Circular No. 3.790

The Board of Directors of the Central Bank of Brazil, in a meeting held on 4 May 2016, based on arts. 9, 10, item IX, of Law No. 4.595, of 31 December 1964, 1, § 1, of Complementary Law No. 130, of 17 April 2009, and 14, item II, of Resolution No. 4.454, of 17 December 2015,

R E S O L V E S :

Art. 1 This Circular establishes procedures to be observed in the accreditation process of Cooperative Audit Entity (EAC) and of independent audit firm for the performance of cooperative audit in single credit cooperatives, central credit cooperatives and confederations of credit centrals.

Art. 2 The accreditation request must be sent to the Central Bank of Brazil containing, at a minimum:

• I - proof of regular incorporation of the entity by providing a certified copy of the following documents:

  • a) articles of association or social contract filed with the competent body; and

  • b) internal regulations or equivalent document;

• II - executive summary, contemplating, at a minimum, the following information:

  • a) organizational chart;

  • b) description of the operational and administrative structures;

  • c) address of the headquarters and regional offices;

  • d) corporate governance criteria and mechanisms;

  • e) description of the internal control systems;

  • f) criteria and mechanisms to safeguard and guarantee the technical autonomy of the audit teams;

  • g) processes for periodic replacement of members with management function of the team involved in the audit of each cooperative;

  • h) description of the continuing education program; and

  • i) short-term goals and long-term strategic market objectives, addressing, including, the geographic area of operation and the number of single credit cooperatives segregated by capital and loan, classic and full cooperatives, central credit cooperatives and confederations of credit centrals to be audited;

• III - code of ethics, when existing;

• IV - code of conduct, when existing;

• V - list of directors, managers and technical responsible, as well as individual information on:

  • a) professional experience, addressing activities performed with single credit cooperatives, central credit cooperatives and confederations of credit centrals;

  • b) list of audit works performed, including in financial institutions and other institutions authorized to operate by the Central Bank of Brazil, especially in the last three years, broken down by institution, nature of the work and total hours spent; and

  • c) documentary proof of specific technical knowledge related to the cooperative segment, with emphasis on topics related to operations performed by credit cooperatives, analysis of operational performance and economic-financial situation, corporate governance, internal controls, risk management, financial regulation, relationship with clients and users of financial products and services and prevention of money laundering and terrorist financing;

• VI - act of designation of the technical responsible for the cooperative audit activities;

• VII - list of any services performed by the applicant in single credit cooperatives, central cooperatives and confederations of credit centrals, as well as in other institutions of the financial system, in the last five years, broken down by institution, nature of the service and total hours spent;

• VIII - list of possible single credit cooperatives, central cooperatives and confederations of credit centrals interested in contracting the cooperative audit services of the applicant, with details of the type of institution, size, complexity and geographic location;

• IX - annual budget projection for the five-year period;

• X - detailed staffing of technical employees, with indication of academic background and professional experience;

• XI - authorization, to the Central Bank of Brazil, for the performance of registration research on the technical responsible for the cooperative audit activities, the directors and the managers of the entity; and

• XII - declaration regarding the existence of administrative and judicial proceedings in which directors, managers or technical responsible for the cooperative audit activities are defendants.

§ 1 The request mentioned in the caput must be signed by the chief executive officer, or by holder of equivalent position, of the EAC or by partner of the independent audit firm.

§ 2 For the purposes of this Circular, manager is considered the professional who occupies a strategic managerial position of coordination of the audit works in the EAC or in the independent audit firm.

Art. 3 For the purposes of analysis of the accreditation process, the Central Bank of Brazil may:

• I - request information, clarifications or additional documents considered necessary for the decision on the accreditation request; and

• II - summon for technical interview directors, managers, administrators and technical responsible.

Art. 4 The accreditation processes will be filed, without analysis of merit, when the requests for presentation of additional documents, provision of information, or appearance for the performance of technical interview or other requests related to the process are not met, within the established deadlines.

Art. 5 The request will be denied, regardless of other analyses, if it is verified:

• I - circumstance that affects the reputation of the directors, managers or technical responsible for the cooperative audit activities; or

• II - falsity in the declarations or in the documents presented in the instruction of the process.

Sole paragraph. To evaluate the circumstance mentioned in item I, the Central Bank of Brazil may take into account the following situations and occurrences:

• I - judicial process or police or civil inquiry to which the elected official, the appointed official, or any company of which he is or has been, at the time of the facts, a controller or administrator, is responding;

• II - administrative process related to the National Financial System; and

• III - other situations, occurrences, or analogous circumstances deemed relevant by the Central Bank of Brazil.

Art. 6 The process will be considered properly instructed only when all necessary documentation, as well as the pertinent information, is fully presented to the Central Bank of Brazil.

Art. 7 The Central Bank of Brazil shall communicate to the EAC or the independent audit firm:

• I - the complementary documentation necessary for the regularization of the accreditation request, if it is found that information or documents required by current regulations are missing; and

• II - the result of the analysis of the accreditation request, including, in the case of denial, the motivation.

Art. 8 From the approval of the accreditation request, the EAC or the independent audit firm must keep permanently updated the records of the directors, managers, and technical officer and the list of audited cooperatives.

Art. 9 For the purposes of inclusion or replacement of directors, managers, and technical officer after the initial accreditation, the EAC or the independent audit firm must forward to the Central Bank of Brazil the documents and information related to these persons required in art. 2, items V, VI, XI, and XII of this Circular.

Art. 10 The EAC or the independent audit firm may have its accreditation canceled, ex officio, if it is found, at any time:

• I - relevant or repeated non-compliance with the minimum requirements established in art. 2, § 1, of Resolution No. 4.454, of 17 December 2015; or

• II - falsity or serious omission in the declarations or documents presented in the instruction of the process.

§ 1 Prior to the cancellation referred to in the caput, the Central Bank of Brazil shall initiate a specific administrative procedure, notifying the interested EAC or independent audit firm to express its views on the intention to cancel.

§ 2 In the event of cancellation of the accreditation, the Central Bank of Brazil shall communicate the motivation to the interested EAC or independent audit firm.

Art. 11 This Circular enters into force on the date of its publication.

Otávio Ribeiro Damaso Anthero de Moraes Meirelles Director of Regulation Director of Supervision Sidnei Corrêa Marques Director of Organization of the Financial System and Control of Rural Credit Operations