Accounting Manual for Pension Fund Administrators

Alameda Juan Pablo II, between 15 and 17 Av. Norte, San Salvador, El Salvador.
Tel. (503) 2281-8000 www.bcr.gob.sv
CNBCR-11/2022
NSP-42
ACCOUNTING MANUAL FOR PENSION FUND ADMINISTRATORS Approval: 12/30/2022 Validity: 03/01/2023

THE COMMITTEE OF STANDARDS OF THE CENTRAL BANK OF RESERVE OF EL SALVADOR,

CONSIDERING:
I. That by Legislative Decree No. 614, dated December 20, 2022, and published in the Official Journal No. 241, Volume No. 437 of December 21, 2022, the Comprehensive Pension System Law was approved.
II. That Article 27, first paragraph, of the Comprehensive Pension System Law, establishes that Pension Fund Administrators shall be financial pension institutions, whose exclusive purpose is to administer a fund known as the Pension Fund, and to manage and grant the benefits and allowances established by the Law.
III. That Article 27, fourth paragraph, of the Comprehensive Pension System Law, establishes that for their establishment and exercise of functions, Administrators shall be governed by the provisions of this Law, the Law on Supervision and Regulation of the Financial System, its regulations, and other applicable requirements in accordance with the Commercial Code.
IV. That Article 27, fifth paragraph, of the Comprehensive Pension System Law, establishes that Administrators are also authorized to administer Voluntary Previsional Savings Funds and receive commissions therefor. Such Funds shall be constituted as independent patrimony of the Administrator and of the Pension Funds it administers, being constituted by operation of law when recorded in the Registry of the Superintendence.
V. That Article 38, second paragraph, of the Comprehensive Pension System Law, establishes that the net worth of Administrators shall be understood as the sum of paid-in capital, legal reserve, and other capital reserves, plus surplus accounts and retained earnings, fifty percent of the net profits after provision for income tax of the current fiscal year, fifty percent of the revaluations authorized by the Financial System Superintendence, minus capital participations in other companies and the value of losses, if any.
VI. That Article 45, first paragraph, of the Comprehensive Pension System Law, establishes that the Central Bank, through its Standards Committee, shall issue the corresponding accounting regulations in which the accounting obligations of the Administrators and the pension fund, the mandatory accounting principles, and the provisions for the formulation of Financial Statements shall be determined. All of this with the objective that the real financial situation of the Administrators be reflected.
VII. That Article 46, first and second paragraphs, of the Comprehensive Pension System Law, establishes that each Administrator shall publish in two newspapers of national circulation within the first sixty days of each year, the financial statements of the company and of the Pension Fund it administers, referring to the accounting fiscal year corresponding to the immediately preceding year, subject to what the Technical Standards dictate for this purpose, establishing their publication periodicity. Such financial statements must be audited by external auditors registered in the registry of the Financial System Superintendence, and the publications must contain their opinion.
VIII. That Article 46, fourth paragraph, of the Comprehensive Pension System Law, establishes that each Administrator shall also publish in two newspapers of national circulation or through the means established in the Special Law Regulating the Obligation of Persons to Comply with the Principle of Publicity, the interim financial statements as of June 30 for both the company and the Funds it holds in administration.
IX. That Article 159, first paragraph, of the Comprehensive Pension System Law, establishes that the Central Bank of Reserve of El Salvador shall issue the Technical Standards and Resolutions necessary to allow the development of what is established in this Law.
X. That Article 99, letter c), of the Law on Supervision and Regulation of the Financial System, establishes that it corresponds to the Standards Committee of the Central Bank of Reserve, the approval of the Technical Standards for the elaboration, approval, presentation, and dissemination of the Financial Statements and supplementary information of the members of the financial system; the determination of accounting obligations and the principles in accordance with which they must keep their accounting; and the establishment of criteria for the valuation of assets, liabilities, and the constitution of provisions and reserves for risks.

THEREFORE, by virtue of the regulatory powers conferred by Article 99 of the Law on Supervision and Regulation of the Financial System, AGREES to issue the following:

ACCOUNTING MANUAL
FOR PENSION FUND ADMINISTRATORS

CHAPTER I
GENERAL PROVISIONS

OBJECTIVE

1.1 General Objective
To standardize the accounting registration of operations carried out by Pension Fund Administrators, for the generation of financial statements that reflect the financial situation and management results of the Administrators, as an instrument for information analysis and decision-making by the administrators of the Administrators, the public users of the services, and other interested parties.

1.2 Specific Objective
To have complete, timely, and homogeneous information on the financial and economic situation of the Administrators that contributes to decision-making by the affiliates and public users of the services provided by these Administrators.

SCOPE
The application of the Manual is mandatory for Pension Fund Administrators authorized by the Superintendence, for the management of their own operations.
The Manual consists of the General Provisions, the Chart of Accounts, the Accounting Applications Manual, and the Models of Financial Statements with their Notes.
TERMS

a) AEG: Special Guarantee Contribution; b) AFP: Pension Fund Administrators; c) Central Bank: Central Bank of Reserve of El Salvador; d) CIAP: Individual Savings Account for Pensions; e) FAPV: Voluntary Previsional Savings Fund; f) Fund: Pension Fund; g) IBC: Contribution Base Income; h) Law: Comprehensive Pension System Law; i) SP: Pension System; j) Superintendence: Financial System Superintendence; and k) Securities: Shares, debentures, and other securities.

CODIFICATION STRUCTURE
The codification structure has been created based on a system of codes and account denominations that contemplates different levels of classifications, distinguishing the following:
Class: Identified by the first digit
Section: Identified by the first two digits
Account: Identified by the first three digits
Subaccount: Identified by the first five digits Currency Type: Identified by the sixth digit Analytical Account: Identified from the seventh digit onwards

The codification system established up to the subaccount level uses five (05) digits; at the analytical account level, it uses more than seven digits, complemented by the sixth digit (M), which must always precede the use of analytical accounts, established to differentiate accounts by currency type and valuation accounts. The codes at the sixth digit level must be used as follows:
a) Used for operations in legal tender currency; b) Used for operations in foreign currency; c) Used for operations with valuation; and d) Used for operations with exchange rate differential.

CLASSIFICATION OF THE CHART OF ACCOUNTS
The defined classes comprise the sections, accounts, subaccounts, and analytical accounts, as established in the respective Chart of Accounts; and are the following:
Class 100 Assets
Class 200 Liabilities
Class 300 Equity
Class 400 Expenses
Class 500 Income
Class 600 Contingent Accounts and Commitments
Class 700 Control Accounts

The accounts contained in the Chart of Accounts do not constitute authorization to carry out the operations to which they refer; AFPs must adhere to the legal norms, regulations, and instructions issued for such effect. AFPs may not use new accounts or subaccounts without prior authorization from the Central Bank. However, they may open additional analytical accounts to those established in the Chart of Accounts, with the exception of analytical accounts intended to identify banking entities, financial entities, stock exchanges, issuers, and others.

Regarding investment accounts in securities such as 121, 122, and 123, subaccounts may be incorporated through the following procedure:

The AFP will notify the Superintendence and the Standards Committee of the Central Bank that it has acquired securities, detailing the following:
a) Name of the issuer; b) Date of acquisition and settlement; and c) Characteristics of the issuance.
Additionally, the AFP will request the Central Bank to assign the code and denomination of the corresponding subaccount.
The Central Bank will make the corresponding evaluation and, if the assignment of new subaccounts is necessary, will notify the AFP and the Superintendence of the code and denomination of the subaccount added to the Chart of Accounts and the Accounting Applications Manual, for immediate application.
The Financial Regulation Management of the Central Bank will proceed to compile the Manual incorporating the new subaccounts, publish them on the Central Bank's website, and then communicate them to the AFPs via circular signed by the Secretary of the Standards Committee of the Central Bank.
The Financial Regulation Management of the Central Bank will inform the Standards Committee of the Central Bank about the incorporations of the new subaccounts in the Session following the publication of the added subaccounts.
DENOMINATION AND CODIFICATION OF FINANCIAL SYSTEM INSTITUTIONS AND FOREIGN ENTITIES

Financial System Institutions and foreign entities must be identified with the codes presented in the attached table, which will be applied immediately after the last code determined in the Chart of Accounts for the corresponding account. When a new Institution or Issuer is incorporated, the Superintendence must be consulted to identify the code to be assigned; upon the withdrawal of any codified Institution, the corresponding code will be omitted.

Financial System Institutions and Foreign Entities

BANKS
Central Bank of Reserve of El Salvador 0101
Agricultural Bank, S. A. 0103
Cuscatlán Bank of El Salvador, S. A. 0104
Davivienda Salvadoran Bank, S. A. 0107
Mortgage Bank of El Salvador, S. A. 0108
Citibank, N. A., Branch El Salvador 0109
Agricultural Development Bank 0110
Atlántida Bank El Salvador, S. A. 0112
Promérica Bank, S. A. 0120
Bank of Central America, S. A. 0127
Abank Bank, S.A. 0130
Industrial Bank El Salvador, S. A. 0131
Azul Bank of El Salvador, S.A. 0132
Integral Support Bank, S.A. (3) 0133

INSURANCE AND BOND COMPANIES
Agrícola Comercial Insurance Co., S. A. 0601
Protege Seguros, S.A. 0602
Sura Insurance, S.A. 0603
MAPFRE La Centro Americana, S. A. 0606
Insurance and Investments, S. A. 0608
Pacific Insurance, S. A. 0609
Davivienda Commercial Bolívar Insurance, S. A. 0611 Pan American Life Insurance Company (El Salvador) 0613 The Central Insurance and Bond Company, S. A. 0614 Future Insurance, A. C. de R. L. 0615 Atlántida Vida, S.A., Life Insurance 0617 SISA, LIFE, S. A., Life Insurance 0619 Sura Insurance, S.A., Life Insurance 0620 Abank Insurance, S.A., Life Insurance 0622 Quálitas Insurance Company, S. A. 0623 ASSA Insurance Company, S. A. 0624 ASSA LIFE, S. A., Life Insurance 0625 Azul Vida Insurance, S. A., Life Insurance 0626 Azul Insurance, Insurance Company, S.A. 0627 Fedecrédito Insurance, S.A. 0628 Fedecrédito Life, S.A., Life Insurance 0629

BROKERAGE FIRMS
General Brokerage Services, S. A. de C. V. 0301 Hencorp S.A. de C.V. 0302 Banagrícola Securities, S. A. de C. V. 0303 Cuscatlán El Salvador Securities, S. A. de C. V. 0304 LAFISE Securities of El Salvador, S. A. de C. V. 0305 Cuscatlán SV Investments, S.A. de C.V. 0306 Davivienda El Salvador Securities, S.A. de C.V. 0307 Atlántida Securities, S. A., Brokerage Firm 0308 Sysvalores, S. A. de C. V. 0309 Azul Securities, S.A. de C.V. 0318

STOCK EXCHANGES
El Salvador Stock Exchange, S.A. de C.V. 0401

DEPOSIT AND CUSTODY OF SECURITIES
Central Securities Depository, S. A. de C.V. (CEDEVAL, S. A. de C. V.) 0501

FOREIGN INSTITUTIONS
FOREIGN BANKS
The Bank of New York Mellon 0701

OTHER FINANCIAL INSTITUTIONS
SAVINGS AND CREDIT COMPANIES
CREDICOMMER Savings and Credit Company, S.A. (1) 0702 MultiMoney Savings and Credit Company S.A. (2) 0703 Optima Savings and Credit Company, S.A. (4) 0705

COOPERATIVES (4)
Multi Inversiones Cooperative Bank of Workers, S.C. de R.L. de C.V. (4) 0802 First Bank of Workers, S.C. de R.L. de C.V. (5) 0806 Medical College Savings and Credit Cooperative Association of El Salvador de R.L. (5) 0807

In the case that an AFP expresses interest to the Superintendence in carrying out financial operations with a new national financial system institution or a foreign entity that is duly registered in the Registry kept by the Superintendence for such effects, new codes will be incorporated into the above table using the following procedure:
a) The AFP will notify the Superintendence and the Standards Committee of the Central Bank that it will carry out financial operations with a new institution, detailing the following:
i. Name of the institution; and
ii. Characteristic of the operation to be carried out.
b) Additionally, the AFP will request the Superintendence to assign the corresponding code and denomination. c) The Financial Regulation Management of the Central Bank, once received the notification from the Superintendence, will proceed to compile the Manual with the new assigned codes, publish it on the Central Bank's website, and communicate it to the AFPs via Circular signed by the Secretary of the Standards Committee of the Central Bank. d) The Financial Regulation Management of the Central Bank will inform the Standards Committee of the Central Bank about the incorporations in the Session following the publication of the added modifications.

ACCOUNTING RECORDS AND FILES

7.1 Recording, archiving, accounting documentation, and legalization of accounting books
The movement and balance of accounts will be recorded in the main books and that of subaccounts in auxiliary books as deemed necessary.
The main books that must be legalized are those indicated by the Commercial Code.
Accounting records must comply with what is established in Title II, Book Two, of the Commercial Code, insofar as applicable.

7.2 Financial Statements
The economic and accounting period will comprise from January 1 to December 31 of each year.
AFPs must prepare Financial Statements as of March 31, June 30, September 30, and December 31 of each year, which must contain the financial statements, the trial balance and its auxiliaries, reflecting the accounting movements of the AFP. AFPs must prepare and maintain the necessary auxiliaries that allow adequate information, taking the necessary precautions to be in conditions to generate at any time all financial and analytical reports. A copy of the balance files must remain at the entity available to the Superintendence.

7.3 Presentation and Publication of Financial Statements

The basic financial statements of AFPs are: The Balance Sheet, Statement of Results, Statement of Changes in Equity, Statement of Cash Flows, and the Notes to the Financial Statements, which are the only valid for all effects, whether for approval by the General Shareholders' Meeting, inclusion in the annual report, publication referred to in Article 46 of the Law, or for any other type of dissemination in the country or abroad.

AFPs must hire the services of an Independent External Audit to examine their financial statements, in accordance with the Technical Standards for the Registration of External Auditors of Members of the Financial System (NRP-16) and the Technical Standards for the Provision of External Audit Services (NRP-18) approved by the Central Bank through its Standards Committee. The basic financial statements of the AFP must contain the signatures of the Comptroller General, the General Manager or Financial Director or their proxy, and the President or legal representative of the AFP. (6) The signatures must be identified regarding the persons to whom they belong and their corresponding positions, considering that they imply the declaration that the information contained in the documents signed has been extracted from the legal and auxiliary books of the entity and verified for accuracy and integrity. In addition to the above, quarterly financial statements must be signed by the external auditor. Financial statements must be published with the following frequency and deadlines:
Period to Maximum publication deadline
June 30 Within 30 calendar days following the indicated date December 31 Within 60 calendar days following the indicated date

Additionally, the external auditor's report for each period, and the one with an opinion referred to December 31 of each year, must be published along with the financial statements and their notes, as established in Article 46 of the Law.

7.4 Annual Report
The closing financial statements of the economic and management fiscal year of the AFP must be included in the annual report to be presented at the General Shareholders' Meeting for approval, taking into account the following procedures:
a) The Board of Directors of each AFP must annually prepare the report, to submit it to the General Shareholders' Meeting for approval, within sixty days following the closing of the fiscal year. b) The report must be available to shareholders along with supporting documents, at least ten days in advance of the holding of the General Shareholders' Meeting. c) In addition to what is stated in the Commercial Code, the report must contain the external auditor's opinion on the financial statements. d) The report must be presented in such a way that it clearly reflects the financial and administrative situation of the AFP, as well as the results obtained in the past, present, and its projections according to the entity's experience, making a summarized evaluation of each of the most important sections, so as to allow the shareholder to have a clear image of the management carried out by the AFP. e) The content of the report will be analyzed by the Superintendence after its approval. For this purpose, AFPs will present it within the deadline provided in letter a) of this section.

7.5 Presentation of Financial Statements to the Superintendence

AFPs must present to the Superintendence their financial statements and those of the administered fund, duly approved, in the formats, deadlines, periodicity, and under the grouping norms established in this Manual. The financial statements presented to the Superintendence must be considered and approved as follows:
a) those referred to the end of each quarter, by the Board of Directors of the AFP; and b) those referred to December 31, by the Ordinary General Meeting of Shareholders in the first meeting held after their presentation, attaching the certification of the minutes of said meeting. In case of observations, these must be reported immediately to the Superintendence. The trial balance to be presented to the Superintendence must contain the balances at the level of the accounts included in the Chart of Accounts according to what is established in this Manual, incl

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