REPARIS – A REGIONAL PROGRAM

THE ROAD TO EUROPE: PROGRAM OF ACCOUNTING REFORM AND INSTITUTIONAL STRENGTHENING (REPARIS)

Accounting Education in Latin

America and the Caribbean

Henri Fortin, Program Manager, CFRR

Accounting Education in Latin America and the Caribbean (LAC)

2

“ Preparing the Next Generation to Deliver High Quality

Accounting ”

The LAC context

Recent trends in higher education in LAC

Tertiary accounting education in LAC: SWOT analysis

Innovations and success stories

A way forward

Population 550 mn.

GDP current US$ 3.7 trn.

GDP Growth (2003-2007) 4.8%

Market capitalization US$ 300 bn.

FDI% GDP (2003-2007) 4.3%

Latin America and Caribbean (LAC): Key figures

3

MexicoNicaragua

Chile

2%

3%

4%

5%

6%

7%

8%

9%

10%

0 2,000 4,000 6,000 8,000 10,000

GD

P c

urr

en

t (U

S$ b

n.,

20

07

)

GDP per capita (US$, 2007)

Common features

Language

Culture

Legal tradition

Some regional

institutions

Marked differences

including in economic

performance

The LAC Context: Financial Depth

4

The LAC Context: Ease of doing business

5

Doing Business

2011

Getting

Credit

Protecting

Investors

Paying

Taxes

Enforcing

Contracts

Trading

Across

Borders

Ease of Doing

Business

Rank

Mexico 46 44 107 81 58 35

Peru 15 20 86 110 53 36

Macedonia, FYR 46 20 33 65 66 38

Colombia 65 5 118 150 99 39

Montenegro 32 28 139 135 34 66

Political stability

Regional integration – e.g., CAFTA

State-owned enterprises are still important

Pension funds

Growing middle class

Emerging regional champions

More recently: financial stability

Other trends

6

Accounting standards

IFRS adopted in most countries for listed companies

Local GAAP in the larger countries but future

uncertain

Strong appetite for the IFRS for SMEs

Financial sector: prudential focus

Auditing standards: mostly ISA

Independent oversight of statutory audits almost

non-existent

Growing demand for high-quality corporate

financial reporting

LAC Corporate Financial Reporting Frameworks

7

Recent Trends in Higher Education in LAC

8

Demand for university education

increasing rapidly since the 1980s

Demand satisfied more and more

through private enrollment

Quality of education has become

less homogeneous

Ex-ante or ex-post evaluation is

challenging

Undergraduate degree in accounting is

still the only substantive requirement to

become a licensed accounting or audit

practitioner

Private Enrollment as % of Total

1985 2002

<10% 10-20% 20-30% 30-40% >40%

Bolivia

Cuba

Panama

Uruguay

Bolivia

Cuba

Panama

Uruguay

Costa Rica

Ecuador

Honduras

Mexico

Nicaragua

Venezuela

Honduras

Argentina

Guatemala

Paraguay Argentina

Costa Rica

Ecuador

Guatemala

Mexico

Chile

El Salvador

Peru

Venezuela

Brazil

Colombia

Dominican Rep.

Brazil

Chile

Colombia

El Salvador

Nicaragua

Paraguay

Peru

Dominican Rep.

Private Enrollment in Latin America and the Caribbean

(1985-2002)

>40%

Tertiary Accounting Education: SWOT Analysis

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Strengths

• Strong tradition in certain leading

universities

• Close ties with accounting

professional bodies

• Large region, conducive to a

critical mass of knowledge and

expertise

• Common language

Opportunities

• Flurry of new standards require

continuing education

• Accounting (financial reporting)

has acquired a higher profile

internationally

• US accreditation of foreign

universities

• Free-trade agreements with the US

allowing for mutual recognition

Weaknesses

• Outdated curricula

• Quality assurance arrangements

• Faculty compensation

• Command of English language

• Negative perceptions in the

business community

Threats

• Widening gap between high- and

low-performing universities

• Vocational education as an

alternative

• New competition by specialized

universities

• “Off-shore” training

Continuing Professional Development (CPD)

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CPD Hours Required Per Year

Argentina -

Brazil 32

Chile -

Colombia -

DR -

Ecuador -

El Salvador -

Honduras -

Haiti 35

Jamaica 65

Mexico 40

OECS 30

Panama -

Paraguay 50

Peru 20

Uruguay -

Source: LAC ROSC A&A review

Refer to discussions at the

EduCoP meeting in Chisinau

(April 2010)

Constraints to Offerings in International Standards

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0%

10%

20%

30%

40%

50%

60%

Lack of student

interest

Lack of qualified

professors

Lack of university

interest

Lack of financial

resources

Lack of literature in

local lang.

Lack of literature in

English

Other

Mexico: Certified Public Accountant (“CPC”)

Developed in 2000-01 by the Mexican Institute

Endorsed (and required) by Mexican financial supervisors

and tax administration for audits of supervised entities and

large taxpayers, respectively

Professional Mutual Recognition Agreement signed in

2002 with the US

Unique case in LAC to date, a model to follow

Success stories, innovative approaches

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Panama: Specialized Accounting University (“UNESCPA”)

Est. in 2004 by the Panamanian Institute to fill a void

Project supported by the leading audit firm in the country

Bachelor degree in accounting and master’s degrees

Approximately 250 students, of whom 60 are candidates

for the bachelor’s degree

Most professors are practitioners from large audit firms

Relies on donations from the international audit firms

“One of the top [accounting] programs in the region,” and

the strongest in Panama (Borgonovo 2009)

Success stories, innovative approaches

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Supply side

Modernize curricula, improving approaches to teaching

Higher standards for faculty credentials

Improving compensations

Greater emphasis on English language proficiency

Panama example

Common base curriculum at regional level

Demand side

New accounting credential incl. credible qualifying exam

(following the Mexican experience)

Which way forward?

14

Thank you

15

Merci

Мерци

Falemnderit