The adoption of the International Financial Reporting Standards (IFRS) 9, 15, and 16 by all the diverse economic sectors of the country has generated concern. Many companies consider the application of these three standards to be complex and elaborated.

Even when the IFRS were adopted by the Institute of Chartered Accountants of Costa Rica years ago, the evolution of the Costa Rican economic and business climate has not reached the same level as that of more economically developed countries. In the vast majority of European countries, and some Latin American countries, the pronouncements of IFRS 9, IFRS 15, and IFRS 16 have been easily adopted by companies and entities alike.

In general, the domain of the FULL IFRS is observed in Costa Rica, mainly in:

    -    Transnational companies,
    -    • Companies listed on the National Stock Exchange, entities supervised by SUGEF, SUGEVAL, SUPEN, SUGESE (which according to CONASSIF apply the FULL IFRS with the prudential treatments required by the new Financial Information Regulation), and
    -    Certain big companies.

It is important to mention that it was not until October of 2018 when the Institute of Chartered Accountants of Costa Rica adopted the International Financial Reporting Standards for Small and Medium-Sized Enterprises (IFRS for SMEs) as they were originally emitted. They had previously adopted the IFRS for SMEs in 2009 under a definition for a SME that was outdated. The last version of the IFRS for SMEs section 1, subsection 1.2 states the following:

“Small and Medium-sized Enterprises are enterprises that:
    a)    Do not possess a public accountability obligation; and
    b)    Publish financial statements with the purposes of general information for external users.
Examples of external users include owners who are not involved in business management, current or potential creditors, and credit rating agencies.” (The one concerning us is the one underlined)

Because of this, a possibility to avoid the application of the IFRS 9, 15, and 16 is for companies and entities which meet with the aforementioned characteristics to apply the IFRS for SMEs as an accounting regulatory body since it fits better with their circumstances. This could imply that companies that previously needed to adopt the FULL IFRS could instead move over to the IFRS for SMEs. Section 35 of the IFRS for SMEs indicate what procedures must be undergone for the company’s first report.

To better understand what has been mentioned, a concept map is presented which companies and entities can follow:


For practical purposes, this concept map can be applied to companies and entities in to possible dates:

-    The companies that as of the 30th of September of 2019 must make a decision about the implementation of the new cited standards (with the exception of IFRS 16 which to date is not obligatory).

 -    The companies that as of December 31st 2019 want to reconsider the implementation of the new standards as they implemented them as of December 31st 2018 (with the exception of IFRS 16 which to date is not obligatory).

 

If you have any questions or queries do no doubt in calling, we would be happy to help.
E-Mail: [email protected]
Phone Number: 4115-1500