Circular No. 2.406

CIRCULAR N. 002406 ------------------ Amends and consolidates procedures for the preparation of financial statements in currency of constant purchasing power. The Board of Directors of the Central Bank of Brazil, in a session held on 09.02.94, based on art. 4, item XII, of Law No. 4.595, of 31.12.64, by competence delegated by the National Monetary Council, D E C I D E D: Art. 1 The following must prepare financial statements in currency of constant purchasing power: I - financial institutions and entities authorized to operate by this Body that are publicly traded companies; II - the following institutions, not constituted as publicly traded companies, with shareholders' equity or paid-in capital exceeding 20,000,000 (twenty million) Fiscal Reference Units - UFIR: a) multiple banks; b) commercial banks; c) savings banks. Paragraph 1 Financial statements in currency of constant purchasing power comprise: I - the Balance Sheet as of the base date of the close of the Semester/Exercise; II - the Income Statement for the Quarter/Semester/Exercise; III - the Statement of Sources and Applications of Funds for the Semester/Exercise; IV - the Statement of Changes in Shareholders' Equity for the Semester/Exercise. Paragraph 2 The Income Statement for the Quarter, in currency of constant purchasing power, referred to in item II of the previous paragraph, must be prepared for the base dates of 31.03 and 30.09. Paragraph 3 The institutions and entities referred to in this article are exempt from preparing the Income Statement for the Quarter in accordance with corporate legislation. Paragraph 4 The following occurrences do not imply exemption from the obligation to prepare financial statements in currency of constant purchasing power: I - loss of the status of publicly traded company, in the case of the institutions and entities referred to in item I of the caput of this article; II - reduction in the amount of shareholders' equity or paid-in capital, below 20,000,000 (twenty million) UFIR, in the case of the institutions and entities referred to in item II of the caput of this article. Paragraph 5 The amounts contained in the Explanatory Notes to the financial statements referred to in this article and in the Management Report must also be presented in currency of constant purchasing power. Paragraph 6 Financial statements in currency of constant purchasing power must be prepared, as of 1 January of the following exercise, by the institutions referred to in item II of the caput of this article, whose shareholders' equity or paid-in capital reaches, on the base date of 31.12, the amount corresponding to 20,000,000 (twenty million) UFIR. Paragraph 7 The institutions referred to in the previous paragraph are exempt from the comparative publication of financial statements in currency of constant purchasing power, relating to the first and second semesters and exercise prior to that in which their classification occurred. Art. 2 The guidelines contained in CVM
Instruction No. 191, of 15.07.92, of the Securities Commission, and other complementary provisions on the matter, must be followed in the preparation of financial statements in currency of constant purchasing power, observing the use of the daily value of the Accounting Monetary Unit - UMC. Paragraph 1 The monthly average value of the UMC may be adopted for monetary assets and liabilities, provided that the adjustments required to adequately reflect the revenues and expenses representing the operations carried out are made. Paragraph 2 The amount of active and passive provisions must be adjusted so that the financial position is adequately reflected, respecting the criteria for valuation of assets and liabilities. Art. 3 Financial statements in currency of constant purchasing power must be disclosed on the same base dates provided for their counterparts in accordance with corporate legislation, with the inclusion of a specific column for the presentation of the respective amounts, observing the publication models of the latter. Paragraph 1 For comparability purposes, financial statements in currency of constant purchasing power must be disclosed with the inclusion of a specific column for the presentation of the amounts relating to the previous period. Paragraph 2 The disclosure of the Income Statement for the Quarter in currency of constant purchasing power is exempt. Art. 4 The institutions and entities referred to in art. 1 may opt for the publication of their set of financial statements exclusively in currency of constant purchasing power. Sole paragraph. The adoption of the alternative provided for in this article makes mandatory: I - the disclosure, in an explanatory note, where applicable: a) of the amounts corresponding to the balances of the accounts contained in the balance sheet prepared in accordance with corporate legislation, when they diverge from those presented in its counterpart in currency of constant purchasing power; b) of the reconciliation of any divergences between the net income for the period and/or shareholders' equity, as a result of the provisions of the previous subitem; II - the submission of financial statements prepared in accordance with corporate legislation, when requested by interested parties; III - the publication, in a specific column for the presentation of the respective amounts, of the financial statements in currency of constant purchasing power relating to the previous period, duly examined by independent auditors. Art. 5 The institutions and entities referred to in art. 1 must transmit to this Body, by the 15th day of the second month following the base date, the following financial statements in currency of constant purchasing power: I - the Income Statement for the Quarter; II - the Income Statement for the Semester. Paragraph 1. The transmission to this Body of the financial statements referred to in this article must be carried out by using Transaction PCOS500 of the Central Bank Information
System - SISBACEN. Paragraph 2. Access to the transaction referred to in the previous paragraph is conditioned, for each base date, on the timely transmission of the statement relating to the previous period. Paragraph 3. The institutions and entities referred to in art. 1 that do not yet have authorization for access to SISBACEN must arrange it with this Body, within a period compatible with the mandatory transmission of the financial statements in currency of constant purchasing power. Art. 6. The institutions and entities referred to in art. 1 are exempt from sending to this Body, without prejudice to the obligation to prepare, examine by independent auditors, publish and compare with those relating to the previous period, the following financial statements in currency of constant purchasing power: I - the Balance Sheet relating to the base date of the close of the Semester/Fiscal Year; II - the Statement of Income for the Fiscal Year; III - the Statement of Sources and Applications of Funds of the Semester/Fiscal Year; IV - the Statement of Changes in Shareholders' Equity of the Semester/Fiscal Year. Art. 7. Failure to observe the deadlines set for transmission, to this Body, of the financial statements in currency of constant purchasing power referred to in art. 5 subjects the defaulting institution or entity to the pecuniary fines provided for in Circular No. 1.490 of 1 June 1989, and complementary regulations. Art. 8. The financial statements in currency of constant purchasing power prepared by the institutions and entities referred to in art. 1 must be examined by independent auditors authorized in accordance with Resolution No. 1.007 of 2 May 1985, and complementary regulations. Paragraph 1. The report of the independent auditors must include their opinion regarding the financial statements in currency of constant purchasing power. Paragraph 2. The Statement of Income for the Quarter in currency of constant purchasing power is exempt from the obligation of examination by independent audit. Paragraph 3. The adoption of the alternative provided for in the "caput" of art. 4 does not eliminate the obligation of examination, by the independent auditors, of the financial statements prepared in accordance with corporate legislation. Art. 9. The institutions and entities referred to in art. 1 must keep in good order, for a period of 05 (five) years and by any means, the safekeeping of the working papers and calculation memories relating to the preparation of the financial statements in currency of constant purchasing power. Art. 10. The mercantile bookkeeping of the institutions and entities referred to in art. 1 must observe the accounting valuation and appropriation criteria provided for in the Chart of Accounts for Institutions of the National Financial System - COSIF, including with respect to the calculation of the result of monetary correction for corporate and tax purposes. Sole paragraph. The preparation of the Statement of Income for
the Quarter, in currency of constant purchasing power, does not imply the formal closing of the income accounts on the respective base dates. Art. 11. Excluded from the requirements prescribed in this Circular are: I - the preparation, in currency of constant purchasing power, of Documents No. 13 - Banking Statistics - ESTBAN and No. 15 - Economic-Financial Statistics - ESTFIN, of COSIF; II - the institutions and entities referred to in art. 1 that are in the process of extrajudicial liquidation. Art. 12. Document No. 8 - Statement of Income for the Quarter/Semester/Fiscal Year, of COSIF, is amended in the form of the annex to this Circular. Art. 13. The institutions and entities referred to in art. 1 are exempt from the transmission, to this Body, of the Statement of Income for the Quarter in currency of constant purchasing power relating to the base date of 30.09.93. Art. 14. The institutions referred to in item II of the "caput" of art. 1, with shareholders' equity or paid-in capital stock greater than 20,000,000 (twenty million) Fiscal Reference Units - UFIR, on the base date of 31.12.92, are exempt: I - from publishing, from submitting to the examination of the independent auditor and from comparing with that relating to the second semester of the previous fiscal year the financial statements referred to in paragraph 1 of art. 1, relating to the base date of 31.12.93; II - from comparing with those relating to the first and second semesters and previous fiscal year the financial statements referred to in paragraph 1 of art. 1, relating to the base dates of 30.06.94 and 31.12.94. Art. 15. The requirements prescribed in this Circular must be observed, as of 1 January 1994, by the institutions referred to in item II of the "caput" of art. 1, whose shareholders' equity or paid-in capital stock has reached, on the base dates of 30.06.93 or 31.12.93, the amount corresponding to 20,000,000 (twenty million) UFIR. Sole paragraph. The institutions referred to in this article are exempt from the comparative publication of financial statements in constant purchasing power currency, relating to the base dates of 30.06.94 and 31.12.94. Art. 16. The alternative provided for in art. 4 may be adopted when publishing the financial statements relating to the base date of 31.12.93. Art. 17. For the purpose of preparing financial statements in constant purchasing power currency and in accordance with corporate legislation, adjustments of income, expenses, gains, losses, profits or losses attributable to previous periods, which cease to be attributed to them, must be monetarily updated from the date on which the appropriation should have been made, with their recording: I - in the appropriate income statement accounts of the second half, when they refer to the first half of the same fiscal year; II - as adjustments of previous years, in ACCUMULATED PROFITS OR LOSSES, when arising from an error or change in accounting criterion, in the case of referring to
previous fiscal years. Sole paragraph. The effects of applying the procedure referred to in this article, if relevant, must be disclosed in a specific explanatory note when publishing the financial statements. Art. 18. Financial institutions, other entities authorized to operate by this Body, and consortium administrators are exempt from sending to this Body the Statement of Sources and Applications of Funds and the Statement of Changes in Shareholders' Equity, prepared in accordance with corporate legislation, until the Department of Norms of the Financial System - DENOR discloses the form of their submission or transmission. Art. 19. This Circular enters into force on the date of its publication. Art. 20. Circulars No. 1.992, of 18.07.91, and No. 2.285, of 10.03.93, and Communiqué No. 3.618, of 03.12.93, are revoked. Brasília, 10 February 1994 Cláudio Ness Mauch Edson Bastos Sabino Director of Norms and Organization Director of Supervision of the Financial System ANNEX COSIF - 4 DOCUMENT No. 8 STATEMENT OF INCOME FOR THE HALF-YEAR/FISCAL YEAR UNDER CORPORATE LEGISLATION AND FULL CORRECTION Synthetic Publication Model On //__ Institution or Conglomerate: Address: C.G.C.: Values in CR$ thousand CODE DESCRIPTION CORPORATE LEGISLATION-FULL CORRECTION 10. INCOME FROM FINANCIAL INTERMEDIATION - 10.10 - Credit Operations............... - 10.40 - Leasing Operations................ - 10.50 - Result of Operations with Securities and Marketable Securities.................. - 10.60 - Result of Exchange Operations........ - 10.70 - Result of Compulsory Deposits... - 10.90 - Gains on Liabilities without Charges, Deducted from Losses on Non-Remunerative Assets.................. - - 15. EXPENSES FROM FINANCIAL INTERMEDIATION - 15.20 - Market Funding Operations........ - 15.30 - Loan, Assignment and Repass Operations................ - 15.40 - Leasing Operations..... - 15.60 - Result of Exchange Operations........ - 15.80 - Provision for Doubtful Debts.............. - 15.90 - Losses on Non-Remunerative Assets, Deducted from Gains on Liabilities without Charges.......... - - 20. GROSS RESULT FROM FINANCIAL INTERMEDIATION...(10-15) - - 50. OTHER OPERATING INCOME/EXPENSES - 50.10 - Service Provision Income....... - 50.20 - Personnel Expenses... - 50.30 - Other Administrative Expenses......... - 50.40 - Tax Expenses.. - 50.70 - Result of Investments in Associates and Subsidiaries..... - 50.80 - Other Operating Income............. - 50.90 - Other Operating Expenses............. - - 60. OPERATING RESULT (20+50) - - 65. NON-OPERATING RESULT - - 70. RESULT OF MONETARY CORRECTION OF BALANCE SHEET - 70.10 - Result of Monetary Correction......... - 70.20 - (-) Adjustments of Monetary Correction of Monthly/Half-Yearly Results............. - - 75. RESULT BEFORE INCOME TAX AND PROFIT SHARING........(60+65+70) - - 80. INCOME TAX AND SOCIAL CONTRIBUTION - - 85. STATUTORY PROFIT SHARING - 90. NET PROFIT (LOSS) - (75-80-85) - 95. EARNINGS PER SHARE:
--------------------------------- ----------------------------- Signature of the Director responsible Place and date for the Accounting Area --------------------------------- ---------------------------- Signature of Director Signature of Accounting Professional CRC( ) No. CPF No.