BCRG INSTRUCTION No. I/DGSIF/DSIMF / 09/2018

ON ACCOUNTING AND FINANCIAL TRANSPARENCY STANDARDS FOR INCLUSIVE FINANCIAL INSTITUTIONS

The Governor

Having regard to Ordinance No. D/2009/046/CNDD of February 7, 2009, establishing the statute of the Central Bank of the Republic of Guinea;

Having regard to Decree No. D/2010/010/PRG/SGG of December 27, 2010, appointing the Governor of the Central Bank of the Republic of Guinea;

Having regard to Law No. L/2017/031/AN of July 4, 2017, on inclusive financial institutions in the Republic of Guinea, particularly Article 62.

DECIDES

Chapter 1: General Accounting Provisions

Article 1:

This instruction applies to Microfinance Institutions (hereinafter, "MFIs"), to Electronic Money Institutions (hereinafter,

SECTION 1: ACCOUNTING CHART

Article 2:

Any IFI presents the financial statements it communicates to the Central Bank according to the accounting chart attached as an appendix.

Financial statements are finalized and communicated to the Central Bank in two (2) copies.

Article 3:

Financial statements comprise the following documents:

• The balance sheet as of December 31,
• The income statement as of December 31,
• The supplementary notes.

Financial statements are prepared in Guinean francs (GNF).

Article 4:

Financial statements must be signed by a duly authorized person to commit the institution's liability.

Article 5:

Any IFI structures its accounting to serve the required financial statements.

SECTION 2: DISTRESSED LOANS OF MFIs

Article 6:

Distressed loans (account 21) consist of:

• Unpaid loans (account 211),
• Restructured loans (account 212),
• Other distressed receivables (account 213),
• Accrued, unpaid interest (account 214), according to the chosen accounting method.

Unpaid loans are those where at least one installment has been unpaid for thirty (30) days or more. Consequently, the entire outstanding loan balance, due or not, is reclassified under this category.

Article 7:

Unpaid receivables (211) are provided for as follows:

• Loan with at least one unpaid installment for at least 30 days: 25% of the outstanding balance;
• Loan with at least one unpaid installment for at least 90 days: 50% of the outstanding balance;
• Loan with at least one unpaid installment for at least 180 days: 75% of the outstanding balance;
• Loan with at least one unpaid installment for at least 720 days: 100% of the outstanding balance.

In the case of restructured loans (account 212), by any means whatsoever (notably by rescheduling or offsetting with a new loan), the provision is calculated as follows:

• Restructured loan up to date: 25% of the amount due;
• Restructured loan with at least one unpaid installment for at least 30 days: 50% of the amount due;
• Restructured loan with at least one unpaid installment for at least 90 days: 100% of the amount due;

A loan with at least one unpaid installment of 24 months or more is considered uncollectible. After reversing the initially established provisions, the receivable is recognized as a loss and subject to off-balance sheet tracking for two fiscal years.

Article 8:

Any MFI chooses an accounting method for its unpaid interest according to one of the following arrangements:

"Interest on customer loans is recognized only when actually paid. Off-balance sheet tracking of unpaid interest is conducted."

Or,

"Accrued interest is recognized at maturity. When unpaid, it is placed on a suspense account (account 214), and it is simultaneously provided for at 100%."

The accounting method is stated in the MFI's annual report. It cannot change during the year.

Article 9:

When a repayment occurs for a loan written off as a loss, recovered amounts (principal, interest, penalties) are recognized as exceptional income.

Chapter 2: Transmission of Financial Statements and Interim Reports

SECTION 1: MICROFINANCE INSTITUTIONS

Article 10:

MFIs communicate annual financial statements and quarterly reports to the Central Bank according to models defined by circular letter of the Central Bank.

Quarterly reports are transmitted no later than 45 days after the closing date of operations and include:

• The accounting statement

  • The asset balance sheet,
  • The liability balance sheet,
  • The income statement, and
  • Off-balance sheet items,

• DIMF-01: status of unpaid loans and other distressed receivables (aging schedule of the distressed credit portfolio);

• DIMF-02: status of loans granted to corporate officers and executives;

• DIMF-03: status of loans granted to staff;

• DIMF-04: list of the 10 largest debtors and list of the 10 largest credit beneficiaries by signature;

• DIMF-05: data on activities and general statistics;

• DIMF-06: calculation of solvency, liquidity, and risk diversification ratios; for the solvency ratio, the provisional profit integrated into equity comes from a quarterly closing integrating annual amortization converted to a quarterly basis (i.e., annual amortization divided by four) and provisions;

• DIMF-07: distribution of the credit portfolio by sector of activity and geographic zone according to the nomenclature established by the Central Bank;

• DIMF-08: detailed recovery statement on all distressed loans, distinguished by category of distressed receivable

• DIMF-09: list of the 10 largest creditors, outside the regulated financial sector, with maturity dates for term deposits;

• DIMF-010: aging schedule of the healthy credit portfolio.

• Where applicable, DIFI-01: updated list of their agents and sub-agents,

SECTION 2: EMIs

Article 11:

EMIs apply the accounting framework for inclusive financial institutions, excluding, on the asset side of the balance sheet, class 2 (customer loans).

EMIs communicate annual financial statements and monthly reports to the Central Bank according to models defined by circular letter of the Central Bank.

Quarterly reports are transmitted no later than 15 days after the closing date of operations and include:

• DEME-01: outstanding electronic money issued,

• DEME-02: liquidity ratio,

• DEME-03: gross deposit amount,

• DEME-04: gross withdrawal amount,

• DIFI-01: amount of sums transferred within the payment system managed by the IFI,

• DIFI-02: amount of sums entering from other payment systems, excluding payments resulting from a cash deposit,

• DIFI-03: amount of sums exiting to other payment systems, excluding sums returned in cash to customers,

• DIFI-04: updated list of their agents and sub-agents.

Monthly reports are transmitted no later than fifteen calendar days after the closing date of operations.

SECTION 3: Postal Financial Services (SFP)

Article 12:

Postal Financial Services apply the accounting framework for inclusive financial institutions, excluding, on the asset side of the balance sheet, class 2 (customer loans).

They communicate annual financial statements and quarterly reports to the Central Bank according to models defined by circular letter of the Central Bank.

Quarterly reports are transmitted no later than 45 days after the closing date of operations and include the following documents:

• The accounting statement

  • The asset balance sheet,
  • The liability balance sheet,
  • The income statement, and
  • Off-balance sheet items,

• DSFP-03: status of loans granted to staff;

• DSFP-05: data on activities and general statistics;

• DSFP-06: calculation of solvency, liquidity, and risk diversification ratios; for the solvency ratio, the provisional profit integrated into equity comes from a quarterly closing integrating annual amortization converted to a quarterly basis (i.e., annual amortization divided by four) and provisions;

• DSFP-09: list of the 10 largest creditors, outside the regulated financial sector, with maturity dates for term deposits;

• Where applicable, they transmit monthly to the BCRG, within 15 days after the closing date of operations, the following documents:

  • DIFI-01: amount of sums transferred within the payment system managed by the IFI,
  • DIFI-02: amount of sums entering from other payment systems, excluding payments resulting from a cash deposit,
  • DIFI-03: amount of sums exiting to other payment systems, excluding sums returned in cash to customers,
  • DIFI-04: updated list of their agents and sub-agents,

Chapter 3: Standards Relating to the Certification of Financial Statements

Article 13: Principles

In compliance with the texts governing its profession, the Statutory Auditor:

• Proceeds with the certification of annual accounts, and,

• Ensures and attests to the accuracy and fairness of information intended for the public and its concordance with said accounts ».

• Accuracy implies that the Statutory Auditor must ensure compliance of operations with the rules and procedures in force in the profession as well as with the provisions of the various texts issued by the Central Bank.

• Fairness mandates the good faith application of these rules and procedures.

In this regard, it should be specified that certification accompanied by qualifications must be the exception and relate to amounts representing a small fraction of the balance sheet or income statement. However, when it occurs, the issued qualifications are subject to a detailed report addressed to the Central Bank.

Certification documents (general report, special report, certified statements, including stock market situations to the Central Bank) are dated and signed by the statutory auditor.

Article 14: Scope of Certification

Certification work covers the following four (4) areas:

15.1. Functioning of governing bodies and internal control.

This involves identifying significant facts contributing to or hindering the normal functioning of governing bodies, notably:

• Compliance of statutes with general law provisions;
• Respect of statutory rules;
• Regularity of the appointment of executives and meetings of bodies;
• Definition of a strategy and a business plan revised periodically in their implementation.

15.2. Opinion on accounts

This results from the assessment of the application of rules established by the IFI accounting framework. In particular, respect for minimum rules for recognizing and providing for distressed commitments requires particular attention.

Any additional provisions requested by the supervisory authority must be fully established at the close of the fiscal year, and any negative discrepancy will be duly assessed or justified by the statutory auditor in their report.

The general report must contain a detailed analysis of the main balance sheet accounts, with a particular focus on the customer credit portfolio for MFIs, off-balance sheet items, and the income statement.

15.3. Compliance with prudential regulation

The statutory auditor assesses, on the one hand, the application of calculation rules and, on the other hand, compliance with standards arising from the existing prudential framework. The determination of net equity is assessed with regard to required supporting documents, and identified shortfalls are brought to the attention of the deliberative body.

15.4. Other verifications and specific information

This part aims, among other things, at compliance with provisions relating to loans granted to corporate officers, shareholders, executives, employees, and related parties. It is distinct from the special report drafted under company law provisions relating to regulated agreements.

Furthermore, the statutory auditor reports on any other violation of legal and regulatory provisions they may have had to note, without prejudice to their actual impact.

Article 15:

In exceptional circumstances, the Central Bank may require the Statutory Auditor to extend the scope of their verification work and report directly to them, or mandate them to carry out special work. Fees related to these additional works are borne by the IFI.

By exceptional circumstances, the Central Bank means any element related to the internal control system, accounting methods and principles, or specific operations that are likely to harm the sustainability of the IFI.

Article 16:

The Statutory Auditor who becomes aware of or is informed of an error or inaccurate information, and in their opinion, material in the financial statements that were the subject of their report, notifies the board of directors of the IFI.

The board of directors communicates the modified financial statements to the Central Bank and to shareholders within thirty (30) days of the notice. If the Statutory Auditor deems it necessary to modify their report, the modified financial statements are accompanied by a copy of the modified report.

Article 17:

Certified statements are transmitted to the Central Bank no later than June 30 of each year. These statements are accompanied by the statutory auditor's report and a detailed description of the work performed and results obtained.

Chapter 4: Final Provisions

Article 18:

This instruction enters into force on the date of its signature and repeals any prior provision relating to the same subject.

Dr Louncény Nabé

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Annexes

Annex 1: Nomenclature and Accounting Chart

Article 1:

The accounting nomenclature may be specified or modified by circular letter of the Central Bank.

Any IFI may, as needed, create sub-accounts for the purpose of recording its operations, in compliance with the principles of accuracy and fairness of its financial information.

Article 2: Asset Accounts

The classes, accounts, and sub-accounts of assets are defined as follows:

1. Operations with the financial sector

   • 10 Cash and current accounts (on demand)

     • 101 Cashiers
     • 102 Central Bank
     • 103 Banks and financial institutions
     • 104 Other availability accounts
     • 105 Checks and effects for collection
     • 106 Trustee Body / Central Network Cashier
     • 108 Related receivables

   • 11 Short-term loans and securities (0 – 2 years)

     • 111 Central Bank
       • 1111 Very short term
       • 1112 Other short term
     • 112 Banks and financial institutions
       • 1121 Very short term
       • 1122 Other short term
     • 113 Other financial sector

   • 1131 Very short term (bonds, T-bills, ...)

   • 1132 Other short term

   • 114 Treasury bills and other securities issued by a public entity

   • 118 Related receivables (accrued but not yet due interest)

   • 12 Medium and long-term loans (2 years and +)

     • 122 Banks and financial institutions
     • 123 Other financial sector
     • 124 Treasury bills and other securities issued by a public entity
     • 128 Related receivables (accrued but not yet due interest)

2. Operations with customers

   • 20 Healthy loans (according to initial duration)
     • 201 Short term (0 to 2 years)
       • 2011 Very short term (0 to 3 months)
       • 2012 Other short term (3 months to 2 years)
     • 202 Medium term (2 to 5 years)
     • 203 Long term (5 years and +)
     • 208 Related receivables (accrued but not yet due interest)
   • 21 Distressed loans
     • 211 Unpaid loans
     • 212 Restructured or rescheduled receivables
     • 213 Other distressed receivables
     • 214 Accrued, unpaid interest (gross - provision = 0)

3. Miscellaneous operations

   • 30 Stocks
   • 31 Short-term securities (realization of receivables)
   • 32 Various debtors

• 321 Advances to staff
• 322 Other various debtors
• 323 Other distressed receivables
• 324 Subscribed capital, unpaid by partners (counterpart to account 571)
• 33 Regularization accounts - asset
  • 331 Expenses paid in advance
  • 332 Income to be received
  • 333 Expenses to be spread over several fiscal years
  • 336 Liaison account - asset

4. Fixed assets
   • 40 Financial fixed assets
     • 401 Participations in approved financial institutions (including FGDR)
     • 402 Other participation securities
     • 403 Other immobilized securities at equity value (subordinated debt, participatory loans ...) in approved financial institutions
     • 404 Other immobilized securities outside financial institutions
   • 41 Deposits and guarantees (long term)
   • 42 Intangible fixed assets
     • 421 Capitalized expenses (establishment costs)
     • 422 Immobilized values (software, ...)
   • 43 Tangible fixed assets
     • 431 Land and land improvements
     • 432 Buildings and real estate improvements
     • 433 Equipment and other IT infrastructure
     • 434 Vehicles

• 435 Other tangible fixed assets
• 44 Assets in progress

Article 3: Liability Accounts

The classes, accounts, and sub-accounts of liabilities are defined as follows:

1. Operations with the financial sector

   • 16 Short-term borrowings

     • 161 Central Bank
       • 1611 Very short term
       • 1612 Other short term
     • 162 Banks and Financial Institutions
       • 1621 Very short term
       • 1622 Other short term
     • 168 Related payables

   • 17 Medium and long-term borrowings

     • 171 Banks and Financial Institutions
       • 1711 Medium term
       • 1712 Long term
     • 172 Other financial sector (bonds, T-bills, ...)
       • 1721 Medium term
         including non-eligible subordinated bonds for equity
       • 1722 Long term
     • 178 Related payables

   • 18 Earmarked resources

     • 181 Earmarked resources for institution risks
     • 182 Earmarked resources for lender risks

2. Operations with customers

   • 24 Customer deposits
     • 241 Demand deposits
     • 242 Term deposits (regulated savings products)
       • 2421 Passbook Accounts (mobilizable in 1 month)
       • 2422 Housing Savings Plan (mobilizable in 6 months)
       • 2423 Retirement Savings Plan (mobilizable in 3 years and +)

• 243 Security deposits
• 244 Other term deposits subscribed by customers
• 248 Related payables (interest to be paid VST)
• 25 Electronic Money Account
  • 251 Electronic money accounts (on demand)
  • 258 Related payables (interest, discounts and bonuses to be paid VST)

3. Miscellaneous operations

   • 34 Partners' accounts

     • 341 Variable redeemable shares without condition
     • 342 Current accounts of partners
     • 343 Term accounts of partners not having equity value

   • 35 Various creditors (other very short-term debts)

     • 351 Tax & social debts
     • 352 Debts to staff
     • 353 Dividends to pay

   • 36 Regularization accounts - liability

     • 361 Income recognized in advance
     • 362 Expenses to pay
     • 366 Liaison account - liability

4. Equity

   • 50 Liability provisions (general banking risk funds)
   • 51 Investment grants
   • 52 Retained earnings
   • 53 Subordinated debts & assimilates eligible for equity
     • 531 Subordinated bank debt with indefinite duration or term ≥ 5 years
     • 532 Subordinated bonds with term ≥ 5 years
     • 533 Convertible bonds into shares upon issuer's request
     • 534 Participatory loan from partners or shareholders
     • 535 Other long-term subordinated values, eligible
   • 54 Voluntary reserves
   • 55 General reserve
   • 56 Indivisible endowment fund, of a reserve nature
   • 57 Share capital
     • 571 Subscribed share capital, unpaid

• 572 Share capital (paid) fixed or whose repayment may be blocked
• 58 Financial solidarity funds of networks
• 59 Surplus or deficit (pending allocation)

Article 4: Expense Accounts

Code	Designation
60	FINANCIAL EXPENSES
601	Interest
6011	Interest on demand deposits
6012	Interest on term deposits
6013	Interest on borrowings of less than one year
6014	Interest on term borrowings
6015	Other interest
602	Other financial expenses
6021	Commissions
6022	Net charge/transfer of short-term securities
61	PURCHASES AND EXTERNAL SERVICES
611	Purchase of office supplies
6111	Stock variations (a)
612	Water and electricity
613	Rentals
614	Maintenance and repairs
615	Insurance premiums
62	OTHER EXTERNAL SERVICES
621	Advertising and public relations
622	Transport and travel
623	Postal and telecommunications expenses
624	Banking services
625	Training, education, research and study expenses
626	Other
63	TAXES AND LEVIES
631	Local taxes and levies
623	Income tax on _____
633	Other taxes and levies
64	PERSONNEL EXPENSES

• 641 Staff expenses
• 642 Social charges

65 OTHER EXPENSES

• 651 Reimbursement of expenses
• 652 Miscellaneous expenses
• 653 Losses on credit portfolio

66 ALLOCATIONS FOR DEPRECIATION AND PROVISIONS

• 661 Allocation for depreciation
• 662 Allocation for provisions
• 6621 Provisions on unpaid receivables (211)
• 6622 Provisions on restructured receivables (212)
• 6623 Provisions on other distressed receivables (213)
• 6624 Provisions on accrued, unpaid interest (214)
• 6625 Other provisions

67 EXCEPTIONAL EXPENSES

• 671 Book value of disposed asset elements
• 672 Other exceptional expenses

68 Tax on net fiscal profit (IS - 25 %)

591 SURPLUS OR DEFICIT before tax (IS)

592 SURPLUS OR DEFICIT after IS or IS credit

Article 5: Income Accounts

Code	Designation
70	FINANCIAL INCOME RELATED TO CREDIT AND PLACEMENTS
701	Interest on customer loans (class 2)
7011	Interest on short-term loans
7012	Interest on medium and long-term loans
7015	Other interest
702	Interest on loans to the financial sector
7021	Interest on demand deposits (financial sector)
7022	Interest on term deposits (financial sector)
703	Financial income related to placements (class 1 / 4)
	Net income/transfer of short-term or available-for-sale securities (capital gain)

• 7032 Income from financial fixed assets (dividends and capital gains entering the income statement)

71 OTHER FINANCIAL INCOME

• 711 Membership fees
• 712 Account maintenance fees
• 713 Deposit or withdrawal fees
• 714 Payment or transfer fees
• 715 Late payment penalties
• 716 Replacement of payment booklet or card

72 INCOME RELATED TO ELECTRONIC MONEY ACCOUNTS AND OPERATIONS

• 721 Account opening or membership fees
• 722 Payment commission (send / receive)
• 723 ME account loading fees
• 724 Fees for