Global expertise, local knowledge
06 Aug 2018
NEWS FROM ARGENTINE
In Argentina, the accounting profession has shown a complexity increase due to the existence of a dynamic business environment characterized with a higher demand of clients in general, and especially in the Tax area, where new regulations have been a constant in the process of transformation and modernization which the country has experienced by adapting to international standards.
During the last years, and as part of a convergence objective towards best practices at a global level, Argentina has adopted IFRS in different regulated areas. Starting 2018, banks and financial entities are also compelled to apply IFRS as their regulatory framework as it is already happening with companies under the supervision of the National Securities Commission (CNV). This situation will require more specialized Audit professionals and creates a new opportunity for most of the firms.
On the other hand, the Tax Amnesty and Money Laundering process which took place in the last years has considerably affected the firms’ work scheme that have noted how the incomes proportion of the Tax area has become more significant. Likewise, continuous demands of regulators like the Central Bank of Argentina (BCRA), the National Securities Commission or the Financial Information Unit (UIF - Prevention of Asset Laundering) have required a greater specialization of professionals.
A relevant challenge for the Audit profession is the application of accounting procedures related to hyperinflation environments for local companies. Regarding that, it is important to point out that management of entities with operations whose functional currency is the Argentine peso should consider making disclosures about judgements and uncertainties related to the applicability of IAS 29 in their Q2 2018 interim financial statements, and developing plans for implementing the requirements of IAS 29 during Q3 2018.
The creation of the Argentinian Forum of Firms of External Auditors (FAFAE), being PKF Audisur actively involved in such process, has been an important milestone to ensure the dissemination of good audit practices. In this context of financial IFRS professionalization, homogenization of regulations and a trend towards adopting NIIF within organizations, the Forum intends to be a sphere which fosters the uniformity of work methods and a place where firms of similar size can share experiences. Additionally, it has the mission of improving the quality control system of the firms while spreading professional achievements in the country.
The market of Audit and Consulting firms in Argentina has had a sustained stability in the last years, repeating a trend of previous years. The local market, one of the largest in Latin America, has a significant presence of global business actors and a great amount of medium and small firms with technical expertise which have increased their competitiveness level in the market. In this sense, the situation for audit firms has not been simple since there have not been mergers of great proportions and the economic situation is still in a recovery phase; moreover, businesses in general are suffering the effects of high inflation with an overvalued exchange rate – a highly appreciated peso.
In any case, prospects are encouraging. Slowly but surely, the economic activity in the country has started to recover and foreign investments are finally arriving to Argentina. Regional economies, led by agriculture activity and renewable energies, have begun to improve their situation and as a result work opportunities are having an important progress. The agreement reached by Argentina and the IMF recently has renewed the trust of the economic community in the country. This implies the possibility of gradually expanding the business horizon for the firms and also reducing uncertainty by encouraging the growth of incomes in Audit and Consulting firms based on an improvement of the business environment.
In this respect, the challenge is that services provided by audit firms should join the companies’ growth and also enhance the quality of such services. In the short term, the trend suggests that firms should solidify their position while in the mid-term it is expected that companies and businesses join the increase of the firms’ activity level.
In a market where traditional audit services have transformed into a commodity whose rate has decreased in view of a strong competition, it is likely that in a long term the opportunity for firms relies on the provision of more specialized services, with a better rate, more trained human resources and aiming at specific niche markets. To this effect, the future of the profession seems to be attached to the provision of end-to-end solutions and the outsourcing of tasks that companies prefer to delegate rather than the expansion of traditional services already comprised by the great number of existing firms.
Similarly, the complex environment of diverse actors continues to indicate the need of providing services related to the regulatory enforcement, hence, the firms will be required to support market demands.
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