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

NCSGR-001
ACCOUNTING MANUAL FOR RECIPROCAL GUARANTEE SOCIETIES AND REINSURERS OF RECIPROCAL GUARANTEE SOCIETIES Approval: 08/10/2003 Validity: 01/11/2003 The Board of Directors of the Financial System Superintendence, based on literal c) of Article 10 of the Organic Law of the Financial System Superintendence, 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 records of transactions and operations of an economic and financial nature, with the aim 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 regulation and supervision, 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 Financial System Superintendence greater efficacy in the exercise of supervision of the societies that make up the Guarantee Societies System. (1)
II. GENERAL RULES
1. Minimum requirements for accounting records
Legal books must present accounts of up to six digits, and auxiliary books 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 transaction recording
Societies must perform a 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 performed 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 Financial System Superintendence. (1)
3. Unforeseen operations
DEROGATED (2)
When any operation or transaction arises that is not foreseen in this Manual, the entities must communicate this 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 denomination identified by the entity, and when the Central Bank approves the referred 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 registration 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; nevertheless, societies may expand the accounts by disaggregating them beyond ten digits, provided that such expansion corresponds to the concept of the account. (1)

NCSGR-001
ACCOUNTING MANUAL FOR RECIPROCAL GUARANTEE SOCIETIES AND REINSURERS OF RECIPROCAL GUARANTEE SOCIETIES Approval: 08/10/2003 Validity: 01/11/2003
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. Information received by the Financial System Superintendence 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 deadline for the pertinent legal effects. (1) Account balances to be sent to the Financial System Superintendence include accounts up to ten digits. When this entity requires it, it may request greater disaggregation of the accounts.
III. INTERNATIONAL ACCOUNTING STANDARDS
Societies must maintain 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 one 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 ISSUANCE OF OWN TITLES 213 TRADED DOCUMENTS 911 COMMITMENTS ACQUIRED FOR GUARANTEES AND REINSURANCES GRANTED (1) 916 PORTFOLIO OF FINANCIAL INVESTMENTS

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

NCSGR-001
ACCOUNTING MANUAL FOR RECIPROCAL GUARANTEE SOCIETIES AND REINSURERS OF RECIPROCAL GUARANTEE SOCIETIES Approval: 08/10/2003 Validity: 01/11/2003 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 Financial System Superintendence meets the minimum standards of consistency and quality that allow it to fulfill its purposes. The accounting information validators 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 contingency by guarantees; and, i) 4129 Provision for losses of contingency by reinsurance.
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)

NCSGR-001
ACCOUNTING MANUAL FOR RECIPROCAL GUARANTEE SOCIETIES AND REINSURERS OF RECIPROCAL GUARANTEE SOCIETIES Approval: 08/10/2003 Validity: 01/11/2003
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 the accounting, thus:
1. Asset
2. Liability
3. Equity
4. Contingent Rights
5. Contingent Commitments
6. Income
7. Costs
8. Expenses
9. Off-Balance Sheet Accounts
CURRENCY
SUBACCOUNT
POSITION IN CATEGORY
CHARACTERISTIC
AGGREGATION CATEGORY
CLASSIFICATION
ELEMENT
DIGIT

NCSGR-001
ACCOUNTING MANUAL FOR RECIPROCAL GUARANTEE SOCIETIES AND REINSURERS OF RECIPROCAL GUARANTEE SOCIETIES Approval: 08/10/2003 Validity: 01/11/2003
2. Second digit
Identifies the classification of each of the aforementioned elements, thus:
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
111
113
Current Assets
Available Funds
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)

NCSGR-001
ACCOUNTING MANUAL FOR RECIPROCAL GUARANTEE SOCIETIES AND REINSURERS OF RECIPROCAL GUARANTEE SOCIETIES Approval: 08/10/2003 Validity: 01/11/2003 6 = (Available for future use) 7 = (Available for future use) 8 = Expired 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 - Expired Documents The number eight in the fourth position indicates that the documents are expired. 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, thus:
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 the 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, thus:

NCSGR-001
ACCOUNTING MANUAL FOR RECIPROCAL GUARANTEE SOCIETIES AND REINSURERS OF RECIPROCAL GUARANTEE SOCIETIES Approval: 08/10/2003 Validity: 01/11/2003 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 Prepaid Expenses and Deferred Charges 124001 Insurance First account of the "Prepaid Expenses and Deferred Charges" category 12400101 On Individuals First subaccount of the "Insurance" account Because two digits are used to identify the subaccounts, these can reach up to a number of ninety-nine; which gives flexibility to the catalog for future expansions. Position 99 always indicates the existence of a subaccount representing interest to be received or to be paid, as applicable. In the Account Catalog, the maximum number of subaccounts within an account is nine. In addition to the two mentioned digits, each subaccount contains two others, which are used to specify a characteristic, as explained in the following sections.
7. Ninth and tenth digits
Is a position used to differentiate the class of currency representing the subaccount balance.
The meanings of the digits are:
00 = Used when it is not necessary to distinguish the class of currency 01 = Local Currency 02 = Foreign Currency To abbreviate the aforementioned names and facilitate reading of the account catalog, the acronyms ML and ME have been added after the name of each subaccount, which mean Local Currency and Foreign Currency, respectively. With the first acronym, the United States dollar is designated, and with the second, all currencies other than the United States dollar and the Salvadoran colón.
VII. ACCOUNT CATALOG FOR RECIPROCAL GUARANTEE SOCIETIES AND REINSURERS OF RECIPROCAL GUARANTEE SOCIETIES (Excel Attachment) (2)

NCSGR-001
ACCOUNTING MANUAL FOR RECIPROCAL GUARANTEE SOCIETIES AND REINSURERS OF RECIPROCAL GUARANTEE SOCIETIES Approval: 08/10/2003 Validity: 01/11/2003
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 of immediate availability, such as General Cash and Petty Cash, both in local currency and foreign currency.
CODES NAMES
111002 Deposits in Financial Institutions (1)
This account represents the balances of checking 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 physical delivery of the document. b) If they are order titles, the physical delivery of the document duly endorsed. c) If they are registered titles, the physical 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.

NCSGR-001
ACCOUNTING MANUAL FOR RECIPROCAL GUARANTEE SOCIETIES AND REINSURERS OF RECIPROCAL GUARANTEE SOCIETIES Approval: 08/10/2003 Validity: 01/11/2003 CODES NAMES 11 Current Assets 112 Temporary Acquisition of Documents 1128 Expired 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 from the acquisition of the documents recorded in this category. The balance of this account is credit, consequently, 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 recorded, according to the classification of the categories of financial assets made by International Accounting Standard 39 (IAS 39) and additionally, that can be freely transferred. CODES NAMES 113002 Transferred Securities In this account, documents or securities transferred as part of a repo or stock market operations, originating from accounts 113001 and 113004, must be recorded. CODES NAMES 113003 Securities Held to Maturity In this account, the securities that the society intends to hold until their maturity must be recorded, according to the classification of the categories of financial assets made by International Accounting Standard 39. (IAS 39)

NCSGR-001
Approval: 08/10/2003
Validity: 01/11/2003

CODES NAMES
113004 Marketable Securities Available for Sale In this account, securities owned by the society that are not classified in the previous categories but are available for sale must be registered, in accordance with the classification of financial asset categories made by International Accounting Standard 39 (IAS 39); likewise, those that have the characteristic of being freely transferable.

CODES NAMES
1138 Matured 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 matured 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 could incur from investments in securities registered in this category. The balance of this account is a credit balance, therefore it must be subtracted from the category to which it belongs. The classification of these investments, according to the financial asset categories 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 Operating Assets
114 Obligations of Partner Members for Honored Guarantees 1141 Payment Agreements of up to one year 1142 Payment Agreements of more than one year In this category and accounts, values derived from agreements made between Partner Members and Guarantee Societies, for debts honored in total or partial by these institutions to financial institutions as a result of defaults by the former, must be accounted for, in accordance with the respective terms.

NCSGR-001
Approval: 08/10/2003
Validity: 01/11/2003

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

CODES NAMES
1149 Provision for Payment Agreements
This account must register the provisions established for payment agreements unfulfilled by Partner Members. Such provisions may 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 transfers, purchases, etc., in payment of debts owed by guaranteed partner members or other debtors, must be registered.

CODES NAMES
12 Other Assets
122 Assets Received in Payment or Adjudicated
1229 Registered Excesses Pending Collection
In this category and accounts, differences in favor of the Guarantee Society, resulting from the comparison between the value of debts owed by the Partner Member and the value of the asset received in payment via dation, registered in account 1220 “Assets Received in Payment or Adjudicated”, must be accounted for. This category and accounts are of a creditor 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
Approval: 08/10/2003
Validity: 01/11/2003
This category must represent the acquisition value of the different goods used for sales 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 category must represent the proportional value of current insurance premiums, prepaid rents, and other concepts corresponding to each account in the category. Regarding organization expenses, they must be accounted for in this account whenever establishment costs 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 costs, training activity expenses, legal and administrative costs for the legal recognition of the Society, advertising and other promotional activities, relocation or reorganization expenses, must be accounted for in the respective income statement accounts in the period in which they are incurred. The values of computer programs that must be registered in this category are those not indispensable 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 registered as fixed assets and treated in accordance with IAS 16.

CODES NAMES
1250 Accounts Receivable
In the accounts of this category, operations derived from accrued income pending payment by the society's debtors, such as commissions, surcharges, payments on behalf of others, advances, rights with the reinsurer, Mutual Guarantee Societies, Insurance Societies, and Reinsurers, etc. (1) must be registered.

CODES NAMES
1259 Provision for Uncollectibility of Accounts Receivable This category must represent the estimate of uncollectibility of the accounts in this category; its balance is a credit balance, consequently, it is presented decreasing the category to which it belongs.

CODES NAMES
1260 Rights and Participations

NCSGR-001
Approval: 08/10/2003
Validity: 01/11/2003
The accounts in this category must represent the value of investments in societies permitted by Law, such as funds for employee food allowances and other types of participations.

CODES NAMES
13 Fixed Assets
1310 Non-Depreciable
The accounts in this category 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 category 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 category, computer programs in which the hardware depends on them for operation, such as operating systems, must be registered; the remaining programs must be registered in category 1240 Prepaid Expenses and Deferred Charges.

CODES NAMES
1329 Accumulated Depreciation
This category must represent the value of depreciation of all fixed assets; its balance is a credit balance, consequently, it is presented decreasing the category to which it belongs.

CODES NAMES
1330 Amortizable
The accounts in this category must represent the value of constructions and other concepts that by their nature have no residual value. Constructions registered in this account are not those that increase the useful life of the asset. Remodeling performed on leased assets must be amortized over a term that does not exceed that of the lease contract or the useful life, whichever is shorter.

CODES NAMES
1341 Assets Received under Financial Leases

NCSGR-001
Approval: 08/10/2003
Validity: 01/11/2003
This account must represent the value of assets received under financial leases by the society. The accounting registration 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 reasonable value of the asset and the present value of the minimum lease payments. In the latter case, the factor or discount rate will be the implicit interest rate in the lease, provided that 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 Financial Leases This category must represent the value of depreciation of depreciable assets received under financial leases by the society; its balance is a credit balance and consequently, it must be presented decreasing the corresponding category. (1)

CODES NAMES
21 Financing Sources
211 Loans
2111 Agreed Loans of up to one year Term
In this category, agreed loans of 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 registered.

CODES NAMES
2112 Agreed Loans of more than one year and less than five years Term In this category, agreed loans of 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 registered.

CODES NAMES
2113 Agreed Loans of five or more years Term (2) In this category, agreed loans of 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 registered. (2)

CODES NAMES
21 Financing Sources

NCSGR-001
Approval: 08/10/2003
Validity: 01/11/2003
212 Own Issuance Securities
This category 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 Transacted Documents
2131 (1) Transacted Documents of up to One Year Term The accounts in this category 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 category 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 accounted for 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 the obtaining of 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 Financial Leases
2221 Short-term Obligations under Financial Leases 2222 Long-term Obligations under Financial Leases Obligations under Financial Leases must represent the fair value of financial 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
Approval: 08/10/2003
Validity: 01/11/2003

CODES NAMES
2230 Withholdings
The accounts in this category 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 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 of a gratification nature that are provided for personnel and Christmas bonuses that, in accordance with the Law, custom, or collective contract, are provided; 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 lawsuits or contingencies of another nature, according to its forecasting 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 registered.

CODES NAMES
225 Deferred Credits
2250 Deferred Credits
In this category, according to the corresponding accounts and sub-accounts, unearned income received from sureties, re-sureties, and other operations; likewise, temporary differences of income tax, must be registered. The corresponding amortizations must be carried out as accrual occurs. (1)

CODES NAMES
31 Equity
311 Paid-in Social Capital
3110 Paid-in Social 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 registered. The value of the partners' participations will be as determined in the society's bylaws. The minimum social capital of these societies cannot be lower than that mentioned in articles 55 and 82 of the Law of the Mutual Guarantee System for Micro, Small, and Medium Rural and Urban Enterprises. (1) For the case of Mutual Guarantee Societies, the social 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 capitals. (1)

CODES NAMES
3120 Capital Reserves
In this category, capital reserves that are required by the corresponding laws to the society, as well as those stipulated in the bylaws or those established voluntarily, must be accounted for. With respect to sub-account 3120000100 Legal Reserve, its accounting must be carried out at the end of the fiscal year.

CODES NAMES
313 Technical Provisions Fund
3130 Technical Provisions Fund
This category must represent the Technical Provisions Fund referred to in article 29 of the Law of the Mutual Guarantee System for Micro, Small, and Medium Enterprises, according to the respective accounts and sub-accounts.

CODES NAMES
3150 Results to Apply

NCSGR-001
Approval: 08/10/2003
Validity: 01/11/2003
In this category, 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 a balance of accumulated surplus and losses are registered in another fiscal year or vice versa, they must be presented separately, without any compensation, unless the institution's partners decide the absorption of losses with accumulated profits. The balance of the “Current Fiscal Year Results” account must be transferred to “Prior Fiscal Year 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, segregated from the total profits of the fiscal year, for the purpose of separating profits that will be available for distribution, must be accounted for.

CODES NAMES
32 Restricted Equity
323 Provisions
3230 Provisions
323001 For Assets Received in Payment or Adjudicated In this account, reserves that are established for extraordinary assets that have been owned by the society for more than two years, or two years plus an 180-day extension if applicable, according to what is established in the first and second clauses of article 61 of the Law of the Mutual Guarantee System for Micro, Small, and Medium Enterprises, must be accounted for. These provisions are charged to 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
Approval: 08/10/2003
Validity: 01/11/2003
In this account, reserves that the society establishes for risks in excess of potential risks in the granting of sureties, accepted re-sureties, or other operations, must be accounted for. (1)

CODES NAMES
32 Restricted Equity
324 Recoveries of Charged-off Assets
In this category, the value of assets obtained in concept of recoveries of assets that were charged off in past fiscal years, according to the corresponding account and sub-accounts, must be represented.

CODES NAMES
32 Restricted Equity
325 Donations
In this account, donations in cash, furniture, or real estate that any organization or person has made 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-sureties
The accounts in this category must represent the potential risks that the society has from the granting of guarantees in favor of micro, small, and medium enterprises or from accepted re-sureties in favor of Mutual Guarantee Societies. (1)

CODES NAMES
4119 Provision for Losses
4129 Provision for Losses
This account must represent the total estimate of possible losses in granted guarantees or accepted re-sureties. The balance of this account is a credit balance, consequently, it is presented decreasing the category to which it belongs. (1)

CODES NAMES
51 Commitments for Contingencies
511 Contingencies for Guarantees

NCSGR-001
Approval: 08/10/2003
Validity: 01/11/2003

CODES NAMES
4119 Provision for Losses
4129 Provision for Losses
This account must represent the total estimate of possible losses in granted guarantees or accepted re-sureties. The balance of this account is a credit balance, consequently, it is presented decreasing the category 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 category must represent the net contingent reinsurance obligations incurred by the entity when acting as guarantor for micro, small, and medium-sized enterprises, in accordance with the corresponding accounts and sub-accounts. For this purpose, this account will be divided into sub-accounts 5111 "Active Risk by Guarantees" and 5112 "Reinsured Risk", where the first will record the net commitment of the Guarantee Society and the other, the risk covered by reinsurance.

CODES NAMES
51 Commitments for Contingencies
512 Contingencies for Reinsurance

The accounts in this category must represent the contingent obligations of the Reinsurer for the reinsurance granted to Reciprocal Guarantee Societies. (1) For this purpose, this account will be divided into sub-accounts 5121 "Active Risks by Accepted Reinsurance" and 5122 "Reinsured Risk with other Reinsurers", where the first will record the commitment of the Reinsurer and the other, the risk transferred to other reinsurers. (1)

CODES NAMES
61 Income from Business Operations
611 Income from Business Operations
6110 Income from Business Operations
611001 For the Granting of Guarantees

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

611002 Income from Service Provision

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

611003 Income from Granting Reinsurance (1)

All income derived from the granting of reinsurance, such as commissions and other related types of income, must be recorded in this account. (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 Investments in Securities

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

621002 Repos

Income generated by financing granted through repos must be accounted for in this account, in accordance with the respective sub-accounts.

621003 Interest on Deposits

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

CODES NAMES
63 Non-Operational Income
631 Non-Operational Income
6310 Non-Operational Income
631001 Income from Agreements on Honored Guarantee Payments

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

CODES NAMES
631002 Income from Previous Years

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

CODES NAMES
631003 Profit on Sale of Assets

Income derived from the sale of fixed and extraordinary assets of the Guarantee Society must be accounted for in this account.

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 form of dividends, distributed by the companies in which equity investments are held.

CODES NAMES
631006 Income from Temporary Differences in Income Tax

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

CODES NAMES
631007 Reversal of Asset Impairment Values

Reversals of asset impairments generated in the period, whether because they no longer exist or have decreased, must be accounted for in this account and corresponding sub-accounts, in accordance with internal and/or external information mentioned in International Accounting Standard 36.

CODES NAMES
631008 Honored and Recovered Reinsurance (1)

Interest and other types of income derived from honored and recovered reinsurance must be recorded in this account. (1)

CODES NAMES
631099 Others

This account must represent income obtained that does not correspond to the business line 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 Costs of Business Operations
7110 Costs of Business Operations
711001 Granting of Guarantees

All costs derived from the granting of guarantees to the Participating Members of the society must be accounted for in this account.

CODES NAMES
711002 Cost of Service Provision (2)

All costs incurred by the Guarantee Society for the provision of services to its Participating Members must be accounted for in this account. (1)

CODES NAME
711003 Reinsurance Guarantees

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

CODES NAMES
711004 Accepted Reinsurance (1)

All costs derived from accepted reinsurance operations with Reciprocal Guarantee Societies must be accounted for in this account. (1)

CODES NAMES
7 Costs
71 Costs of Business Operations
712 Write-offs and Charges
7120 Write-offs and Charges
712001 Write-off for Guarantees

Write-offs of doubtful, honored, etc., guarantees granted by the Guarantee Society to financial institutions to guarantee obligations of its Participating Members must be accounted for in this account. In the case of Reinsurers, write-offs of honored reinsurance must be accounted for. (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
712002 Charge of Assets

Charges for unfulfilled obligations of Participating Members to the Reciprocal Guarantee Society must be accounted for in this account. These obligations originate from unpaid loans by Participating Members to financial institutions that have had to be honored by the Guarantee Society, by virtue of guarantees in favor of said institutions. In the case of Reinsurers, charges for unfulfilled obligations of Reciprocal Guarantee Societies for accepted reinsurance must be accounted for. (1)

CODES NAMES
7 Costs
72 Costs of Other Operations
721 Costs of Other Operations
721001 Loans

Financial costs for financing received by the society from financial institutions must be recorded in this account, in accordance with the corresponding sub-accounts. (1)

CODES NAMES
721002 From other Creditors

Costs derived from financing from other institutions must be accounted for in this account, in accordance with the corresponding sub-accounts.

CODES NAMES
721003 Own Issuance Securities

Costs derived from the issuance of securities must be recorded in this account, in accordance with the corresponding sub-accounts.

CODES NAMES
721004 Losses from Price Differences

Losses from price differences in the sale, negotiation of securities, or price adjustments must be recorded in this account, in accordance with the corresponding sub-accounts.

CODES NAMES
721005 Repos

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

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

CODES NAMES
721006 Write-offs

This category must represent the value of reserves constituted during the accounting period. It will be debited for increases to reserves and credited for decreases to reserves constituted in the current period.

CODES NAMES
721007 Charged Assets

This category must represent the value of charges (write-offs) to 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)

What is paid to officials or employees for ordinary or extraordinary services rendered to the society must be considered as salary; therefore, what they accrue in the form of vacation, indemnities, and other similar benefits must be accounted for 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

Provisions and payments that the society makes to staff in the form of indemnities for dismissal and temporary incapacity must be recorded in this account, in accordance with its accounting policies.

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

accounting policies. (1)

CODES NAMES
811004 Board Expenses

Expenses generated by the board of directors of the society in the exercise of their management functions must be accounted for in this account.

CODES NAMES
811005 Pensions and Retirement

Charges for the estimation of pensions and retirement for the society's staff must be recorded in this account, in accordance with the society's policies. (1)

CODES NAMES
811006 Other Staff Expenses

Other staff expenses of the society that are 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 category must represent the 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 category must represent the loss of value of fixed asset goods or other goods, whether by depreciation or amortization. This category also includes goods received under financial leasing by the society, in accordance with the detail of accounts and respective sub-accounts. (1)

CODES NAMES
82 Non-Operational Expenses

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

8210 Expenses from Previous Years

The accounts in this category 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 category 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 category must represent the expenses necessary to generate income from the exploitation of fixed assets and extraordinary assets.

CODES NAMES
8240 Charges of Goods Received in Payment or Adjudicated

In this category, losses in "Extraordinary Assets" that have been owned by the entity for more than two years or after that plus 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, must be represented.

CODES NAMES
8250 Expenses from Temporary Differences in Income Tax

Temporary expenses for income tax must be recorded in this account, as mentioned in International Accounting Standards (IAS).

CODES NAMES
8260 Losses from Contingencies

Contingency losses regulated in International Accounting Standards (IAS), understood as such, possible or present obligations arising from past events, derived from future and uncertain events that are not entirely under the control of the society, must be recorded in this account. (1)

NCSGR-001
ACCOUNTING MANUAL FOR RECIPROCAL GUARANTEE SOCIETIES 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 category and corresponding accounts. Such impairments arise when the recoverable value of an asset is less than the book value.

CODES NAMES
8280 Financial Expenses

Financial losses resulting from financial leases received by the society must be accounted for in this category, in accordance with the respective account and sub-accounts. (1)

CODES NAMES
8290 Others

The value of expenses incurred in the Maintenance of Extraordinary Assets must be recorded in this category.

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, rights, 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 that the acquisition value is recorded.

CODES NAMES
83 Direct Taxes
831 Taxes on Income
831000 Taxes on Income

This account must represent the value of the tax provision on the entity's profits, which must be accounted for monthly based on accumulated profit.

This account will be debited when the tax provision increases, and credited when it decreases; in both cases, account 221003 Accounts Payable - Income Tax will be used.

CODES NAMES
9 Off-Balance Sheet Accounts

NCSGR-001
ACCOUNTING MANUAL FOR RECIPROCAL GUARANTEE SOCIETIES 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 the bonds granted to participating members. In the case of Reinsurers, this account represents the responsibility for reinsurance granted to Reciprocal Guarantee Societies. (1)

CODES NAMES
912 Bonds and Reinsurance (1)
9120 Bonds and Reinsurance (1)

Reinsurance for bonds granted to participating members and to Reciprocal Guarantee Societies must be recorded in this account. (1)

CODES NAMES
913 Rights and Obligations for Obtained Credits 913001 Availability from Obtained Credits

Loan funds that are available to the society must be accounted for in this account.

CODES NAMES
914 Goods Received in Payment
914001 (1) Extraordinary Assets

The value of goods that the society receives in concept of payment for unsatisfied debts must be recorded in this account.

CODES NAMES
915 Balances Pending Payment in Favor of the Society (2) 9150 Balances Owed by Debtors

In the sub-accounts of this category, balances that remain pending payment for obligations of debtors who have partially canceled to the institution, through extraordinary assets received in payment or adjudicated, 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

CODES NAMES
916 Financial Investment Portfolio
9160 Financial Investment Portfolio

These accounts must represent the nominal value of the registered documents, plus the value of existing coupons, in accordance with the corresponding sub-accounts.

CODES NAMES
917 Charged Assets
9170 Charged 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 that are 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) Aspects not foreseen in regulatory matters in this Manual will be resolved by the Central Bank of Reserve through its Committee of Norms. (2)

MODIFICATIONS:
(1) Modifications approved by the Committee of Norms of the Central Bank of Reserve of El Salvador, in Session No. CN-12/2012 of date November 27, two thousand twelve, with validity from January 02, two thousand thirteen. (2) Modifications in Chapter I. General Provisions, roman II. General Norms, numeral 3. Unforeseen Operations, in roman III. International Accounting Norms, in roman IV. Components of the main categories, in roman VIII. Description of concepts related to the use of accounts and incorporation of Chapter II. Other Provisions, approved by the Committee of Norms of the Central Bank of Reserve of El Salvador, in Session No. CN-11/2024 of date December 19, two thousand twenty-four, with validity from January 03, two thousand twenty-five.