Regulatory Alerts2022-12-30 | NSP-62Added · Updated
Accounting Manual for Voluntary Pension Savings Funds
The Standards Committee of the Central Reserve Bank of El Salvador issued this manual to mandate uniform accounting recording, measurement, and disclosure for Voluntary Pension Savings Funds. The regulation requires Administrative Institutions to submit monthly trial balances within eight business days and semi-annual and annual financial statements with specific auditor reports to the Superintendence. It establishes detailed requirements for accounting systems, including security measures, contingency plans, and the approval process for any modifications to the established chart of accounts.
Alameda Juan Pablo II, between 15 and 17 Norte Ave, San Salvador, El Salvador. Tel. (503) 2281-8000 www.bcr.gob.sv Page 1 of 82 CNBCR-11/2022 NSP-62 ACCOUNTING MANUAL FOR VOLUNTARY PENSION SAVINGS FUNDS Approval: 30/12/2022 Validity: 30/12/2022 THE STANDARDS COMMITTEE OF THE CENTRAL RESERVE BANK OF EL SALVADOR,
CONSIDERING:
I. That Legislative Decree No. 614, dated December 20, 2022, published in Official Diary No. 241 Volume No. 437, of the 21st of the same month and year, issued the Comprehensive Pension System Law. II. Article 27, fifth paragraph of the Comprehensive Pension System Law, establishes that Administrators will also be authorized to manage Voluntary Pension Savings Funds. Furthermore, said paragraph establishes that such Funds will be constituted as independent patrimony from the Administrator and from the Pension Funds it manages. III. That Article 133, first paragraph of the Comprehensive Pension System Law, establishes that Voluntary Pension Savings Funds will be offered by Pension Fund Administrators, Banks, Cooperative Banks, Fund Managers, and Savings and Credit Societies, in accordance with the regulations applicable to them, and will be governed by the provisions in Chapter I of Title II of said Law and, where applicable, by the Investment Funds Law. IV. That first paragraph of Article 134 of the Comprehensive Pension System Law, establishes that each Voluntary Pension Savings Fund will be the exclusive property of the natural persons and employers who have made contributions to it, being an independent patrimony different from that of the institution that manages it and other Voluntary Pension Savings Funds, if any, managed by the same. V. That Article 159 of the Comprehensive Pension System Law establishes that the Central Reserve Bank of El Salvador will issue the necessary Technical Norms to allow the development of what is established in the referred Law. VI. That Article 99, letter c) of the Law on Supervision and Regulation of the Financial System, establishes that it corresponds to the Standards Committee of the Central Reserve Bank, the approval of technical norms for the elaboration, approval, presentation, and dissemination of Financial Statements and supplementary information of the members of the financial system; the determination of accounting obligations and the principles according to which they must keep their accounting; and the establishment of criteria for the valuation of assets, liabilities, and the constitution of provisions and reserves for risks.
Alameda Juan Pablo II, between 15 and 17 Norte Ave, San Salvador, El Salvador. Tel. (503) 2281-8000 www.bcr.gob.sv Page 2 of 82 CNBCR-11/2022 NSP-62 ACCOUNTING MANUAL FOR VOLUNTARY PENSION SAVINGS FUNDS Approval: 30/12/2022 Validity: 30/12/2022 THEREFORE,
by virtue of the regulatory powers conferred by Article 99 of the Law on Supervision and Regulation of the Financial System, AGREES to issue the following: ACCOUNTING MANUAL FOR VOLUNTARY PENSION SAVINGS FUNDS
Alameda Juan Pablo II, between 15 and 17 Norte Ave, San Salvador, El Salvador. Tel. (503) 2281-8000 www.bcr.gob.sv Page 3 of 82 CNBCR-11/2022 NSP-62 ACCOUNTING MANUAL FOR VOLUNTARY PENSION SAVINGS FUNDS Approval: 30/12/2022 Validity: 30/12/2022 CONTENTS
CHAPTER I GENERAL PROVISIONS Comprises the general application provisions for the recognition, measurement, presentation, and disclosure of Voluntary Pension Savings Fund operations. CHAPTER II ACCOUNTING FRAMEWORK Comprises the accounting principles that Voluntary Pension Savings Funds will apply to their operations, which will be composed of sections indicating how to proceed for the accounting of regulated elements. Sections of the Chapter: SECTION 1. Cash and Cash Equivalents. SECTION 2. Financial Instruments. SECTION 3. Derivative Financial Instruments. SECTION 4. Specific Treatments Defined for the Presentation of Financial Statements. SECTION 5. Preparation, Presentation, Disclosure, and Publication of Financial Statements. CHAPTER III CHART OF ACCOUNTS Comprises the list of accounts provided for the accounting of respective operations.
CHAPTER IV ACCOUNTING APPLICATIONS MANUAL Comprises the description of account concepts and the main applications by which they will be affected.
CHAPTER V FINANCIAL STATEMENTS Financial Statement Models.
CHAPTER VI OTHER PROVISIONS AND VALIDITY
Alameda Juan Pablo II, between 15 and 17 Norte Ave, San Salvador, El Salvador. Tel. (503) 2281-8000 www.bcr.gob.sv Page 4 of 82 CNBCR-11/2022 NSP-62 ACCOUNTING MANUAL FOR VOLUNTARY PENSION SAVINGS FUNDS Approval: 30/12/2022 Validity: 30/12/2022 CHAPTER I GENERAL PROVISIONS
- OBJECTIVES
1.1. General Objective To uniform the accounting recording of Voluntary Pension Savings Fund operations, to obtain financial statements that reflect the financial situation and management results of the same, as an instrument for information analysis and decision-making by the Administrative Institutions, the public users of the services provided by said Administrative Institutions, and other interested parties. 1.2. Specific Objective To have complete, timely, and homogeneous information on the financial and economic situation of Voluntary Pension Savings Funds that contributes to decision-making by the participant and the general public. 2. SCOPE
The application of the Manual is mandatory for Voluntary Pension Savings Funds authorized by the Superintendence, for the management of their own operations. When this Manual refers to actions of the Fund, it shall be understood that the one performing them is the Administrative Institution in its capacity as administrator thereof. The Manual consists of the General Provisions, the Accounting Framework, the Chart of Accounts, the Accounting Applications Manual, and the Financial Statement Models with their Notes. 3. TERMS For the purposes of this Accounting Manual, the terms indicated below have the following meaning: a) Central Bank: Central Reserve Bank of El Salvador; b) Individual Account: Individual voluntary pension savings account in the name of a natural person, which contains the data of contributions and withdrawals made by natural persons or by the employer if applicable, and the returns generated by said contributions; c) Fund(s): Voluntary Pension Savings Funds;
Alameda Juan Pablo II, between 15 and 17 Norte Ave, San Salvador, El Salvador. Tel. (503) 2281-8000 www.bcr.gob.sv Page 5 of 82 CNBCR-11/2022 NSP-62 ACCOUNTING MANUAL FOR VOLUNTARY PENSION SAVINGS FUNDS Approval: 30/12/2022 Validity: 30/12/2022 d) Employer: Natural or legal person who agrees through a contract or institutional plan to make contributions to the individual account of a natural person with whom they maintain a labor relationship; e) Administrative Institution: Financial institution that manages Voluntary Pension Savings Funds which are registered in the Public Registry of the Financial System Superintendence; f) Law: Comprehensive Pension System Law; g) FI Law: Investment Funds Law; h) Participant: Natural person in whose name the individual voluntary pension savings account is located; i) Withdrawal: Corresponds to the total or partial payment of the resources from the participant's individual account balance; j) Superintendence: Financial System Superintendence; k) Transfer: Corresponds to the total or partial sending of resources from one individual account to another or other individual accounts of the same holder in the same or other authorized Voluntary Pension Savings Funds; and l) Securities: Shares, debentures, and other securities. 4. PROCESS OF OPERATIONS AND ACCOUNTING SYSTEM
4.1. Processing of Accounting Operations Funds subject to this Manual may process their accounting operations by the means they deem convenient, provided it allows for their analysis and supervision. To this effect, they must present to the Superintendence, prior to entry in the Register, the accounting information processing system they will use, for its respective verification and authorization. Similarly, when a change occurs in said system, they must present the change to the Superintendence. The documentary or electronic source of each accounting entry must contain explanations about the operation being recorded. 4.2. Authorization and Modification of the Accounting System The accounting system consists of the methods, computer systems, application manuals, formats, accounting policies, and records established to identify, analyze, classify, record, and report Fund transactions. The system comprises: a) The Chart of Accounts and Application Manual; b) Accounting records, supporting documents, and auxiliary records; c) The accounting processing involved from the initiation of a transaction until its inclusion in the Financial Statements; and
Alameda Juan Pablo II, between 15 and 17 Norte Ave, San Salvador, El Salvador. Tel. (503) 2281-8000 www.bcr.gob.sv Page 6 of 82 CNBCR-11/2022 NSP-62 ACCOUNTING MANUAL FOR VOLUNTARY PENSION SAVINGS FUNDS Approval: 30/12/2022 Validity: 30/12/2022 d) The financial information process used to prepare the Financial Statements, including important estimates and disclosures. Accounting records may be kept electronically, provided they comply with what is established in Article 455 of the Code of Commerce. The minimum information to be detailed within the accounting system, for purposes of approval and modification, will be: 4.2.1. Description of the Accounting System
a) Fund General Information: Name, Tax Identification Number (TIN), address, and other relevant information, etc.; b) Type of Voluntary Pension Savings Fund according to the defined Plan; c) Registration data in the Public Registry; d) Name and registration number of the external auditor; e) Accounting policies and procedures adopted, which consist of presenting said policies and the procedures the Fund will use, in accordance with the minimum disclosures required by this Manual and the applicable International Financial Reporting Standards; and f) Description of the notes to the Financial Statements to be prepared, in accordance with the minimum disclosures required by this Accounting Manual for Funds and the applicable International Financial Reporting Standards. 4.2.2. Requirements of Accounting Records
a) Method of keeping accounting books: legal accounting books will be kept in bound and folioed books, on separate folioed sheets, or other physical or electronic means; b) Nature of the system to be used: description of the name and method of operation of the computer system in which accounting will be kept; c) Method of recording operations: explain in what form operations will be recorded in the legalized accounting records; and d) Detail of auxiliary books to be kept and the method of recording operations in them. 4.2.3. Description of Computerized Information Systems
a) Design of the computerized accounting system: the content of this letter comprises a description of the method of recording, operating, and generating accounting records; b) Description of modules:
Alameda Juan Pablo II, between 15 and 17 Norte Ave, San Salvador, El Salvador. Tel. (503) 2281-8000 www.bcr.gob.sv Page 7 of 82 CNBCR-11/2022 NSP-62 ACCOUNTING MANUAL FOR VOLUNTARY PENSION SAVINGS FUNDS Approval: 30/12/2022 Validity: 30/12/2022 i. Name of the module; ii. Implementation language; iii. Objective of the module, which will generally describe the main function of the specific accounting module; iv. Main sub-modules with their respective explanation; v. Reports issued by the module; on paper, screen, or magnetic files; and vi. Indicate the name of the report, frequency of issuance, and its objective. c) Description of databases: i. Name of the database; ii. Objective; iii. Database manager with detailed version; iv. Method of data capture: in this particular area, it must be specified whether the content of the database is generated by the system through automatic calculation or corresponds to information captured by the user; v. Detailed description of fields including name, type, meaning, and use of the field; and vi. Data dictionary; and d) Flowchart of modules and programs: the flowchart must show the data flow through the system and the interrelation between the steps of the process and computer routines. 4.2.4. Security Measures It will consist of the description of measures to be taken internally to guarantee the confidentiality and integrity of the information managed by the accounting system, with the purpose of minimizing the inherent risk existing for the different assets. 4.2.5. Contingency Plan It will consist of a description of measures to be taken to be resilient and able to continue operating the system. 4.2.6. Additional Documentation The following documentation must be attached in original and copy: a) Source documentation to be used for the recording of operations including income notes, expense notes, journal vouchers, among others; b) Formats of main books, except those required by the Tax Code and its respective regulation;
Alameda Juan Pablo II, between 15 and 17 Norte Ave, San Salvador, El Salvador. Tel. (503) 2281-8000 www.bcr.gob.sv Page 8 of 82 CNBCR-11/2022 NSP-62 ACCOUNTING MANUAL FOR VOLUNTARY PENSION SAVINGS FUNDS Approval: 30/12/2022 Validity: 30/12/2022 c) Formats of auxiliary books; d) Technical and operation manual of the computer system; and e) User manual of the computer system. 4.2.7. Outsourcing of Accounting When the Administrative Institution, on a sufficiently reasoned and founded basis, decides to hire an independent company to keep the accounting of each Fund it manages, the Administrative Institution will define the profile of the company that will keep the records, which must be available to the Superintendence for review; likewise, the Superintendence may carry out the respective inspection of the contracted company's computer systems to verify that they comply with the parameters established in this Manual and other applicable accounting provisions. This requirement will apply even when the accounting service is provided by a company from the same business group or financial conglomerate of the Administrative Institution, because it is a contracting activity. Said company must ensure that it has the capacity to keep the accounting of each Fund separately.
When the service contract to keep the accounting is carried out, the Fund must ensure it has unrestricted access to historical information. 5. MODIFICATION OF THE MANUAL The coding and openings established in this Manual must be respected in their entirety; therefore, no new elements, items, accounts, primary sub-accounts, secondary sub-accounts, and sub-sub-accounts different from those already established may be opened. Analytical sub-sub-accounts may be added after the ninth (9th) digit, provided they correspond to the nature of the account from which they originate and to the degree and detail they consider necessary for better recording and control of their operations. When any operation or transaction not provided for in this Manual originates, the Fund will 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, indicating its quantitative impact on the Financial Statements and the reasons that, in the judgment of the competent administrative body, justify the proposed treatment. Such communication will be sent physically or by duly signed email by the responsible persons.
Alameda Juan Pablo II, between 15 and 17 Norte Ave, San Salvador, El Salvador. Tel. (503) 2281-8000 www.bcr.gob.sv Page 9 of 82 CNBCR-11/2022 NSP-62 ACCOUNTING MANUAL FOR VOLUNTARY PENSION SAVINGS FUNDS Approval: 30/12/2022 Validity: 30/12/2022 The Central Bank will analyze what is proposed and if it is a matter of modifying the Manual, the proposed accounting application, if appropriate, will be approved by the Central Bank through its Standards Committee. Prior to the agreement of the Standards Committee, the Fund must account for the operation or proposal to be modified, and when the Central Bank through its Standards Committee agrees to approve the change to the Manual, the Fund must make the necessary adjustments, transferring the transaction from the account in which it was temporarily recorded to the corresponding approved one. 6. RESPONSIBILITIES 6.1. Administration of Funds The administration of Funds is a purpose of the Administrative Institutions; consequently, all matters and operations related to the activity of the Funds are the responsibility of these. 6.2. Accounting Records It is the responsibility of the Administrative Institution to record the Fund's operations, from the preparation of vouchers, documents, records, and files of transactions, to the formulation of Financial Statements and other reports for their respective analysis and interpretation. The Administrative Institution must define the profile that the accountant it hires to perform the Fund's accounting operations must meet, in order to efficiently and effectively carry out the activities and operations performed by it. 6.3. Timeliness of Accounting Recording It is the responsibility of the Administrative Institution to daily account for the transactions performed by the Fund, which will be recorded in chronological order and in the accounts whose title corresponds to their nature, and the accounting closing of the Fund will be daily. 7. SUBMISSION OF INFORMATION 7.1. Timeliness The Fund will remit the corresponding information within the deadlines defined in this Manual. Lack of timeliness in submission will be sanctioned in accordance with what is established in the Law on Supervision and Regulation of the Financial System. The Fund must designate a responsible official as well as its respective substitute to timely comply with the information requirements established in this Manual to be submitted to the Superintendence. 7.2. Frequency 7.2.1. Monthly Financial Statements The Administrative Institution will obligatorily present the monthly trial balance of each Fund, which must be delivered to the Superintendence within eight (8) business days following the month to which the information corresponds. When it concerns the Trial Balances and information relative to the months of June and December of each year, the Fund will remit electronically within fifteen (15) calendar days following the month to which the definitive information corresponds. The foregoing does not mean that the provisional information of said months does not have to be presented within the deadline stipulated in the first paragraph. The Administrative Institution must present the monthly Financial Statements of each Fund it manages as mentioned in item 7.2.2. Semi-Annual and Annual Financial Statements. 7.2.2. Semi-Annual and Annual Financial Statements The Fund must present its semi-annual and annual Financial Statements to the Superintendence, in the formats, deadlines, periodicity, and under the grouping norms dictated in this Manual. Said Financial Statements are the only valid for all effects, whether for inclusion in the annual report and publication in the press or for any other type of dissemination in the country or abroad, with the exception of Financial Statements that must be prepared for tax purposes, while there are fiscal criteria that differ from what is established in this Manual. The semi-annual and annual Financial Statements, such as: Balance Sheet, Statement of Comprehensive Income, Statement of Changes in Equity, Statement of Cash Flows, and the notes thereto, that are submitted to the Superintendence, must be presented obligatorily with the signatures of the general accountant, general manager, or the person acting in their place, and the legal representative when different from the legal manager or the person acting in their place. The Financial Statements referred to the month of June must be submitted with the interim report of the External Auditor. In the case of annual Financial Statements, they must