Accounting standards

In Chile, accounting standards are governed by the Financial Market Commission (Comisión para el Mercado Financiero, or CMF) and the SII (Servicio de Impuestos Internos), which is responsible for regulating and supervising financial markets, entities, and participants. The accounting standards to be met in Chile are primarily based on the International Financial Reporting Standards (IFRS), which are issued by the International Accounting Standards Board (IASB). The CMF has adopted the IFRS as the basis for financial reporting in Chile, with some modifications and additional guidelines specific to the Chilean context.

Here are some key aspects of accounting standards to be met in Chile:

1. IFRS adoption: Chile has adopted the IFRS for public and private companies, with some exceptions. Publicly-traded companies, banks, insurance companies, and other financial institutions must comply with the full IFRS. Non-publicly traded companies, such as small and medium-sized enterprises (SMEs), can choose to adopt the IFRS for SMEs or the full IFRS.

2. Presentation of financial statements: Companies must prepare and present their financial statements in accordance with the IFRS, which includes the statement of financial position, the statement of comprehensive income, the statement of changes in equity, the statement of cash flows, and the notes to the financial statements.

3. Accounting principles: Financial statements must be prepared using the accrual basis of accounting, which records transactions when they are incurred, not when cash is exchanged. Companies must also follow the principles of consistency, materiality, and prudence in the preparation and presentation of their financial statements.

4. Consolidation: Parent companies that control one or more subsidiaries must prepare consolidated financial statements, which present the financial position, performance, and cash flows of the parent company and its subsidiaries as a single economic entity.

5. Disclosure requirements: Companies are required to provide detailed disclosures in their financial statements, including information about accounting policies, significant judgments and estimates, risk management, financial instruments, and related-party transactions.

6. Audit requirements: Publicly-traded companies, banks, insurance companies, and other financial institutions must have their financial statements audited by an independent external auditor registered with the CMF. The auditor's report should express an opinion on whether the financial statements are prepared in accordance with the applicable accounting standards and provide a true and fair view of the company's financial position and performance.

In summary, accounting standards in Chile are mainly based on the IFRS, with some modifications and additional guidelines specific to the Chilean context. Companies must prepare and present their financial statements following these standards, ensuring compliance with the principles of consistency, materiality, and prudence, as well as meeting audit and disclosure requirements.