Accounting Manual for Reciprocal Guarantee Societies and Reinsurers of Reciprocal Guarantee Societies

NCSGR-001
RECIPROCAL AND REINSURERS OF RECIPROCAL GUARANTEE SOCIETIES Approval: 08/10/2003 Validity: 01/11/2003

The Board of Directors of the Superintendency of the Financial System, based on subsection c) of Article 10 of the Organic Law of the Superintendency of the Financial System, agrees to issue the following:

ACCOUNTING MANUAL FOR RECIPROCAL GUARANTEE SOCIETIES AND REINSURERS OF RECIPROCAL GUARANTEE SOCIETIES (1)

CHAPTER I
GENERAL PROVISIONS (2)

I. OBJECTIVES

1. General Objective
   The objective of this Manual is to provide authorized Reciprocal Guarantee Societies and Reinsurers of Reciprocal Guarantee Societies operating in the Republic of El Salvador with the technical instrument that allows them to standardize the accounting record of transactions and operations of an economic and financial nature, with the purpose of presenting financial statements that reflect the economic and financial situation at a specific date, the operating results, and cash flows that will serve for analysis and decision-making by administrators, owners, institutions responsible for their regulation and oversight, and other interested parties. (1)

This Manual is mandatory for all Reciprocal Guarantee Societies and Reinsurers of Reciprocal Guarantee Societies included in the Law of the Reciprocal Guarantee System for Micro, Small, and Medium Rural and Urban Enterprises. (1)

In the text of this Manual, the expression "societies" refers to Reciprocal Guarantee Societies and Reinsurers of Reciprocal Guarantee Societies. (1)

2. Specific Objectives
   a. Provide true, transparent, reliable, and timely accounting information to all users of the services provided by Reciprocal Guarantee Societies, Reinsurers of Reciprocal Guarantee Societies, and other interested parties. (1) b. Allow the Superintendency of the Financial System greater efficacy in the exercise of supervision of the societies that make up the Society of Guarantee System. (1)

II. GENERAL NORMS

1. Minimum requirements for accounting records
   Legal books must present accounts of up to six digits, and auxiliary books of up to ten digits. Additionally, what is established in Title II of Book Two of the Commercial Code must be complied with insofar as it does not oppose these norms.

2. Daily cutoff of operations for the recording of transactions
   Societies must perform the daily cutoff of their operations until the hour at which they ordinarily provide their services; however, they may perform it before the end of the working day, in which case transactions carried out after the cutoff will be recorded with the date of the next business day, and the corresponding accounting vouchers must be marked with the legend: "Extraordinary Service". The cutoff hour adopted by the society must be communicated to the Superintendency of the Financial System. (1)

3. Unforeseen operations
   DEROGATED (2)
   When any operation or transaction arises that is not provided for in this Manual, the entities must communicate it to the Central Bank, attaching the accounting criteria they intend to use, as well as the accounts to be used, describing the transaction or event and the reasons justifying the proposed treatment. Such communication must be sent physically or by means of an email duly signed by the responsible persons. (2) The Central Bank will analyze the request and if the proposed accounting application is appropriate and implies a modification of the Manual, the corresponding normative process will be activated for its approval. (2) Prior to the modification of the Manual, the entity must temporarily account for the operation or transaction in subaccounts corresponding to the category denominations identified by the entity, and when the Central Bank approves the aforementioned modification, the entity must reclassify the transaction to the accounts that have been approved for such effects. (2)

4. Purging of account balances
   Account balances must not contain data subject to confirmation, clarification, regularization, or definitive recording that depends on the society. (1)

5. Update
   Only the Central Reserve Bank of El Salvador, through the Standards Committee, may make changes to this Manual; however, societies may expand the accounts by disaggregating them beyond ten digits, provided that such expansion corresponds to the concept of the account. (1)

6. Responsibility for information
   Directors, managers, and employees responsible for the preparation or review of accounting information will be liable for errors, omissions, and irregularities contained therein. The information received by the Superintendency of the Financial System may be modified within the established deadline for its presentation; once this deadline has expired, it will be considered definitive; however, societies may request the respective substitution, justifying it appropriately. Notwithstanding being authorized to do so, the information will be considered received out of time for the pertinent legal effects. (1)

Account balances to be sent to the Superintendency of the Financial System include accounts of up to ten digits. When this entity requires it, it may request greater disaggregation of the accounts.

III. INTERNATIONAL ACCOUNTING STANDARDS
Societies must keep their accounting based on International Accounting Standards, using the most conservative option when the Standards Committee of the Central Bank has not expressed itself on any of the permitted options. In the event that the phenomenon, transaction, or accounting operation is not specifically regulated by said Standards or by the interpretations emanating from the Interpretations Committee thereof, the accounting must be carried out in accordance with International Accounting Standard No. 1. (1) (2)

International Accounting Standard No. 1 establishes that accounting policies are selected and adopted by the management (administration) of the entity.
DEROGATED (2)

IV. COMPONENTS OF THE MAIN CATEGORIES
In order to satisfy the information needs of the different users of the societies' financial statements, some categories have been subdivided so that it is feasible to obtain the institutional sectorization of the economy, as shown below: (1) 111 AVAILABLE FUNDS 112 TEMPORARY ACQUISITION OF DOCUMENTS 113 FINANCIAL INVESTMENTS 211 LOANS 212 OWN ISSUANCE TITLES 213 NEGOTIATED DOCUMENTS 911 COMMITMENTS ACQUIRED FOR GUARANTEES AND REINSURANCES GRANTED (1) 916 FINANCIAL INVESTMENT PORTFOLIO

The components and position of the aforementioned categories are described below:
01 CENTRAL RESERVE BANK
02 STATE ENTITIES
DEROGATED (2)
03 PRIVATE ENTERPRISE
(All natural and legal persons and other entities dedicated to productive activities) 04 INDIVIDUALS (All natural and legal persons and other entities dedicated to productive activities) 05 ENTITIES OF THE FINANCIAL SYSTEM Banks and Finance Companies DEROGATED (2) Insurance Companies DEROGATED (2) Securities Market DEROGATED (2) Pension System DEROGATED (2) Non-Bank Financial Intermediaries DEROGATED (2) Stabilization Funds Non-Governmental Organizations (NGOs) Official Credit Institutions (1) DEROGATED (2) Agencies or offices of information of foreign banks General Warehouses Foreign Currency Exchange Houses

Credit Card Issuers
Subsidiaries of non-bank financial intermediaries and insurance companies Deposit Guarantee Institute

V. SYSTEM FOR VALIDATION OF ACCOUNTING INFORMATION
The object of the validators described below is that the accounting information provided to the Superintendency of the Financial System satisfies the minimum standards of consistency and quality that allow it to fulfill its purposes.

The validators of the accounting information are as follows:

1. The accounting equation is composed of the following elements:
   Asset + Contingent Rights = Liability + Equity + Contingent Commitments + Results 1+ 4 = 2 + 3 + 5+ (6 - 7 - 8)

2. Accounts starting with digits 1, 4, 7, and 8 must have a debit balance, except the following:
   a) 1129 Provision for losses; b) 1139 Provision for investment risks; c) 1149 Provision for unfulfilled payment agreements; d) 1229 Pending registered surpluses to be received; e) 1259 Provision for uncollectibility of accounts receivable; f) 1329 Accumulated depreciation; g) 1349 Accumulated depreciation of Financial Leased Assets; h) 4119 Provision for losses of guarantee contingencies; and, i) 4129 Provision for losses of reinsurance contingencies.

3. Accounts starting with digits 2, 3, 5, and 6 must have a credit balance, except the following:
   a) 3150010201 Prior years' results losses; b) 3150020201 Current year's results losses.

4. Accounts representing contingent rights, contingent commitments, must maintain the following equality:
   51 - 41 = 4129 (Taking the absolute values of their balances)

5. The balance of account 3140000100 Legal Reserve must not vary from January to December 30 of each year.

6. The balance of account 1259 Provision for uncollectibility of accounts receivable must not be higher than that of account 1250 Accounts receivable.

7. Account 315002 "Current Year's Results" must be zero throughout the year except in December.

VI. DESCRIPTION OF THE CODIFICATION METHOD
The accounting code has been structured distinguishing the following levels:
1 2 3 4 5 6 7 8 9 10

1. First digit
The first digit identifies the element of accounting, as follows:
1. Asset
2. Liability
3. Equity
4. Contingent Rights
5. Contingent Commitments
6. Income
7. Costs
8. Expenses
9. Off-Balance Sheet Accounts

MONETARY UNIT
SUBACCOUNT
POSITION IN CATEGORY
CHARACTERISTIC
AGGREGATION CATEGORY
CLASSIFICATION
ELEMENT
DIGIT

2. Second digit
   Identifies the classification of each of the aforementioned elements, as follows:
   1.1 Current Assets
   1.2 Other Assets
   1.3 Fixed Assets
   2.1 Financing Sources
   2.2 Other Liabilities
   3.1 Equity
   3.2 Restricted Equity
   4.1 Contingent Rights
   5.1 Contingent Commitments
   6.1 Operating Income
   6.2 Non-Operating Income
   7.1 Operating Costs
   7.2 Other Operating Costs
   8.1 Operating Expenses
   8.2 Non-Operating Expenses
   8.3 Direct Taxes
   9.1 Financial Information
   9.2 Financial Information by Contra
   9.3 Other Off-Balance Sheet Accounts by Contra

3. Third digit
   Corresponds to the aggregation category, and identifies the position of this within each of the aforementioned classifications, for example:
   Code Names Meaning
   11 Current Assets
   111 Available Funds
   113 Financial Investments
   First category of current assets
   Third category of current assets

4. Fourth digit
   Is a position used to indicate a specific characteristic of the category; consequently, each digit has a particular meaning, the meanings are:
   0 = Used when it is not necessary to indicate any characteristic 1 = Balances agreed up to one year term 2 = Balances agreed for more than one year term 3 = Balances agreed for 5 or more years term 4 = Balances with no determined term 5 = (Available for future use) 6 = (Available for future use) 7 = (Available for future use) 8 = Overdue balances 9 = Valuation category (Provisions for risks, probable losses or uncollectibility, and accumulated depreciation)

In conclusion: The category will always have four digits, even if it is not necessary to distinguish any characteristic.
Some examples are:
Code Names Meaning
1110 Available Funds First category of "Current Assets" (In this case it is not necessary to distinguish any characteristic) 1121 Temporary Acquisition of Documents - Documents Up to One Year Term The number one in the fourth position indicates the term of the documents, in this case, up to one year term. 1128 Temporary Acquisition of Documents - Overdue Documents The number eight in the fourth position indicates that the documents are overdue. 1129 Temporary Acquisition of Documents - Provision for losses The number nine in the fourth position indicates that it is a provision for probable loss.

5. Fifth and sixth digits
   Correspond to the account and identify its position within each category, as follows:
   Code Names Meaning
   1110 Available Funds
   111001 Cash First account of the Available Funds category.
   111002 Bank Deposits Second account of the Available Funds category.

Because two digits are used to identify accounts, these can reach up to a number of ninety-nine; which gives flexibility to the catalog for future expansions. The maximum number of accounts within a category, in this Catalog, is nine.

6. Seventh and eighth digits
   Correspond to the subaccount, and identify its position within each account, as follows:
   Code Names Meaning
   1110 Available Funds
   111001 Cash First account of the Available Funds category 11100101 General Cash First subaccount of the Cash account 1240 Expenses Paid in Advance and Deferred Charges 124001 Insurance First account of the "Expenses Paid in Advance and Deferred Charges" category 12400101 On Persons First subaccount of the "Insurance" account

Because two digits are used to identify subaccounts, these can reach up to a number of ninety-nine; which gives flexibility to the catalog for future expansions. The position 99, always indicates the existence of a subaccount that represents interest to be received or paid, as appropriate. In the Chart of Accounts, the maximum number of subaccounts within an account is nine. In addition to the two aforementioned digits, each subaccount contains two others, which are used to specify a characteristic, as explained in the following paragraphs.

7. Ninth and tenth digits
   Is a position used to differentiate the type of currency that represents the balance of the subaccount.
   The meanings of the digits are:
   00 = Used when it is not necessary to distinguish the type of currency 01 = Local Currency 02 = Foreign Currency

To abbreviate the aforementioned names and facilitate reading the chart of accounts, the abbreviations ML and ME have been added after the name of each subaccount, which mean Local Currency and Foreign Currency, respectively. The first abbreviation designates the United States dollar, and the second, all those currencies different from the United States dollar and the Salvadoran colón.

VII. CHART OF ACCOUNTS FOR RECIPROCAL GUARANTEE SOCIETIES AND REINSURERS OF RECIPROCAL GUARANTEE SOCIETIES (Excel Attachment) (2)

VIII. DESCRIPTION OF CONCEPTS RELATED TO THE USE OF ACCOUNTS

CODES NAMES
11 Current Assets
1110 Available Funds
111001 Cash
This account represents liquid assets with immediate availability, such as General Cash and Petty Cash, both in local currency and foreign currency.

CODES NAMES
111002 Deposits in Financial Institutions (1)
In this account are represented the balances of demand and time deposits that the institution maintains in the different banks of the System together with the interest generated by such deposits, according to the corresponding subaccounts.

CODES NAMES
11 Current Assets
112 Temporary Acquisition of Documents
1121 Documents Acquired up to One Year Term
112101/06 Repo Operations
These accounts must represent the value of the rights acquired by repo operations carried out based on the rules established in the Commercial Code. The perfection requirements required by said Code are:
a) If they are bearer titles, the simple material delivery of the document. b) If they are order titles, the material delivery of the document duly endorsed. c) If they are registered titles, the material delivery of the document duly endorsed and the registration of the change of holder in the issuer's books.

CODES NAMES
112107 Stock Market Operations
This account must represent the value of the rights acquired by stock market transactions called repos.

CODES NAMES
11 Current Assets
112 Temporary Acquisition of Documents
1128 Overdue Documents
The accounts in this category must represent the value of documents whose agreed term has expired.

CODES NAMES
112900 Provision for Losses
This account must represent the value of the estimated losses that the society might incur due to the acquisition of the documents registered in this category. The balance of this account is credit, therefore, it is deducted from the corresponding category.

CODES NAMES
11 Current Assets
113 Financial Investments
1130 Financial Investments
113001 Securities Held for Trading
In this account, the society's securities that have the characteristic of being held exclusively for trading must be accounted for, according to the classification of the categories of financial assets made by International Accounting Standard 39 (IAS 39) and, in addition, that they can be freely transferred.

CODES NAMES
113002 Transferred Securities
In this account, documents or securities transferred in the character of repo or stock market operations, originating from accounts 113001 and 113004, must be accounted for.

CODES NAMES
113003 Securities Held to Maturity
In this account, the securities that the society intends to hold until their maturity must be registered, according to the classification of the categories of financial assets made by International Accounting Standard 39 (IAS 39).

CODES NAMES
113004 Securities Available for Sale
In this account, the securities owned by the society that are not in the aforementioned classifications, but are available for sale, must be registered, according to the classification of the categories of financial assets made by International Accounting Standard 39 (IAS 39); likewise, that they have the characteristic of being freely transferable.

CODES NAMES
1138 Overdue Investments
The accounts in this category must represent the value of securities held for trading, held to maturity, and available for sale, whose agreed terms have expired or have been favored in draws and which for various reasons have not been paid to the society.

CODES NAMES
1139 Provision for Investment Risk
This account must represent the estimated value of losses that the society might incur due to investment in securities registered in this category. The balance of this account is credit, therefore it must be reduced from the category to which it belongs. The classification of these investments, according to the categories of financial assets of International Accounting Standard 39 (IAS 39), is as follows:
a) Held for trading, b) Held to maturity, and c) Available for sale.

CODES NAMES
11 Current Assets
114 Obligations of Participating Partners for Honored Guarantees 1141 Payment Agreements up to One Year 1142 Payment Agreements for more than One Year In this category and accounts, the values derived from agreements agreed upon between the Participating Partners and the Guarantee Societies, for debts honored in total or partial by these to financial institutions as a result of non-payment by them, must be accounted for, in accordance with the respective terms.

CODES NAMES
1148 Unfulfilled Payment Agreements
This account must represent the values of unfulfilled payment agreements by the Participating Partners, derived from agreements between them and the Reciprocal Guarantee Society.

CODES NAMES
1149 Provision for Payment Agreements
This account must register the provisions constituted for unfulfilled payment agreements by the Participating Partners. Such provisions can be by risk categories, voluntary, or for portfolio management risks.

CODES NAMES
12 Other Assets
122 Assets Received in Payment or Adjudicated
122001/03 Assets Received in Payment or Adjudicated In these accounts, assets that the society has received as a result of judicial actions, voluntary assignments, purchases, etc., in payment of debts owed by guaranteed participating partners or other debtors, must be registered.

CODES NAMES
12 Other Assets
122 Assets Received in Payment or Adjudicated
1229 Pending Registered Surpluses to be Received In this category and accounts, the surpluses in favor of the Guarantee Society, resulting from the comparison between the value of the debts owed by the Participating Partner and the value of the asset received in payment by dation, accounted for in account 1220 "Assets Received in Payment or Adjudicated", must be accounted for. This category and accounts are of a credit nature (complementary account), therefore, they must be subtracted from the corresponding asset category. This account must be charged only when the extraordinary asset has been sold, reclassified, or destroyed.

CODES NAMES
1230 Inventories

NCSGR-001
ACCOUNTING MANUAL FOR RECIPROCAL GUARANTEE SOCIETIES AND REINSURERS OF RECIPROCAL GUARANTEE SOCIETIES Approval: 08/10/2003 Validity: 01/11/2003

This item must represent the acquisition value of the different goods used for sale and for the development of business management, such as stationery, supplies, furnishings, etc.

CODES NAMES
1240 Prepaid Expenses and Deferred Charges

The accounts in this item must represent the proportional value of current insurance premiums, prepaid rents, and other concepts corresponding to each account in this item.

Regarding organization expenses, they must be recorded in this account only when establishment expenses are part of the cost of an element of property, plant, and equipment, in accordance with what is established by IAS 16 "Property, Plant and Equipment"; in any other cases, such as research costs, start-up costs, pre-opening expenses, training activity expenses, legal and administrative costs for the legal recognition of the Society, advertising and other promotional expenses, relocation or reorganization expenses, must be recorded in the respective income statement accounts in the period in which they are incurred.

The values of computer programs that must be recorded in this item are those that are not essential for the operation of the equipment and that meet the identifiability, control, and future economic benefits requirements established in IAS 38; the others must be recorded as fixed assets and treated in accordance with IAS 16.

CODES NAMES
1250 Accounts Receivable

In the accounts of this item, operations derived from accrued income pending payment by the society's debtors must be recorded, such as commissions, surcharges, payments on behalf of others, advances, rights with the reinsurer, Reciprocal Guarantee Societies, Insurance Societies, and Reinsurers, etc. (1)

CODES NAMES
1259 Provision for Uncollectible Accounts Receivable

This item must represent the estimate of uncollectibility of the accounts in this item; its balance is a credit balance, therefore, it is presented reducing the item to which it belongs.

CODES NAMES
1260 Rights and Participations

NCSGR-001
ACCOUNTING MANUAL FOR RECIPROCAL GUARANTEE SOCIETIES AND REINSURERS OF RECIPROCAL GUARANTEE SOCIETIES Approval: 08/10/2003 Validity: 01/11/2003

The accounts in this item must represent the value of investments in societies permitted by law, such as funds for employee pantry and other types of participations.

CODES NAMES
13 Fixed Assets
1310 Non-Depreciable

The accounts in this item must represent the value of goods that by their nature are not subject to depreciation or because they are not being used temporarily.

CODES NAMES
1320 Depreciable

The accounts in this item must represent the value of goods that the society uses for the development of its business. They must be goods that are subject to loss of value due to use, the action of time, or obsolescence. In this item, computer programs must be recorded on which the hardware depends for its operation, such as operating systems; the remaining programs must be recorded in item 1240 Prepaid Expenses and Deferred Charges.

CODES NAMES
1329 Accumulated Depreciation

This item must represent the value of the depreciation of all fixed assets; its balance is a credit balance, therefore, it is presented reducing the item to which it belongs.

CODES NAMES
1330 Amortizable

The accounts in this item must represent the value of constructions and other concepts that by their nature have no residual value. The constructions registered in this account are not those that increase the useful life of the asset.

Remodeling carried out on leased assets must be amortized over a period not exceeding that corresponding to the lease contract or the useful life, whichever is shorter.

CODES NAMES
1341 Assets Received under Finance Lease

NCSGR-001
ACCOUNTING MANUAL FOR RECIPROCAL GUARANTEE SOCIETIES AND REINSURERS OF RECIPROCAL GUARANTEE SOCIETIES Approval: 08/10/2003 Validity: 01/11/2003

This account must represent the value of assets received under finance lease by the society. The accounting record of these assets must be made in accordance with International Accounting Standard 17; therefore, the value to be registered must be the lower between the fair value of the asset and the present value of the minimum lease payments. In the latter case, the discount factor or rate will be the implicit interest rate in the lease, provided it can be determined; otherwise, the incremental interest rate of the loans held by the lessee society must be taken. (1)

CODES NAMES
1349 Accumulated Depreciation of Assets under Finance Lease

This item must represent the value of the depreciation of depreciable assets received under finance lease by the society; its balance is a credit balance and therefore, it must be presented reducing the corresponding item. (1)

CODES NAMES
21 Financing Sources
211 Loans
2111 Loans Agreed for up to One Year Term

In this item, loans agreed for up to one year term, owed by the society and in favor of banks, State entities, Financial System entities, foreign entities, and other creditors, must be recorded.

CODES NAMES
2112 Loans Agreed for more than One Year and Less than Five Years Term

In this item, loans agreed for more than one year and less than five years term, owed by the society and in favor of banks, State entities, Financial System entities, foreign entities, and other creditors, must be recorded.

CODES NAMES
2113 Loans Agreed for Five or More Years Term (2)

In this item, loans agreed for five or more years, owed by the society and in favor of banks, State entities, Financial System entities, foreign entities, and other creditors, must be recorded. (2)

CODES NAMES
21 Financing Sources

NCSGR-001
ACCOUNTING MANUAL FOR RECIPROCAL GUARANTEE SOCIETIES AND REINSURERS OF RECIPROCAL GUARANTEE SOCIETIES Approval: 08/10/2003 Validity: 01/11/2003

212 Own Issuance Securities

This item must represent the value of the society's obligations from the issuance of securities, according to the terms indicated in the corresponding accounts and as established in the Commercial Code.

CODES NAMES
213 Negotiated Documents
2131 (1) Negotiated Documents Up to One Year Term

The accounts in this item must represent the amount of obligations contracted through repo operations, according to the rules established in the Commercial Code or through stock exchanges.

CODES NAMES
22 Other Liabilities
221 Accounts Payable
2210 Accounts Payable

The accounts in this item must represent the obligations for the concepts described by each of the accounts and sub-accounts.

Account 221001 Dividends and Participations must represent the society's obligations for dividends agreed to be distributed to partners and for employee participation in profits. The accounting vouchers generated by distributions and participations must be recorded with the date of the general meeting of partners where such distribution was approved.

Account 221003 must represent the value of the income tax payable by the institution for obtaining taxable profits. This account is credited with monthly increases in the balance of account 831000 Income Taxes and debited with monthly decreases thereof and when the tax is paid.

CODES NAMES
222 Obligations under Finance Leases
2221 Short-term Obligations under Finance Leases 2222 Long-term Obligations under Finance Leases

Obligations under Finance Leases must represent the fair value of finance leases received by the society, in accordance with the respective accounts and sub-accounts and in accordance with International Accounting Standard 17. (1)

NCSGR-001
ACCOUNTING MANUAL FOR RECIPROCAL GUARANTEE SOCIETIES AND REINSURERS OF RECIPROCAL GUARANTEE SOCIETIES Approval: 08/10/2003 Validity: 01/11/2003

CODES NAMES
2230 Withholdings

The accounts in this item must represent the value of withholdings made to the institution's personnel and third parties, for the different concepts described in the respective account and sub-accounts.

CODES NAMES
2240 Provisions
224001 Labor Provisions

This account must represent the value of the different labor obligations, for example: a) accrued and unpaid vacations, whether because the employee has not fulfilled the required working time or because they have not taken them. This balance must be composed of the salary portion corresponding to the vacation period and the corresponding surcharge; b) benefits with the character of gratification that are provided for in favor of personnel and Christmas bonuses that, in accordance with the Law, custom, or collective contract, are provided for; c) the estimate to pay dismissal indemnities, according to the Labor Code or internal entity norms; d) the retirement premium, according to each institution's policies; and, e) the labor obligation in favor of persons retired or pensioned by the society. (1)

CODES NAMES
224002 Provisions for Contingencies

This account must represent the values that the society has estimated to pay to third parties in judicial litigation or contingencies of another nature, according to its foresight criteria and International Accounting Standard 37.

CODES NAMES
224099 (1) Other Provisions

In this account, provisions that are not included in the previous classifications must be recorded.

CODES NAMES
225 Deferred Credits
2250 Deferred Credits

In this item, according to the respective accounts and sub-accounts, unearned income received from guarantees, re-guarantees, and other operations must be recorded;

NCSGR-001
ACCOUNTING MANUAL FOR RECIPROCAL GUARANTEE SOCIETIES AND REINSURERS OF RECIPROCAL GUARANTEE SOCIETIES Approval: 08/10/2003 Validity: 01/11/2003

likewise, for temporary differences in income tax. The corresponding amortizations must be carried out as accrual occurs. (1)

CODES NAMES
31 Equity
311 Paid-in Share Capital
3110 Paid-in Share Capital
311001 Fixed Capital
311002 Variable Capital

In this account, the value of the ownership of the social participations of the society's partners must be recorded. The value of the partners' participations will be as determined in the society's bylaws. The minimum share capital of these societies cannot be lower than that mentioned in articles 55 and 82 of the Law of the Reciprocal Guarantee System for Micro, Small, and Medium Rural and Urban Enterprises. (1)

For the case of Reciprocal Guarantee Societies, the share capital will be integrated by the contributions of protective and participating partners and will be variable between a fixed minimum amount, determined in the society's bylaws, and up to triple that amount. The participation of partners, both Protective and Participating, will be in both classes of capital. (1)

CODES NAMES
3120 Capital Reserves

In this item, capital reserves that are required by law to be charged to the society must be accounted for; likewise, those that have been stipulated in the bylaws or those established voluntarily.

Regarding sub-account 3120000100 Legal Reserve, its accounting must be carried out at the close of the fiscal year.

CODES NAMES
313 Technical Provisions Fund
3130 Technical Provisions Fund

This item must represent the Technical Provisions Fund referred to in article 29 of the Law of the Reciprocal Guarantee System for Micro, Small, and Medium Enterprises, according to the respective accounts and sub-accounts.

CODES NAMES
3150 Results to Apply

NCSGR-001
ACCOUNTING MANUAL FOR RECIPROCAL GUARANTEE SOCIETIES AND REINSURERS OF RECIPROCAL GUARANTEE SOCIETIES Approval: 08/10/2003 Validity: 01/11/2003

In this item, accumulated results generated in previous fiscal years as well as the net result of the current fiscal year that has not been distributed or applied to other purposes must be represented. If there is an accumulated surplus balance and losses are recorded in another fiscal year or vice versa, they must be presented separately, without any compensation, unless the institution's partners decide to absorb the losses with accumulated profits.

The balance of the "Current Year Results" account must be transferred to "Previous Years' Results" at the beginning of a new year.

CODES NAMES
32 Restricted Equity
321 Undistributable Profits
3210 Undistributable Profits
321000 Undistributable Profits

In this account, profits that have not been received must be accounted for, segregating them from the total profits of the fiscal year, for the purpose of separating profits that will be available for distribution.

CODES NAMES
32 Restricted Equity
323 Provisions
3230 Provisions
323001 For Assets Received in Payment or Adjudicated

In this account, reserves that are constituted for extraordinary assets that have been owned by the society for more than two years or two years plus an 180-day extension, according to what is established in the first and second paragraphs of article 61 of the Law of the Reciprocal Guarantee System for Micro, Small, and Medium Enterprises, must be accounted for.

These provisions are constituted against the expenses of the accounting fiscal year and are released when the society transfers the asset or is authorized by the Superintendence to retain it.

CODES NAMES
32 Restricted Equity
323 Provisions
3230 Provisions
323002 Reserves for General Risks

NCSGR-001
ACCOUNTING MANUAL FOR RECIPROCAL GUARANTEE SOCIETIES AND REINSURERS OF RECIPROCAL GUARANTEE SOCIETIES Approval: 08/10/2003 Validity: 01/11/2003

In this account, reserves that the society constitutes for risks in excess of potential risks in the granting of guarantees, accepted re-guarantees, or other operations must be accounted for. (1)

CODES NAMES
32 Restricted Equity
324 Recoveries of Charged-off Assets

In this item, the value of assets obtained as recoveries of assets that were charged off in past fiscal years must be represented, according to the corresponding account and sub-accounts.

CODES NAMES
32 Restricted Equity
325 Donations

In this account, donations in cash, furniture, or real estate made by any organization or person to the society to be used for the benefit of the productive activities of the entity's partners must be accounted for. (1)

CODES NAMES
41 Contingent Rights
411 Contingencies for Guarantees
412 Contingencies for Re-guarantees

The accounts in this item must represent the potential risks that the society has due to the granting of guarantees in favor of micro, small, and medium enterprises or due to accepted re-guarantees in favor of Reciprocal Guarantee Societies. (1)

CODES NAMES
4119 Provision for Losses
4129 Provision for Losses

This account must represent the total estimate for possible losses in granted guarantees or accepted re-guarantees. The balance of this account is a credit balance, therefore, it is presented reducing the item to which it belongs. (1)

CODES NAMES
51 Commitments for Contingencies
511 Contingencies for Guarantees

NCSGR-001
ACCOUNTING MANUAL FOR RECIPROCAL GUARANTEE SOCIETIES AND REINSURERS OF RECIPROCAL GUARANTEE SOCIETIES Approval: 08/10/2003 Validity: 01/11/2003

The accounts in this item must represent the net re-guarantee contingent obligations contracted by the entity when acting as guarantor for micro, small, and medium enterprises, according to the respective accounts and sub-accounts. For such purposes, this account will be divided into sub-accounts 5111 "Active Risk for Guarantees" and 5112 "Re-guaranteed Risk", where the first will record the net commitment of the Guarantee Society and the other, the risk covered by re-guarantee.

CODES NAMES
51 Commitments for Contingencies
512 Contingencies for Re-guarantee

The accounts in this item must represent the contingent obligations of the Reinsurer for re-guarantees granted to Reciprocal Guarantee Societies. (1)

For such purposes, this account will be divided into sub-accounts 5121 "Active Risks for Accepted Re-guarantees" and 5122 "Re-guaranteed Risk with other Reinsurers", where the first will record the Reinsurer's commitment and the other, the risk transferred to other reinsurers. (1)

CODES NAMES
61 Income from Core Operations
611 Income from Core Operations
6110 Income from Core Operations
611001 From the Granting of Guarantees

In this account, all income derived from the granting of guarantees must be recorded, such as interest, commissions, and other types of related income.

611002 Income from Service Provision

In this account, income derived from training, consulting, financial advisory, etc., services provided to the Participating Partners of the Reciprocal Guarantee Society must be accounted for.

611003 Income from Granting Re-guarantees (1)

In this account, all income derived from the granting of re-guarantees must be recorded, such as commissions and other types of related income. (1)

CODES NAMES
62 Income from Other Operations
621 Income from Other Operations
6210 Investment Portfolio

NCSGR-001
ACCOUNTING MANUAL FOR RECIPROCAL GUARANTEE SOCIETIES AND REINSURERS OF RECIPROCAL GUARANTEE SOCIETIES Approval: 08/10/2003 Validity: 01/11/2003

621001 Income from Securities Investments

In this account, income derived from investments in securities must be recorded, whether held for trading, held to maturity, or available for sale, in accordance with the classification of the respective sub-accounts.

621002 Repos

In this account, income generated by financings granted through repos must be accounted for, according to the respective sub-accounts.

621003 Interest on Deposits

In this account, income derived from the placement of deposits in financial institutions supervised by the Superintendence of the Financial System must be recorded.

CODES NAMES
63 Non-Operational Income
631 Non-Operational Income
6310 Non-Operational Income
631001 Income from Agreements on Payment of Honored Guarantees

In this account, interest and other types of income derived from agreements between Reciprocal Guarantee Societies and Participating Partners, for non-payment of debts of the latter with financial entities that have been honored by said Society, must be recorded.

CODES NAMES
631002 Income from Previous Fiscal Years

This account must represent income derived from operations of previous fiscal years from recoveries of values, guarantees, re-guarantees, financial investments, expense recoveries, release of provisions, etc. (1)

CODES NAMES
631003 Gain on Sale of Assets

In this account, income derived from the sale of fixed and extraordinary assets of the Guarantee Society must be accounted for.

CODES NAMES
631004 Income from Asset Exploitation

NCSGR-001
ACCOUNTING MANUAL FOR RECIPROCAL GUARANTEE SOCIETIES AND REINSURERS OF RECIPROCAL GUARANTEE SOCIETIES Approval: 08/10/2003 Validity: 01/11/2003

This account must represent income derived from the exploitation of fixed or extraordinary assets owned by the Guarantee Society.

CODES NAMES
631005 Dividends

This account must represent the value of income obtained in the concept of dividends, distributed by the companies in which patrimonial investments are maintained.

CODES NAMES
631006 Income from Temporary Differences in Income Tax

In this account, income derived from temporary differences in income tax must be recorded, as mentioned in International Accounting Standards.

CODES NAMES
631007 Reversal of Asset Impairment Values

In this account and corresponding sub-accounts, reversals of asset impairments generated in the fiscal year must be accounted for, whether because they no longer exist or have decreased, according to internal and/or external information mentioned in International Accounting Standard 36.

CODES NAMES
631008 Honored and Recovered Re-guarantees (1)

In this account, interest and other types of income derived from honored and recovered re-guarantees must be recorded. (1)

CODES NAMES
631099 Others

This account must represent income obtained that does not correspond to the business core and is not found in the classifications of the previous accounts.

CODES NAMES
7 Costs

NCSGR-001
ACCOUNTING MANUAL FOR RECIPROCAL GUARANTEE SOCIETIES AND REINSURERS OF RECIPROCAL GUARANTEE SOCIETIES Approval: 08/10/2003 Validity: 01/11/2003

71 Core Operations Costs
7110 Core Operations Costs
711001 Granting of Guarantees

In this account, all costs derived from the granting of guarantees to the Participating Partners of the society must be accounted for.

CODES NAMES
711002 Cost for Service Provision (2)

In this account, all costs incurred by the Guarantee Society for the provision of services to its Participating Partners must be accounted for. (1)

CODES NAME
711003 Re-guarantees Guarantees

In this account, costs derived from re-guarantees for guarantees granted to the Participating Partners of the Reciprocal Guarantee Society must be accounted for. In the case of Reinsurers, in this account, all costs derived from re-guarantee operations carried out with other reinsurers, such as premiums, commissions, or others, must be accounted for. (1)

CODES NAMES
711004 Accepted Re-guarantees (1)

In this account, all costs derived from accepted re-guarantee operations with Reciprocal Guarantee Societies must be accounted for. (1)

CODES NAMES
7 Costs
71 Core Operations Costs
712 Cleanings and Write-offs
7120 Cleanings and Write-offs
712001 Cleaning for Guarantees

In this account, cleanings of doubtful, honored, etc. guarantees that the Guarantee Society has granted to financial institutions to guarantee obligations of its Participating Partners must be accounted for. In the case of Reinsurers, cleanings of honored re-guarantees must be accounted for. (1)

NCSGR-001
RECIROCAL AND REINSURERS OF RECIPROCAL GUARANTEE SOCIETIES Approval: 08/10/2003 Validity: 01/11/2003

CODES NAMES
712002 Write-off of Assets
In this account, write-offs for unfulfilled obligations of Partner Members to the Reciprocal Guarantee Society must be recorded. These obligations originate from unpaid loans by Partner Members to financial institutions that had to be honored by the Guarantee Society, by virtue of guarantees in favor of said institutions. In the case of Reinsurers, write-offs for unfulfilled obligations of Reciprocal Guarantee Societies due to accepted reinsurance must be recorded. (1)

CODES NAMES
7 Costs
72 Costs of Other Operations
721 Costs of Other Operations
721001 Loans
In this account, financial costs for financing received by the society from financial institutions must be recorded, in accordance with the corresponding sub-accounts. (1)

CODES NAMES
721002 From Other Creditors
In this account, costs derived from financing from other institutions must be recorded, in accordance with the corresponding sub-accounts.

CODES NAMES
721003 Own Issuance Securities
In this account, costs derived from the issuance of securities must be recorded, in accordance with the corresponding sub-accounts.

CODES NAMES
721004 Losses from Price Differences
In this account, losses from price differences in the sale, negotiation of securities, or price adjustments must be recorded, in accordance with the corresponding sub-accounts.

CODES NAMES
721005 Repos

NCSGR-001
RECIROCAL AND REINSURERS OF RECIPROCAL GUARANTEE SOCIETIES Approval: 08/10/2003 Validity: 01/11/2003

In this account, costs incurred for repo obligations in favor of other entities must be recorded, in accordance with the corresponding sub-accounts.

CODES NAMES
721006 Reserves
This item must represent the value of reserves established during the accounting period. It is debited for increases to reserves and credited for decreases to reserves established in the current period.

CODES NAMES
721007 Written-off Assets
This item must represent the value of write-offs (derecognition) of financial investments and other investments, in accordance with the corresponding sub-accounts.

CODES NAMES
81 Operating Expenses
8110 Expenses for Officials and Employees
811001 Remuneration
This account must represent expenses for ordinary and extraordinary salaries paid to the institution's staff. (1) Ordinary or extraordinary services rendered by officials or employees to the society must be considered as salary; therefore, what they accrue in terms of vacations, severance, and other similar benefits must be recorded in the corresponding accounts. (1)

CODES NAMES
811002 Staff Benefits
This account must represent the value of benefits paid to staff, as described in the corresponding sub-accounts.

CODES NAMES
811003 Staff Indemnities
In this account, provisions and payments made by the society to staff for dismissal and temporary disability indemnities must be recorded, in accordance with its accounting policies. (1)

CODES NAMES
811004 Board Expenses
Expenses generated by the society's board of directors in the exercise of their management functions must be recorded in this account.

CODES NAMES
811005 Pensions and Retirement
In this account, charges for the estimation of pensions and retirement benefits for the society's staff must be recorded, in accordance with its policies. (1)

CODES NAMES
811006 Other Staff Expenses
Other staff expenses of the society not included in the previous classifications must be recorded in this account, in accordance with the corresponding sub-accounts. (1)

CODES NAMES
8120 General Expenses
The accounts in this item must represent expenses incurred by the society, according to the detail of accounts and sub-accounts.
These accounts must be affected by the disbursements and provisions that correspond.

CODES NAMES
8130 Depreciations and Amortizations
The accounts in this item must represent the loss of value of fixed asset goods or other goods, whether by depreciation or amortization. This item also includes goods received under financial leases by the society, in accordance with the respective detail of accounts and sub-accounts. (1)

CODES NAMES
82 Non-Operating Expenses

NCSGR-001
RECIROCAL AND REINSURERS OF RECIPROCAL GUARANTEE SOCIETIES Approval: 08/10/2003 Validity: 01/11/2003

8210 Expenses from Previous Periods
The accounts in this item must represent insignificant expenses left unprovided for in the current period due to some error and not by deliberate action.

CODES NAMES
8220 Loss on Sale of Assets
The accounts in this item must represent the value of losses caused by the sale of fixed asset goods and extraordinary assets.

CODES NAMES
8230 Expenses from Asset Exploitation
The accounts in this item must represent the expenses necessary to generate income from the exploitation of fixed assets and extraordinary assets.

CODES NAMES
8240 Write-offs of Goods Received in Payment or Adjudicated This item must represent losses in "Extraordinary Assets" that have been owned by the entity for more than two years or after the extension granted by the Superintendence, as stipulated in the second paragraph of Article 61 of the Law of the Reciprocal Guarantee System for Micro, Small, and Medium Rural and Urban Enterprises.

CODES NAMES
8250 Expenses from Temporary Tax Differences on Income Temporary expenses for income taxes must be recorded in this account, as mentioned in the International Accounting Standards (IAS).

CODES NAMES
8260 Losses from Contingencies
Contingencies for losses regulated in the International Accounting Standards (IAS); understood as such, possible or present obligations arising from past events, derived from future and uncertain facts that are not entirely under the control of the society. (1)

NCSGR-001
RECIROCAL AND REINSURERS OF RECIPROCAL GUARANTEE SOCIETIES Approval: 08/10/2003 Validity: 01/11/2003

CODES NAME
8270 Asset Impairment
Impairments of assets indicated by International Accounting Standard 36 must be recorded in this item and corresponding accounts. Such impairments arise when the recoverable amount of an asset is less than its book value.

CODES NAMES
8280 Financial Expenses
Financial losses resulting from financial leases received by the society must be recorded in this item, in accordance with the respective account and sub-accounts. (1)

CODES NAMES
8290 Others
In this item, the value of expenses incurred in the Maintenance of Extraordinary Assets must be recorded.
When the value determined in the deed of transfer in payment is greater than the sum of the capital balance, interest recorded in asset accounts, legal costs, taxes, fees, and professional fees necessary to acquire ownership of the goods, the difference must be applied in this account. This accounting entry must be made on the same date the acquisition value is recorded.

CODES NAMES
83 Direct Taxes
8310 Income Taxes
831000 Income Taxes
This account must represent the value of the tax provision on the entity's profits, which must be recorded monthly based on accumulated profit.
This account is debited when the tax provision increases and credited when it decreases; in both cases, account 221003 Accounts Payable - Income Tax is used.

CODES NAMES
9 Off-Balance Sheet Accounts

NCSGR-001
RECIROCAL AND REINSURERS OF RECIPROCAL GUARANTEE SOCIETIES Approval: 08/10/2003 Validity: 01/11/2003

91 Financial Information
911 Commitments Acquired by Guarantees and Reinsurance Granted (1) 9110 Commitments Acquired by Guarantees and Reinsurance Granted (1) This account represents the responsibility of the Reciprocal Guarantee Society for guarantees granted to partner members. In the case of Reinsurers, this account represents the responsibility for reinsurance granted to Reciprocal Guarantee Societies. (1)

CODES NAMES
912 Guarantees and Reinsurance (1)
9120 Guarantees and Reinsurance (1)
Reinsurance for guarantees granted to partner members and to Reciprocal Guarantee Societies must be recorded in this account. (1)

CODES NAMES
913 Rights and Obligations from Obtained Credits 913001 Availability from Obtained Credits Funds from loans that are available to the society must be recorded in this account.

CODES NAMES
914 Goods Received in Payment
914001 (1) Extraordinary Assets
The value of goods that the society receives as payment for unsettled debts must be recorded in this account.

CODES NAMES
915 Balances Pending Payment in Favor of the Society (2) 9150 Balances Due from Debtors In the sub-accounts of this item, balances that remain pending payment by debtors who have partially canceled obligations to the institution, through extraordinary assets received in payment or adjudicated, must be recorded.

NCSGR-001
RECIROCAL AND REINSURERS OF RECIPROCAL GUARANTEE SOCIETIES Approval: 08/10/2003 Validity: 01/11/2003

CODES NAMES
916 Financial Investment Portfolio
9160 Financial Investment Portfolio
These accounts must represent the nominal value of registered documents, plus the value of existing coupons, in accordance with the corresponding sub-accounts.

CODES NAMES
917 Written-off Assets
9170 Written-off Assets
This account must represent the value of assets that have been written off.

CODES NAMES
918 Other Off-Balance Sheet Accounts
9180 Other Off-Balance Sheet Accounts
All off-balance sheet accounts not included in the previous classifications must be recorded in this account.

CHAPTER II
OTHER PROVISIONS (2)
A. SANCTIONS (2)
Non-compliance with the provisions contained in this Manual will be sanctioned in accordance with what is established in the Law of Supervision and Regulation of the Financial System. (2)

B. UNFORESEEN ASPECTS (2)
Unforeseen aspects in regulatory matters in this Manual will be resolved by the Central Bank of Reserve through its Standards Committee. (2)

MODIFICATIONS:
(1) Modifications approved by the Standards Committee of the Central Bank of Reserve of El Salvador, in Session No. CN-12/2012 dated November 27, two thousand twelve, with validity starting from January 2, two thousand thirteen. (2) Modifications in Chapter I. General Provisions, roman II. General Norms, numeral 3. Unforeseen Operations, in roman III. International Accounting Standards, in roman IV. Components of the main items, in roman VIII. Description of concepts related to the use of accounts and incorporation of Chapter II. Other Provisions, approved by the Standards Committee of the Central Bank of Reserve of El Salvador, in Session No. CN-11/2024 dated December 19, two thousand twenty-four, with validity starting from January 3, two thousand twenty-five.