ENEffective Insolvency and Creditor Rights Systems
According to the 2002 World Bank assessment of Argentina's insolvency and creditor rights system, the legal framework for enforcement of both secured and unsecured rights and the Argentine corporate insolvency regime are largely consistent with the World Bank's Principles and Guidelines for Effective Insolvency and Creditor Rights System. Nevertheless, some improvements are needed. Due to the lack of appropriate incentives for debtors and creditors, the legal framework for informal workouts is rarely used. Also, years of economic recession have significantly increased the number of insolvencies, overburdening the insolvency courts in most jurisdictions. As a result, the World Bank has recommended the adoption of a new legal mechanism instituting a consensual, out-of-court, corporate workout framework. This mechanism should incorporate urgently needed reforms to the insolvency system, leaving less-urgent amendments for a later time. In the medium term, Argentina should focus on changes to the legal and institutional framework for creditors' rights and further amendments to the insolvency regime.
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NCInternational Financial Reporting Standards
The Argentine Federation of Professional Councils of Economic Sciences (FACPCE) coordinates the issuance of professional accounting and auditing standards. According to a 2008 Ernst & Young report, in 1998 the FACPCE’s Governing Board developed a plan to adapt Argentine accounting standards to International Financial Reporting Standards (IFRSs) issued by the International Accounting Standard Board (IASB). On December 8, 2000, the FACPCE’s Governing Board approved Technical Resolutions (TRs) 16 through 19, thus completing the first stage of the harmonization plan. New TRs have been issued since then. However, Ernst & Young note that the TRs differ from IFRSs in several respects. In addition, since 2007 the FACPCE and the Argentine National Securities Commission (CNV) have been actively working on the comprehensive adoption of IFRSs for listed companies and other companies of public interest. Finally, as stated on the Deloitte & Touche IAS Plus website, on March 20, 2009, the FACPCE approved TR 26, which adopted IFRSs as issued by the IASB in effect as of 2009. The Resolution also includes the commitment to incorporate all new IFRSs and modifications to the existing ones as they become available in the future. Companies included in the public listing system (which lists shares and corporate bonds), or companies that requested authorization to be included in this system, (with the exception of banks, financial trusts, insurance companies, and cooperatives) are legally required to apply TR 26 effective for periods beginning on January 1, 2011. Other companies may apply either IFRSs or continue to follow Argentinean Generally Accepted Accounting Principles, which, as mentioned above, differ from the international standards. According to a 2009 publication by PricewaterhouseCoopers, other than the CNV, the regulators have not announced any plans to introduce IFRSs.
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ENPrinciples of Corporate Governance
Corporate governance reform started in Argentina in 2001 when Decree No. 677 was passed, which promotes the adoption of good corporate governance practices for publicly-traded companies. Argentina is considered to be relatively developed in corporate governance matters compared to similar countries, according to a paper published by the Center for Financial Stability in 2005. However, only modest progress has been recorded since, and evidence shows that there is still much potential for improving corporate governance practices in Argentina, including not only publicly-traded companies but also privately-held firms and financial institutions. Enforcement mechanisms and regulators’ supervision powers also need to be strengthened. In September 2004, the Argentine Institute for Corporate Governance published a Code of Good Practices for Corporate Governance in conjunction with KPMG and the Institute for Enterprise Development in Argentina. The Code is primarily aimed at listed companies, but can also be applied to privately held and small and medium-sized enterprises. Its recommendations are based on the Organization for Economic Co-operation and Development's (OECD) Principles on Corporate Governance and the recommendations of the OECD's 2003 White Paper on Corporate Governance in Latin America. The Code is voluntary in nature and companies who adhere to the principles of the Code must make a public declaration regarding their compliance with it. In October 2007, the National Securities Commission (CNV) issued General Resolution No. 516, mandating listed companies to annually disclose whether they comply with a minimum set of governance standards established by the CNV or to explain the reason for not doing so.
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IDInternational Standards on Auditing
On July 4, 2003 FACPCE issued Technical Resolution No. 284 whereby it approved a project to adopt International Standards on Auditing (ISAs) issued by the International Auditing and Assurance Standards Board of the International Federation of Accountants (IFAC). The adoption was set to take effect as of June 30, 2004. The Resolution stipulated that the FACPCE would retain the right to adopt ISAs either in full or in part, and the text of the approved standard should include: (1) ISAs translated into Spanish, using Argentine vocabulary and expressions on the basis of a translation that the FACPCE will prepare or adopt; (2) differences stemming from the particular conditions in Argentina; (3) a manual on ISAs for small entities, and (4) stipulation of future modifications. However, as explained in a 2008 article in Imagen Professional Magazine by Godoy, subsequent FACPCE resolutions postponed the application of ISAs in the country and, at the time of the writing of the article, the discussions about the introduction of ISAs were focused on what type of entities should be required to have their financial statements audited in accordance with ISAs and whether the implementation should be gradual or wholesale. In a July 2008 response to the Part 3 of the IFAC´s Member Body Compliance Program, the FACPCE explains that the deadlines for the adoption of ISAs were to be determined by the end of 2008. As of May 2009, there was no information publicly available on whether this objective had been achieved.
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IIAnti-Money Laundering/Combating Terrorist Financing Standard
According to the 2009 U.S. Department of State (DoS) report, the Argentine anti-money laundering (AML) framework, which includes the criminalization of money laundering, the Financial Intelligence Unit (UIF), and administrative penalties, are set up by Law No. 25.246 of 2000. Since 2002, the UIF has set guidelines for reporting requirements and types of activities related to customer due diligence, record keeping, suspicious transactions reporting, and internal control procedures. In 2005, Argentina ratified the United Nations International Convention for the Suppression of the Financing of Terrorism. The DoS report notes that since 2006 the government of Argentina has taken several important steps to combat money laundering and terrorist financing. For instance, Law No. 25.246 was amended to address the Financial Action Task Force's (FATF) concerns about Argentine money laundering and terrorism-financing legislation. In June 2007, the authorities passed the long-awaited terrorist financing Law No. 26.268, which provides the legal foundation to investigate and prosecute crimes relating to terrorism and terrorist financing. A two year National Agenda regarding AML and combating the financing of terrorism (CFT) was approved through Decree No. 1225 of 2007. The Agenda aims to increase the UIF´s performance and to improve the: (1) prevention; (2) early detection; (3) reporting; (4) investigation; and (5) judgment of acts on money laundering and terrorist financing. The National Agenda is composed by twenty main objectives and 44 secondary goals referred to as the AML/CFT fight. In October 2003, the FATF conducted a mutual evaluation of Argentina. Its findings, based on the FATF's old methodology, were published in 2004. Despite the existence of various reports on Argentina's AML/CFT regime, there is little information subsequent to the 2004 FATF's report addressing Argentina's compliance with the FATF's recommendations. According to Clarín 2009, the FAFT will conduct a new mutual evaluation of Argentina at the end of 2009.
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IICore Principles for Systemically Important Payment Systems
According to a report jointly prepared by the Center for Latin American Monetary Studies (CEMLA) and the World Bank in 2000, the BCRA redefined the regulatory and operational framework for payment systems, and took the lead in implementing payments reforms in 1996. Per the 2003 CEMLA/World Bank report, these reforms have included the creation of a real-time gross settlement system, the main system employed for large-value funds transfers; the Electronic Payment Means, operated by the BCRA; the privatization of automated low-value clearinghouses throughout the country; and the development of large value automated clearinghouses owned and operated by the private sector. The Argentine Interbank Commission for Payment Means of the Republic of Argentina (CIMPRA) was created in the mid-1990s to manage the development of the National Payment System plan, coordinate its implementation, and implement future improvements in the payment systems. CIMPRA is the forum in which the various players of the system (BCRA, banks, bank associations, and automated clearinghouses) study, plan and monitor the performance of payment systems. The BCRA is in charge of supervising the payment system. The World Bank 2008 report asserts that, the weak regulatory basis and the absence of a unit specialized in payments policy issues within the BCRA limit the effectiveness of the supervisory authority. According to another report prepared by the World Bank the national payment system is undergoing a reform of the legal and regulatory framework of its large-value funds transfer and of its retail payment systems, among others. This reform was initiated by the need to diminish systemic risk and ameliorate the overall efficiency of the payment system, notes the World Bank in its report on Global Payment Systems. However, there is insufficient information publicly available as to Argentina's compliance with the Core Principles for Systemically Important Payment Systems.
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