The Nature of the Accounting Profession in Mexico, and Mexicos Term Paper

The Nature of the Accounting Profession in Mexico, and Mexicos Accounting Principles - Term Paper Example At present, Mexico’s accounting profession is quite established with a long history. The initial accounting professional body was established in the year 1917. MIPA or the Mexican Institute of Public Accountants was part of the nine-member founders of the International Accounting Standards Committee  (IASC). Mexican accounting firms primarily provide services such as bookkeeping and audit and tax services. In order for a person, to qualify as a public accountant in Mexico he or she must have a professional diploma in accounting. MIPA issues bulletins, which regulate accounting and financial reporting in the country (Deloitte, Haskins & Sells and AICPA 125). These bulletins dictate financial reporting through requirements for stock exchange listings, as well as legislation. Mexican law requires all listed companies to be audited by a Mexican certified public accountant. The law also requires annual financial statements to be published in nationally circulated media such as ne wspapers. The Mexican National Banking and Securities Commission or NBSC, which is an equivalent of the US Stock Exchange Commission, oversees the disclosure of information by publicly owned organizations. MIPA also has the mandate of issuing auditing and accounting standards through a well-established process (Prieto 106). The oversight institution established a Code of Ethics that deters public accountants from advertising their services. The School of Public Accountants of Mexico is the sole accountancy organization that establishes standards, as well as financial reporting principles and train people who seek an accounting career. Since Mexico is part and parcel of the North American Free Trade Agreement, the accounting principles of the US significantly influence Mexico’s accounting principles. The US primarily exerts this control through the existence of the Big 4 international accounting firms, as well as the presence of numerous subsidiaries of renowned US companies. Perhaps the most exceptional characteristic of Mexican accounting principles is the treatment of the implications of inflation in financial statements. Mexican accounting principles primarily provide for the treatment of the effects of inflation through the use of general purchasing power accounting. The nation’s accounting principles require the adjustment of a number of accounts to demonstrate the effects of inflation. These accounts include net earnings, which include monetary losses and gains, depreciation and cost of sales, fixed assets, shareholders equity (in effect of holding non-monetary assets and capital stock and retained earnings) and inventories. MIPA’s bulletins dictate how businesses calculate various values. For instance, bulletin B-10 introduced an innovative concept referred to as the integrated result of financing calculated by summing the nominal interest expense, the losses and gains due to changes in the price level in terms of a company’s net monetary position, and losses and gain due to fluctuations in the exchange rate on a company’s monetary assets, as well as liabilities denominated through foreign currencies (Orme 67). Regardless of international influences inherent in Mexico’s accounting principles, the country’s Bulletin B-10 that deals with inflation accounting indicates how