Taxpayers who are required to do so under the provisions of the Commercial Code or special laws are required to keep formal accounts. Section 454.- The letters, telegrams and invoices they receive, as well as copies of invoices issued by merchants that serve as vouchers for accounting aspects, are deemed to be attached to the accounts and are kept for the period indicated in section 451. In El Salvador, the main legal basis for accounting is found in the Commercial Code, although there are other laws and codes that have a significant impact on accounting and, in particular, on the auditing and behaviour of accountants and auditors. Article 437: Individual traders whose assets are less than twelve thousand United States dollars shall keep accounts for themselves or for persons designated by them. However, individual traders whose drawing assets are equal to or greater than twelve thousand dollars, and social traders in general, are required to keep their accounts through accountants, legally licensed companies, single persons and directors or accountants with securities recognized by the State, the latter two being required to prove their capacity in the manner provided for in Article 80 of the Regulation Implementing the Tax Code. Article 440: The provisions of articles 436, 438 and 439 apply to all registers that merchants are required to keep by law, even if they are not accountants. Taxpayers are required to keep the accounts at the registered office of the parent company or at the place where they have notified that they will keep them. The body empowered by law in El Salvador to determine the application of accounting principles is the Board of Directors of the Profession of Chartered Accountant and Auditor. The provisions of this Code specify the characteristics and requirements of the books or registers to be kept by taxable persons and the manner in which manual, mechanical or computerised books, records, registers, accounting systems and programmes are kept and prepared, taking into account the documentation which must assist them, without prejudice to the assignments which fall within the responsibility of other bodies in this field. However, it was not until 1999 that the Prudential Supervisory Board made an initial statement on the need to apply international accounting standards in the terms of reference for the preparation and presentation of financial statements. Books can be kept manually or through mechanized systems, for which it is not necessary to obtain prior authorization from the tax authorities, since it is enough to comply with the rules of storage of the respective files and programs. Article 139: For the purposes of this Code, formal accounting means what is kept in the books approved in legal form in accordance with one of the generally accepted accounting methods appropriate to the company concerned. Article 435: The merchant is required to keep accounts in accordance with one of the generally accepted accounting systems and to be approved by those who exercise the public control function.
The formal accounts must be supplemented by the necessary auxiliary books and supported by the legal documentation that supports the registers allowing to establish with sufficient order and clarity the chargeable events of the taxes established in the respective tax laws, the expenditures, the estimates and all the operations that make it possible to establish their real tax situation. Article 450.- The probative value of accounts, their judicial issuance and recognition, as well as the effects of the absence of certain requirements of this chapter are governed by the Code of Civil Procedure. Traders may keep accounts on separate sheets and make summary entries in the journal and use electronic systems or other appropriate technical means to record accounting transactions. All this is brought to the attention of the office, which exercises control over the state. Legal framework In 2005, Brazil began to adopt International Financial Reporting Standards (IFRS) through the first announcements of the CFC From the inventory carried out, a detail is elaborated, shipped and grouped the goods according to their type, with the specifications required within each group. a precise indication of the quantity, unit of measurement, description of the goods and their description or description; the unit price, excluding VAT, and the total value of the shares. The references of the book “Cost”, “Leftovers” or “Local purchases”, whose corresponding price has been taken, must be indicated. The prepared details must be included in the protocol containing the above requirements and are signed by the taxpayer, his representative or agent and his accountant, which serves as the medium for the receipt and accounting documents, as well as a summary of the inventory carried out in the legalized annual account book or in the book in which the purchases are recorded. Turnover and expenses, in the case of traders who are not required to keep formal accounts. Article 439: Traders must record their daily transactions and keep their accounts clearly, in chronological order, without objectives, interpolations, scratches or deletions and without signs of change. Home » Blog » IFRS » The importance of IFRS in accounting in El Salvador The entries are expressed in chronological order, complete and timely, in Spanish and legal tender.
Transactions are recorded as they are carried out and only a period of two months may be granted for tax purposes. Article 436: The registers must be kept in Spanish. Accounts are recorded in colones or U.S. dollars. All accounts must be held in the country, including accounts of agencies, affiliates, subsidiaries or branches of foreign companies. The offence is punishable by the body exercising State control in accordance with its legislation. Any authority having knowledge of the infringement is obliged to inform the above-mentioned body without delay.