Circular No. 2397 — Establishes procedures for the preparation and submission of financial statements for institutions with foreign branches or equity participations

CIRCULAR NO. 002397

Establishes procedures for the preparation and submission of financial statements for institutions that hold branches or equity participations abroad.

The Board of Directors of the Central Bank of Brazil, in a session held on 12/29/93, based on Article 11 of Resolution No. 1,974, of 12/04/92, and on the grounds of Article 4, item XII, of Law No. 4,595, of 12/31/64, by competence delegated by the National Monetary Council,

D E C I D E D:

Art. 1. Establish that, starting from 01/01/94, institutions authorized to operate by the Central Bank of Brazil, which hold branches abroad, must prepare, for each branch and for the consolidated branches:

I - monthly:

a) Analytical Balance Sheet, document No. 18, of the Accounting Plan of the Institutions of the National Financial System - COSIF;

b) Consolidated Analytical Balance Sheet, document No. 18, of COSIF;

II - on June 30 and December 31, in addition to the documents provided for in the previous item:

a) Analytical Balance Sheet, document No. 19, of COSIF;

b) Consolidated Analytical Balance Sheet, document No. 19, of COSIF;

c) Statement of the Result of the Semester, document No. 20, of COSIF;

d) Consolidated Statement of the Result of the Semester, document No. 20, of COSIF.

Paragraph 1. The statements provided for in this article must be filled out in US$1,000.00 (one thousand US dollars).

Paragraph 2. Operations carried out between the branch and the headquarters, or other branches, must be recorded in the Inter-branch Relations subgroup, of COSIF.

Paragraph 3. Accounting events related to representation offices must be incorporated into the accounting of the headquarters or the branch to which they relate.

Art. 2. The institutions referred to in the previous article must send to this Body, starting from 01/01/94, for each branch and for the consolidated branches, the documents listed in items I and II, letters "a" and "b", of that article.

Art. 3. Institutions authorized to operate by this body, which hold equity participations abroad, must prepare, starting from 01/01/94, for each subsidiary and controlled company, directly or indirectly:

I - quarterly, the Analytical Balance Sheet, document No. 18, of COSIF;

II - on June 30 and December 31, in addition to the document provided for in the previous item:

a) Analytical Balance Sheet, document No. 19, of COSIF;

b) Statement of the Result of the Semester, document No. 20, of COSIF.

Sole Paragraph. Such statements must be filled out in US$1,000.00 (one thousand US dollars).

Art. 4. The institutions referred to in the previous article must send to this body, starting from 01/01/94, for each subsidiary and controlled company, the documents listed in items I and II, letter "a", of that article.

Art. 5. Institutions authorized to operate by this body that hold branches abroad must prepare, starting from 01/01/94, the following consolidated financial statements in accordance with the standards provided for in COSIF, with full compliance with the Fundamental Principles of Accounting:

I - monthly, the Consolidated Analytical Balance Sheet, document No. 4, of COSIF;

II - on June 30, in addition to the document provided for in the previous item:

a) Consolidated Analytical Balance Sheet, document No. 4, of COSIF;

b) Consolidated Statement of the Result of the Semester, document No. 8, of COSIF;

c) Consolidated Statement of Changes in Equity of the Semester, document No. 11, of COSIF;

d) Consolidated Statement of Sources and Applications of Resources of the Semester, document No. 12, of COSIF;

III - on December 31, in addition to the documents provided for in the previous items I and II:

a) Consolidated Statement of the Result of the Fiscal Year, document No. 8, of COSIF;

b) Consolidated Statement of Changes in Equity of the Fiscal Year, document No. 11, of COSIF;

c) Consolidated Statement of Sources and Applications of Resources of the Fiscal Year, document No. 12, of COSIF.

Art. 6. The institutions referred to in the previous article must send to this body, starting from 01/01/94:

I - monthly, the Consolidated Analytical Balance Sheet, document No. 4, of COSIF;

II - on June 30 and December 31, in addition to the document provided for in the previous item, the Consolidated Analytical Balance Sheet, document No. 4, of COSIF.

Art. 7. The institutions referred to in the "caput" of Art. 5 of this Circular must determine their operational limits based on the documents listed in items I and II, letter "a", of that article.

Art. 8. The consolidated operational statements referred to in COSIF 1.21 must be prepared including branches and equity participations in subsidiaries and controlled companies, in the country and abroad.

Sole Paragraph. Institutions that opt for the faculty of determining debt and risk diversification limits based on consolidated statements, in accordance with Resolution No. 1,990, of 06/30/93, must use the consolidated analytical balance sheet/balance sheet prepared as provided for in the "caput" of this article.

Art. 9. In the conversion of foreign currency to the national currency of the balance sheet/balance sheet of branches and equity participations in subsidiaries and controlled companies, abroad, for consolidation purposes, the following must be observed:

I - the conversion of the original currency of the country where the branch or investment is located to the US dollar must be carried out adopting the current selling exchange rate, except for non-monetary items which must be converted by the exchange rate in effect on the date of their formation or acquisition;

II - the conversion of the US dollar to the national currency must be carried out using the current selling exchange rate on the date of the balance sheet/balance sheet.

Sole Paragraph. Non-monetary items are considered those identified as assets or rights, mostly represented by items with physical existence, which have their own economic substance, regardless of the cost value or original value of their acquisition, and the accounts that form equity.

Art. 10. In the conversion of the income statement, the following must be observed:

I - revenues and expenses must be converted by the rates in effect in the respective periods of their formation, using the rate of the day or the average rate of the month;

II - depreciation is determined by applying depreciation rates to the costs of depreciable assets already converted.

Art. 11. For the purpose of sending the accounting information referred to in this Circular, the following codes of the Document Catalog - CADOC must be adopted:

I - ANALYTICAL BALANCE SHEET (Individualized Position of Branches Abroad), document No. 18, of COSIF:

SEGMENT CADOC CODE

Commercial Banks 20.2.3.010-4
Investment Banks 24.2.3.001-4
Multiple Banks 26.2.3.010-8

II - CONSOLIDATED ANALYTICAL BALANCE SHEET (Consolidated Position of Branches Abroad), document No. 18, of COSIF:

SEGMENT CADOC CODE

Commercial Banks 20.2.3.020-7
Investment Banks 24.2.3.002-1
Multiple Banks 26.2.3.020-1

III - ANALYTICAL BALANCE SHEET (Individualized Position of Branches Abroad), document No. 19, of COSIF:

SEGMENT CADOC CODE

Commercial Banks 20.2.6.010-5
Investment Banks 24.2.6.001-5
Multiple Banks 26.2.6.010-9

IV - CONSOLIDATED ANALYTICAL BALANCE SHEET (Consolidated Position of Branches Abroad), document No. 19, of COSIF:

SEGMENT CADOC CODE

Commercial Banks 20.2.6.020-8
Investment Banks 24.2.6.002-2
Multiple Banks 26.2.6.020-2

V - ANALYTICAL BALANCE SHEET (Individualized Position of Equity Participations Abroad), document No. 18, of COSIF:

SEGMENT CADOC CODE

Commercial Banks 20.3.4.001-8
Investment Banks 24.3.4.001-4
Multiple Banks 26.3.4.001-2

VI - ANALYTICAL BALANCE SHEET (Individualized Position of Equity Participations Abroad), document No. 19, of COSIF:

SEGMENT CADOC CODE

Commercial Banks 20.3.6.001-9
Investment Banks 24.3.6.001-8
Multiple Banks 26.3.6.001-3

VII - CONSOLIDATED ANALYTICAL BALANCE SHEET (Consolidation of Headquarters and Branches Abroad), document No. 4, of COSIF:

SEGMENT CADOC CODE

Commercial Banks 20.2.3.021-4
Investment Banks 24.2.3.003-8
Multiple Banks 26.2.3.021-8

VIII - CONSOLIDATED ANALYTICAL BALANCE SHEET (Consolidated Position of Headquarters and Branches Abroad), document No. 4, of COSIF:

SEGMENT CADOC CODE

Commercial Banks 20.2.6.101-9
Investment Banks 24.2.6.003-9
Multiple Banks 26.2.6.091-0

IX - CONSOLIDATED ANALYTICAL BALANCE SHEET (Operational Consolidation of Financial Conglomerate, including Branches and Equity Participations, Abroad), document No. 4, of COSIF:

SEGMENT CADOC CODE

Financial Conglomerates - Lead Institutions 42.1.6.005-6

X - CONSOLIDATED ANALYTICAL BALANCE SHEET (Operational Consolidation of Financial Conglomerate, including Branches and Equity Participations, Abroad), document No. 4, of COSIF:

SEGMENT CADOC CODE

Financial Conglomerates - Lead Institutions 42.1.6.010-4

Art. 12. The deadlines for delivering the financial statements to the Document Reception Center of the Regional Delegations of this body or transmission via SISBACEN are the same as those provided for in the other documents dealt with in Circulars No. 1,490, of 06/01/89, and 1,949, of 04/24/91, and complementary regulation.

Sole Paragraph. Non-observance of the deadlines fixed for sending the financial statements to this body subjects the institution to the monetary fines provided for in Circulars No. 1,490/89 and 1,949/91, and complementary regulation.

Art. 13. Institutions must keep in good order, for a period of 05 (five) years, and by any means, the custody of the working papers and calculation memos related to the preparation of their consolidated financial statements in the manner provided for in this Circular.

Art. 14. This Circular enters into force on the date of its publication.

Art. 15. Circular-Letter No. 2,370, of 06/04/93, is revoked, eliminating the following statements from COSIF:

I - Consolidation of the Accounts of Branches Abroad with those of Branches in the Country, document No. 17, of COSIF;

II - Statement of the Movement of the "Branches Abroad" account, document No. 22, of COSIF;

III - Statement of the Movement of Equity, document No. 23, of COSIF;

IV - Balance Sheet Equivalence Table, document No. 24, of COSIF.

Brasília, December 29, 1993

Edson Bastos Sabino
Director of Supervision and of Standards and Organization of the Financial System, in exercise