How distant are the Peruvian companies of the International Accounting

Standards (IAS) 32 and 39

By: Mario Pinglo Garcia, MBA, and CPA

We know that a Competitive Market exists in which there is complete information on

present and contingent states and that exists a Market of Derivatives that is basically
characterized to cover the possible contingencies. All this is in force under if there is
information near the complete one and the markets are efficient. In an efficient market
(nearly utopian) both agents of interchange, that is to say, buyer and salesman are well
informed. For that reason it is preoccupation of the regulating begins and the International
Standard Accounting Board (IASB) to specially cause a set of similar information to the
participants of the international markets, Per like emergent economy looks to open its
borders to the international market has the urgent necessity to fulfill international standards,
through its companies, consequently Per would be seen as attractive and serious country
for the investors.
For that reason it is precise to do the question to us: Are at the moment the Peruvian
companies are fulfilling with accounting practice on the financial instruments for purposes
of uniformity and consequent comparison in relation to the measurement, recognition and
stipulated requirements of revelation in IAS 32 and 39?
At this moment, the Peruvian companies are fulfilling with accounting practice on financial
instruments for purposes of uniformity and consequent comparison in relation to the
measurement, recognition and stipulated requirements of revelation in IAS 32 and 39?
Have a look to the mentioned standardization; according to

IAS Financial 32 Instruments: Revelation and Presentation

This standard establishes certain requirements in relation to the presentation and the
information to reveal on the financial instruments recognized so much in the balance (on
balance sheet) like outside balance (in off balance sheet) with the aim of which the users of
the financial statement can understand the occurred economic facts in their total magnitude,
as well as the impact of these facts in the performance of the box flow.
In relation to the method of the reasonable value (to FAIR VALUE1) like measurement
criterion, the standard indicates the information to reveal in both cases (as much for the

instruments recognized in the balance like outside). Also the standard indicates that when
it is not possible to determine the reasonable value with trustworthiness this circumstance
must of being revealed
IAS 39 Financial Instruments: Recognition and Measurement This standard indicates
that all as much active financial instruments as liabilities, including derived financial
instruments, must of being recognized in the balance. After their initial recognition (which
is done to the cost), all the financial assets must of being measured to the reasonable value.
Also, in relation to the financial liabilities this standard establishes that the maintained to
negotiate and derived liabilities, must of being measured to their reasonable value. Other
financial liabilities are measured to the cost or the method of the amortized cost.
The changes in the reasonable value are registered in the state of gains and losses in the
period that they occur. This standard also establishes that the derived financial instruments
always are considered like sharps to negotiate it (TRADING), unless they are identified like
maintained for covers of other operations, in such special cases countable precisions on its
standardization are established.
Observing the countable practices for financial instruments used by Peruvian companies
that quote in stock-market of values local we observed that these are far from which IAS 32
and 39 requires.
This happens especially in the financial instruments where the reasonable value like
criterion of measurement and recognition is used (in the financial assets maintained to
negotiate and available for the sale). The subject is that it is not explained Peruvian
companies calculates and reveals the reasonable value of the financial instrument
In relation to the recognition and measurement of financial instruments accountants used by
the Peruvian companies and IAS are several differences between standards. In Per the
financial assets and liabilities are not estimated to reasonable value (except in the
commercialization of securities by financial institutions) and the rules on the accounting of
the cover are much less restrictive.
In which to derived instruments it concerns we observed that the majority of the companies
only maintains them for cover purposes, explicitly report not to use them for speculative
purposes (TRADING). The case is that these companies that explicitly declare to maintain
them with cover aims do not specify the operations that originate them. On the other hand,
the derivatives with speculative purposes are maintained exclusively by financial
organizations and these do not reveal either much on their countable policies for these
instruments. Concerning the measurement criterion we observed that the criterion of the
reasonable value this being adopted by many of them, nevertheless with respect to the
operations of cover (Forwards) exists an important breach between his you practice
countable and the standard international accountants (IAS 32 and 39). It would be healthful
to reveal as the Peruvian companies are revealing the risks of their positions in the financial
instruments

Of the mentioned previously it is necessary to consider that the procedures established in

each region to assure the correct application the local countable standards vary substantially
besides also varying their structure of revision. We do not forget in addition that the main
multinationals, at which the Peruvian companies aim, generate more of 70% of their results
outside their country of residence, before which seems necessary to affirm that standard
requirements of report are not only one option. For that reason a great improvement in the
practices of report in relation to this class of instruments is necessary. As financial
information user and as potential investor is imperative to become the question if the
revealed information is understandable, comparable and therefore useful for me to make a
decision?
1 Fair value: It is the amount by which assets can be interchanged or liabilities eliminated between two
agents well informed and prepared to realize a transaction.