such financial statements they are free from material errors. Likewise, it must indicate whether such financial statements are prepared, in all material aspects, in accordance with the international standards adopted according to this law. The auditor's opinion should provide a high but not absolute degree of assurance expressed positively in its audit report.

3. The Public Accredited Professional Accountant who provides his services in an economic entity of level 1 of scalability as a legal entity and who does not approve the assessment of the quality control system referred to in literal b) numeral 2 of article 24 of this Law, you will not be able to contract with new clients of the same level of scalability within the following six (6) months that you have to re-present and approve it, according to paragraph 2 of the numeral of the same article.

4. The Public Accredited Professional Accountant who provides his services in an economic entity of level one of scalability as a natural person, must renew his professional card every five (5) years, or renew it in the eventuality that he wishes to provide his services to one of said entities in case such period has elapsed.

For this, the Public Accredited Professional Accountant may not have his professional card suspended or canceled, and must additionally prove that during the five (5) years immediately prior to the request for renewal of his professional card, he met any of the following conditions:

a) Postgraduate university studies in an area related to professional accounting services;

b) Continuing professional education in areas related to professional accounting services, lasting no less than two hundred (200) academic hours, certified by a university institution duly recognized by the State, or by an association or professional association of accountants whose program is duly accredited to the State; or, c) Presentation and approval of the State examination that will be applied by the competent governmental body.

d) Obtaining a degree of accreditation referred to in article 17 of this law, in such a way that it allows it to provide its services in an economic entity of level one of scalability.

When a Public Accredited Professional Accountant as a natural person does not comply with the conditions to renew his professional card indicated in this paragraph, he will have six (6) more months to comply with the conditions, maintaining his professional condition during this period. In the event of not complying with the conditions for the second time, your professional card will be automatically suspended and you will not be able to practice as a Public Accredited Professional Accountant in economic entities of level one of scalability until you achieve said accreditation.

Without prejudice to the fulfillment of the conditions for the renewal of the professional card, the Public Accredited Professional Accountant who provides his services in an economic entity of level one of scalability as a natural person must maintain an adequate quality control system throughout the time of Your license."

The expression "accredited professional accountant" will be explained later, since the objective is to cover the most important changes regarding the tax audit, for this article 19 is brought.

“Article 19. Independence of the financial statement auditor: To ensure the independence of the financial statement auditors, fundamental for public confidence in the reliability of the reports they issue; and to increase the credibility of the published financial information and add value to investors, creditors, employees, public authorities and others interested in financial information, the auditors must comply with the following requirements:

1. The financial statement auditor, the auditing firm or the network of firms, to which it is linked, may not provide consulting or tax advisory services to the companies they audit. In the same way, natural persons who perform auditing tasks in firms or in Accredited Professional Accountants as legal entities, may not provide such services nor may they be hired by the audited economic entities during the year following the termination of the audit contract.

2. The financial statement auditor will be appointed by the Audit Committee for a fixed period of not less than two (2) years nor more than five (5), without the possibility of renewal. The remuneration received by the auditor of financial statements must be agreed in its entirety at the beginning of its activities, and in it no additional payments derived from the result of the audit may be foreseen.

3. The auditor of financial statements shall cease the exercise of his functions for any of the following causes: expiration of the term, supervening incapacity, violations of the disciplinary or administrative regime at the discretion of the audit committee, or by resignation. "

In this way, the provision of services by the "financial statement auditors" is conditioned to seek greater independence. Article 18 describes another change with high repercussions for the accounting profession and refers to internal auditing. We deal with it in this section because of its relationship with the statutory auditor regarding control.

"Article 18. Internal control mechanisms: Without prejudice to the importance that economic entities give to their own risk management and information control systems, the National Government may establish the obligation to have audit committees and order the institutionalization of the internal audit function in economic entities of level one (1) of scalability that it considers must comply with said mechanisms, attending, in any case, to the different corporate structures of such entities. In the economic entities of levels two and three, such control mechanisms will be voluntary, depending on their respective needs, circumstances and interests:

1. The audit committee will be responsible for its recommendations or nominations and will have the functions, among others, of ensuring that the financial information and the audit comply with the terms indicated in this law, presenting reports on the matter and, in any case, reporting your breach. It will also be responsible for exercising effective internal control and for resolving the position to be adopted by the economic entity in the face of disagreements between the entity's management and the auditor in relation to financial information.

The members of the audit committee will be appointed by the board of directors, board of directors or the one acting in its place, and ratified by the assembly or board of partners. The audit committee will fulfill its functions as a support body dependent on the board of directors, board of directors or whoever takes its place, in such a way that it serves as support in decision-making. The National Government will issue the general rules on the conformation of the audit committees, indicating, among others, the interest groups that should be represented there.

2. The internal auditor will be in charge of, at least, the evaluation of the internal control systems and compliance with the codes of good governance issued by the respective entity. Likewise, it is up to him to verify the adequate evaluation of business risks by the economic entity.

Internal auditing must be performed according to internationally recognized standards for internal auditing and will report to the audit committee, if any, or otherwise to the shareholders' meeting or the body acting in its place. The internal audit functions will be assumed by the person appointed by the audit committee, and ratified by the assembly or board of partners, for which it will not be required that the person have any particular profession, as long as they meet the professional suitability requirements. and morals determined by international standards on internal auditing.

3. In any case, the responsibility for the internal control mechanisms and in general for all internal controls, lies with the administrators of the entities. Auditors, both independent and internal, should evaluate said internal controls and incorporate such evaluation in their audit reports.

Article 2. Independence of the financial statement auditor: To ensure the independence of the financial statement auditors, essential for public confidence in the reliability of the reports they issue; and to increase the credibility of the published financial information and add value to investors, creditors, employees, public authorities and others interested in financial information, the auditors must comply with the following requirements:

The participation of accountants in the internal audit will be displaced by professionals in other knowledge different from accounting, surely administrators, economists, industrial engineers, among others.

Opinion: we recognize a clear violation of the right to work for accounting professionals due to the disappearance of the statutory auditor as an institution. The figure that supplies said institution has a single field of action; the review of financial statements, without the possibility of applying the knowledge and practices of the comprehensive approach to the audit, going back in the history built by the statutory auditor throughout all its years of practice in Colombia, and with the prohibition of advising, of any mode, to companies when level one is concerned; and those who do not have this prohibition, for carrying out the audit of financial statements in economic entities of level two and three, will surely be mistreated in their remuneration, since they do not have a high responsibility and obligations.

In the same sense, the work of accountants is violated, leaving the internal audit in the hands of other professionals who demonstrate their ability, however, we trust that accounting professionals are the most qualified for these trades.

We do not consider that the call to accredit and evaluate the quality of public accountants is the Superintendency of Companies, since, that function requires suitable knowledge in accounting technique and academics, in our opinion it is better to leave this function to continue developing the Ministry of Education.

Thus ends the study of article 38 and the articles that are directly related to it.

II. OTHER IMPORTANT CHANGES TO THE ECONOMIC INTERVENTION LAW

Change of professional title

Other changes are those of the professional title and the work of the accounting profession, in addition to the changes recognized in articles 17 and 25 previously presented, articles 23 and 24 expand on these issues.

"Article 23. Accredited Professional Accountant: An Accredited Professional Accountant (CPA) shall be the natural or legal person who, through the registration that proves his professional competence in the terms of this law, acts in public or private professional practice of the accounting profession..

Public professional practice is understood to be the exercise of the accounting profession in which the essential elements of the contract for the provision of services are, on the one hand, the independence between who provides the service and who hires it and, on the other, the primacy of the public interest on the matter. The accredited professional accountant in public professional practice will be obliged to include his name and signature or include in his company name or commercial name the denomination of "Public Accredited Professional Accountant"; no other person or entity may use such names or any other that leads to confusion with the same.

Private professional practice is understood to be the exercise of the accounting profession in which independence is not required between the person who provides the service and the person who hires it as an element of the essence of the contract for the provision of services or the employment contract, whether it is perform in the service, industry, commerce, public, education sectors, among others. The accredited professional accountant in private professional practice must include his name and signature or include in his company name or commercial name the denomination of "Private Accredited Professional Accountant"; no other person or entity may use such names or any other that leads to confusion with the same.

Paragraph: The use of the denomination referred to in the second and third subparagraphs of this article imposes the obligations implicit in it and whoever acts in one way or the other against different clients will not be able to evade them by relying on the denomination used.

Transitory paragraph: The public accountant recognized in the terms of Law 43 of 1990, or in provisions prior to the entry into force of this law, will have, by ministry of this Law, the quality of Accredited Professional Accountant with all their rights and obligations."

"Article 24. Registration of the Accredited Professional Accountant: The registration of the Accredited Professional Accountant will be verified by means of a professional card, which will be issued in accordance with this Law. The person who wishes to prove their professional competence by registering as an Accredited Professional Accountant, you must meet the following conditions:

1. The natural person who meets the following requirements will be registered as an Accredited Professional Accountant:

a) University professional degree in accounting obtained at a university duly recognized and authorized by the National Government;

b) One (1) year experience in activities related to accounting research or business practice or accounting practice; and, c) Have passed the State examination that will be applied by the competent governmental body.

Paragraph 1: The registrations made and the professional cards issued by the Central Board of Accountants remain valid prior to the validity of this Law.

Paragraph 2: The Superintendency of Companies will automatically issue new professional cards for Accredited Professional Accountants to accredited professional accountants who, as of the effective date of this law, have the professional card issued by the Central Board of Accountants in force.

Paragraph 3: The National Government will design the most appropriate method to verify that the foreign professional meets the requirements indicated in this paragraph to be accredited as an Accredited Professional Accountant, for which it may accept degrees or certifications issued by other countries. Once accredited, the foreigner will practice in the country with the same guarantees that the Colombian professional enjoys.

2. The legal person that meets the following requirements will be registered as an Accredited Professional Accountant:

a) To become a legal person whose main purpose is the provision of services related to the exercise of the accounting profession; and, b) Having approved the evaluation of its quality control system for the exercise of the accounting profession as a legal entity, carried out by the Superintendency of Companies, or by the entity designated by it, in accordance with the provisions of article 17 of this law.

The functions corresponding to the execution of the work of the accounting office of the legal entity that is accredited as an Accredited Professional Accountant must fall on natural persons who are registered as accredited professional accountants. The Accredited Professional Accountant who has been sanctioned with the suspension or cancellation of his / her registration for the exercise of the profession will not be able to perform accounting work in the legal entity that is accredited as Accredited Professional Accountant. This disability will remain for the entire duration of the sanction.

The registration of the Accredited Professional Accountant as a legal entity must be renewed every five (5) years from the issuance of the respective accreditation, according to the procedure issued for this purpose by the Superintendency of Companies. In any case, the legal person that is registered as an Accredited Professional Accountant must maintain an adequate quality control system during the entire time of their license.

When an Accredited Professional Accountant as a legal entity does not approve the evaluation of the quality control system mentioned in literal b) of this paragraph, he will have six (6) more months to practice it again and approve it, maintaining during this period your professional status. In the event of not passing the evaluation a second time, your professional card will be automatically suspended and you will not be able to practice as an Accredited Professional Accountant until you achieve said accreditation.

The Superintendency of Companies will issue new professional cards of Accredited Professional Accountant as a legal entity to companies of accountants that on the date of entry into force of this law have current registration with the Central Board of Accountants, as long as they comply with the evaluation of the quality control mentioned in literal b) of this numeral. However, they must undergo the renewal mentioned in the previous paragraph.

Transitory paragraph 1: The Superintendency of Companies, or the entity designated by it, must establish the guidelines for the evaluation of quality control systems for professional accountants accredited as legal entities, within the year following the date of entry into validity of this law. The expiration of the term will not imply the loss of competence, but will be considered as a cause of misconduct, regardless of whether the faculty has been appointed to a third party.

Transitory paragraph 2: While the Superintendency of Companies, or the entity designated by it, establishes the guidelines and performs the evaluation of the quality control systems of the Accredited Professional Accountant as a legal entity; the companies of accountants that on the date of entry into force of this law have current registration with the Central Board of Accountants may continue to provide their services. New legal entities wishing to provide accounting services may be accredited before the Superintendency of Companies with compliance with the requirements previously indicated by the Central Board of Accountants for such purposes, which must respect the principles indicated in this law. "

Opinion: from our point of view we see the change of title as inoficious and redundant, because if it is an accountant, it must carry its professionalism implicit and it does not have to be increased in the title, it is clear that in Colombia there will only be one class of accounting professionals Public and characterized by being either titled or authorized.

Regarding the change in the work of accounting, we see that the accounting profession benefits by markedly differentiating the fields of action of the professional accountant, when the trade is exercised publicly; referring to the work of accountants to provide public faith, whose main characteristic is independence; and when the trade is practiced privately in the capacity of consultancy, in which the professional accountant does not have independence since he seeks to contribute to the welfare of his client. The benefit of this differentiation is the identification and delimitation of the responsibilities and obligations that are acquired when providing services accompanied by the signature and name of the public accountant, thus avoiding confusion that could harm them.

The changes in the requirements to achieve accreditation as a professional accountant, and therefore, the professional card, in our opinion seek to increase the quality in the provision of the services of the accounting profession, generating greater recognition in the labor market, with consequences Favorable demand for professional accounting services.

A. Concept of economic entity

The concept of economic entity is changed in article 1, expanding the writing in article 6 of Decree 2649 of 1993, including in this concept agreements to develop economic activities and giving entry to the public sector.

“Article 1. Scope of application of the Intervention Law: This law must be applied by economic entities, in order for them to proceed in their activities in accordance with good governance practices and to recognize, prepare, present, reveal and submit their financial information to credibility procedures, under equal conditions.

This law will also be applied by the entities of the public sector, in accordance with the instructions issued by the General Accountant of the Nation in the terms indicated in this law.

Paragraph 1: An economic entity is understood to be economic activity organized as a unit, with respect to which the control of resources is predicated. The entity must be defined and identified in such a way that it is distinguished from other entities. The concept of entity includes, among others, people, joint venture contracts, de facto partnerships, joint venture contracts, autonomous patrimonies, consortia, temporary unions, economic groups, combinations of businesses and the like, the commercial and industrial companies of the State, the social companies of the State, the official companies of domiciliary public services and the mixed economy companies. The National Government may, through general regulations,to preach the quality of economic entity to any activity that meets the characteristics indicated in this paragraph.

Paragraph 2: For the purposes of this law, they are understood as public sector entities, as long as they are part of the general balance sheet of the public sector, the entities, agencies, corporations, units or other agencies that make up the different branches of public power from the central or decentralized level of the national or territorial orders; the control entities; electoral bodies; state entities and agencies subject to a special regime; and any other entity that manages or administers public resources and only in relation to them. In any case, the quality of public sector entity will not be predicated of those entities indicated in the previous paragraph, nor of those to whom the National Government has recognized the quality of economic entities. "

Opinion: we see in a favorable way the expansion of the concept of economic entity, since the inclusion of agreements to develop economic activities and the public sector will result in a new target market for the accounting profession, this because, surely, they will be it will impose on them the obligation to keep accounts, increasing the demand for the professional services of accountants.

B. Classification of economic entities and deadlines for the adoption of international standards.

Economic entities are classified by levels in article 4, which has a close relationship with article 35 and this in turn with article 39, which are presented below. It should be remembered that such classification is important in terms of articles 18 and 33 mentioned above and other articles of the same law not mentioned in this document.

"Article 4. Scope of State intervention in the economy: The application of the standards that are adopted in accordance with this law, its effects, transition regime and entry into force, will be carried out in the application of the defined scalability principle in numeral 3 of article 7 of this Law. For such purposes, economic entities are classified as follows:

a) Level One (1): the economic entities that have values registered in the National Registry of Securities and Intermediaries, or the one that acts as their substitutes, in the stock exchanges or stock exchanges of agricultural or agro-industrial products and the entities supervised by the Superintendencies Banking, Securities and Home Public Services.

b) Level Two (2): the economic entities that according to the legal criteria established to classify companies by their size meet the requirements to be classified as large and medium-sized companies, provided that they do not correspond, in either case, to before level one scalability.

c) Level Three (3): economic entities that, according to the legal criteria established to classify companies by size, meet the requirements to be classified as small or micro-companies.

Paragraph 1: The National Government may determine that a particular economic entity belongs to a higher level of the classification, when the activity carried out by it is of public interest.

Paragraph 2: The General Accountant of the Nation will determine the scalability levels of the public sector entities, as well as the entities that are part of the respective level.

Paragraph 3: Economic entities, including those of the public sector, may reduce their level of location when their level of development decreases in a stable and lasting manner, in accordance with the criteria established in this article.

Paragraph 4: The legal criteria established to classify companies by their size will be the one indicated in Law 590 of 2000 or the regulations that modify, add or replace it.

Paragraph 5: The competent national body to determine the adoption of an international standard may establish special criteria for economic entities assimilated to micro-enterprises, as indicated in literal c) of this article. "

"Article 35. Deadlines for adjustment: The economic entities and the public sector must present financial statements prepared according to international accounting standards, by accountants who meet international accounting standards and audited according to international auditing standards; from the following dates:

1. For entities of level 1: In each financial year beginning from January 2006 inclusive.

2. For level 2 entities: In each financial year that begins as of January 2007 inclusive.

3. For entities in level 3: In each financial year beginning as of January 2008 inclusive.

Paragraph 1: The economic entities and the public sector that consider it, may adopt the international accounting, auditing or accounting standards from the effective date of this law, complying with the express disclosure requirements, according to international standards.

Paragraph 2: In any case, the National Government may postpone the term mentioned in this article by adding it for one more year, when it considers that such a measure favors the public interest in the adoption of accounting, auditing and accounting standards. "

“Article 39. Validity of this law: This Law is in force from the date of promulgation. Economic entities and the public sector must present financial statements prepared according to international accounting standards, by accountants that meet international accounting standards and audited according to international auditing standards; according to the term indicated in article 35 of this Law. "

Opinion: the classification of economic entities by levels will facilitate the control work of the state by focusing its attention and focusing on the importance of each level in pursuit of government economic objectives.

Regarding the deadline given for the adoption of international standards, our opinion is that time is short and passes quickly. The first to adopt international standards will do so for the year 2006, and with respect to the financial statements they must be presented comparatively with those of the immediately previous year. It is the duty of professional accountants to respond with sufficient commitment to this fact, for this they must prepare not only accountants but also universities, and as previously said, assume a participatory stance in the future of the economic intervention law; object of our analysis.

III. FINAL CONTRIBUTIONS

The adoption of international standards is not the issue to be discussed regarding the economic intervention bill since, as its presentation on page 5 says; “Given the country's economic integration needs with international processes, it is not enough to have a single national system if it has differences with international systems. That is why it is imperative to take the step towards a unified international system, as practically all the countries in the world are doing, particularly the most developed ones and with stronger accounting systems ”, it is clear then that the world trend is the free exchange and transfer of economic factors, or better known as free trade, which is the most representative figure of neo-liberal capitalist thought.

The future of Colombia, like that of many economies, will be linked to free trade. The adoption of international accounting, auditing and accounting standards is one of the mandatory steps on this path. It is indisputable that the adoption of international standards is not motivated by internal economic circumstances, these practices of unavoidable acceptance are motivated by the international environment and are necessary to continue to be accepted as part of the world of our time. The repercussions of free trade are uncertain, we can expect a future of boom translated into economic growth as an indicator of the quality of life, bringing at the same time the disappearance of the national industry understood in the sense that the industry within Colombia is owned. of Colombians,there may be economic depressions, our economy following the path it is on, slow growth or some other kind of luck; the prediction of this destination will be left to the calculations of the experts in the field.

How the international accounting, auditing and accounting standards should be adopted is the issue that should be discussed broadly and with adequate participation mechanisms so that the agents linked to the accounting work are the ones who decide on their work, seeking the advancement of the profession and the country. Particular importance should be given to the role to be played by universities and their academics, being the calls for research and the generation of valid knowledge, which helps to propose the best way in which those affected can assume the adoption of international standards of accounting, auditing and accounting.

Concerning what is proposed in the economic intervention law on the fiscal audit; In the end, the State may be the most affected, since it will lose the institution that in Colombia works in favor of its interests in companies, protecting them from the onerous and powerful arm of the law, thus becoming an extension of the controlling function of the State when the breach of rules is involved; It could be affirmed that the fiscal auditor in Colombia is an ad honoren official of the State, paid by the companies and cornered by complex regulations, under pain of disciplinary, administrative, civil, social and criminal responsibility when performing their work. Other harmed will be the companies, since the integral work of a tax auditor,It will be replaced by the work of various specialized professionals, an occupation in which accountants will have to excel in order not to be displaced by other professionals.

Finally, we denounce the intention of separating the Ministry of Education from the accounting profession, distancing it from the academy and thus from its status as science.

We recall that the objective of this document is to make it known, analyze it, present personal opinions and invite those interested to participate with commitment in the future of this project; We must clarify that the opinion presented is the authors' own, it does not seek to generate bias in the readers, that is why we recognize that there are conflicting opinions of professionals who agree in whole or in part with the economic intervention project, with reasonable and respectable arguments. The arguments that have been given to us regarding the most important changes discussed in the document are summarized below.

IV. ARGUMENTS THAT DEFEND THE LAW OF ECONOMIC INTERVENTION

A. Suppression of the Technical Council of Accounting, the Permanent Council for the Evaluation of Accounting Standards and the Central Board of Accountants.

They put in between said the effectiveness of these organisms to fulfill their aims. Isolated cases are known in which the fulfillment of their functions is questioned, in addition to suffering from various other ills that get along well with politics and power, it is taken for granted that they do not perform with the necessary efficiency and It is thought that these evils must be changed at their roots so that they can once again become transparent and efficient organizations, free from political vices.

B. Repeal of Law 145 of 1960, Law 43 of 1990, Regulatory Decree 2649 of 1993, Regulatory Decree 2650 of 1993 and the other regulations related to them.

The legal universe that makes up the accounting regulations is scattered and poorly articulated, this is evidenced in the 15 account plans that exist, in the circulars issued by different control bodies, in the divergences in the application of tax laws vs. accounting, among other evidences; It is time for a structural and definitive change to be made to the set of general and specific rules that regulate accounting, the result of which is an indivisible body of regulations, conducive to being applied to the diversity of economic entities and whose purpose is that financial information It is comparable, transparent and that it provides security and utility to its different users.

Regarding the other changes, there is no information that we can contribute to help form a stronger criterion and judgment about this economic intervention bill.

BIBLIOGRAPHY

Ministry of Finance and Economic Development. Economic intervention bill by means of which the mechanisms by which international accounting, auditing and accounting standards are adopted in Colombia, the Commercial Code, accounting regulations are modified and other provisions related to the matter. December 13, 2003.

OROZCO PARDO AND ASSOCIATES. Draft Law to Adopt International Accounting Standards in Colombia. January 16, 2004 No. 6

* Certified Public Accountant, Specialist in Tax Management, Master in Administration and Finance from UNAB and the Instituto Tecnológico de Estudios Superiores de Monterrey México. Research Professor at the University of Medellín, Professor at the University of Antioquia, Postgraduate professor at several universities, including the University of Tolima.

** Certified Public Accountant, University of Medellín, Young Researcher of the Accounting and Public Management Research Group of the Universidad del Valle.
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