Genesis and Operation of an Enforcement System for National Accounting Standards: The Case of Portugal

Many European code-law countries applying IFRS-based national accounting standards to non-listed SMEs face persistent enforcement challenges. This study examines how an enforcement system for national accounting standards has emerged, developed, and operates in practice, using Portugal’s Accounting Standardisation System as a case study. Drawing on documentary analysis and interviews, we identify gaps between the formal enforcement framework and its practical operation. Although the standard setter is legally mandated to oversee compliance, resource constraints have inhibited active enforcement. Quality control mechanisms of the accountants’ professional body have been suspended, while those of statutory auditors apply only to entities subject to mandatory audit, leaving most SMEs without direct accounting enforcement. Consequently, tax inspections have become a mechanism for scrutinising and correcting accounting practices, giving the Tax Authority a strong indirect influence on enforcement outcomes. These findings show enforcement responsibilities are reconfigured through policy–practice decoupling, raising questions about enforcement in SME-dominated economies.