Amendatory Circular 4/23 to the Single Circular for Insurance and Sureties

Official Gazette of the Federation (DOF): 22/08/2023

Amendatory Circular 4/23 to the Single Circular for Insurance and Sureties

In the margin a seal with the National Shield, stating: United Mexican States.- TREASURY.- Secretariat of Treasury and Public Credit.- National Commission of Insurance and Sureties.

AMENDATORY CIRCULAR 4/23 TO THE SINGLE CIRCULAR FOR INSURANCE AND SURETIES

(Eighty-Ninth Transitory Provision)

The National Commission of Insurance and Sureties, based on the provisions of articles 366, section II, 367, section II, 372, sections VI and XLII, 373 and 381 of the Law of Insurance and Surety Institutions, and:

CONSIDERING

That in accordance with the provisions of article 300 of the Law of Insurance and Surety Institutions, the accounts that Institutions and Mutual Societies must keep in their accounting shall be adjusted to the general provisions that this National Commission of Insurance and Sureties issues for such purpose.

That through Annex 22.1.2. of the Single Circular for Insurance and Sureties, this Commission made known the accounting criteria applicable starting from the 2016 fiscal year, so that institutions and mutual societies adequately present their assets, liabilities, equity, results and order accounts; likewise, it established the specific criteria for the application of Financial Reporting Standards (NIF), taking into consideration that institutions and mutual societies carry out specialized operations, so that by observing the provisions in said Standards, those institutions and mutual societies must adjust to what is established in NIF B-1, "Accounting Changes and Correction of Errors".

That NIF B-1 establishes that all accounting changes must be recognized through their retrospective application, which implies that in the financial statements of previous periods comparatives are presented with the current period, which implies adjusting or reclassifying retrospectively their assets, liabilities, equity, results and order accounts, to recognize in them the effects of the accounting change as if the NIF adopted had always been used from the beginning of the oldest period that is presented in comparative form.

That taking into consideration that NIF B-1, in particular, could imply an impact in its application by the institutions or mutual societies, which may come to generate, on one hand, that they find themselves unable to determine the effects of previous fiscal years, or else, non-relevant results, and on the other, the possibility of determining the partial retrospective effect, with which non-consistent financial information would be generated in the audited annual financial statements.

That on October 23, 2020, Amendatory Circular 8/20 to the Single Circular for Insurance and Sureties was published in the Official Gazette of the Federation, which modified the Seventy-Ninth Transitory Provision of the Single Circular for Insurance and Sureties, in order for institutions and mutual societies to be in a position to carry out the adaptation in their accounting processes of the Financial Reporting Standards, issued by the now Mexican Council for Financial Reporting Standards, A.C. (CINIF), indicating that the "Application of particular standards" provided in Annex 22.1.2. regarding the "Accounting criteria applicable to institutions, mutual societies and controlling societies", would enter into force on January 1, 2022. The foregoing, as part of the homologation process with said standards, which this Commission saw fit to carry out, in order to identify and eliminate, to the extent possible, the existing differences between the NIF and the accounting criteria that are applicable to the insurance and surety sectors.

For the foregoing exposed, this Commission has resolved to issue the following modification to the Single Circular for Insurance and Sureties, in the following terms:

AMENDATORY CIRCULAR 4/23 TO THE SINGLE CIRCULAR FOR INSURANCE AND SURETIES

(Eighty-Ninth Transitory Provision)

SOLE. - The Eighty-Ninth Transitory Provision of the Single Circular for Insurance and Sureties is added, to remain as follows:

"EIGHTY-NINTH. - Institutions and mutual societies may recognize as the initial application date of the Financial Reporting Standards (NIF), issued by the Mexican Council for Financial Reporting Standards, A.C. (CINIF), provided in Annex 22.1.2. regarding the 'Accounting criteria applicable to institutions, mutual societies and controlling societies', the date on which these entered into force, that is January 1, 2022, considering the accumulated effect of accounting changes, without reformulating figures from previous fiscal years.

Institutions and mutual societies must explain and detail, in their respective disclosure notes, the main changes in accounting regulations that affect or could significantly affect their financial statements, as well as the adoption mechanics and the adjustments carried out in the determination of the initial effects of the application of accounting criteria.

On the other hand, the financial statements corresponding to the 2022 fiscal year referred to in Provision 23.1.14. of this Single Circular for Insurance and Sureties, may be presented in a non-comparative form with those of the immediate previous year.

For the basic consolidated quarterly and annual financial statements that are required of institutions and mutual societies, in accordance with the present provisions, corresponding to the period ended December 31, 2022, comparatives shall not be presented with the corresponding quarter of the 2021 fiscal year nor for the period ended December 31, 2021."

TRANSITORY PROVISIONS

FIRST. - Publish in the Official Gazette of the Federation.

SECOND. - This Amendatory Circular shall enter into force on the day following its publication in the Official Gazette of the Federation.

Respectfully

Mexico City, August 14, 2023.- The President of the National Commission of Insurance and Sureties,

Ricardo Ernesto Ochoa Rodríguez .- Signature.

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