Circular No. 3.816

The Collegiate Board of the Central Bank of Brazil, in a session held on 14 December 2016, based on arts. 9 of Law No. 4.595, of 31 December 1964, and 12 of Resolution No. 4.524, of 29 September 2016,

R E S O L V E S :

Art. 1 Financial institutions and other institutions authorized to operate by the Central Bank of Brazil that hold investments abroad must use, for the purposes of consolidation of financial statements and determination and recording of the result of equity in earnings, the financial statements of the investee abroad, in national currency, relating to the same base date as the statements of the investor.

§ 1 If the financial statements of the investee abroad are prepared on a date different from that on which the statements of the investor are prepared, it is permitted to use statements of the investee with a date difference of up to two months, provided that the necessary adjustments are made to recognize the effects of any significant transactions or other events occurring between the different dates.

§ 2 In the situation provided for in § 1, the following must be observed:

• I - if the functional currency of the investee abroad is the national currency, transactions in foreign currency carried out by the investee must be converted into national currency, observing the regulations in force, on the date of the trial balance or balance sheet of the investing institution; and

• II - if the functional currency of the investee abroad is different from the national currency, the financial statements of the investee must be converted into national currency, observing the regulations in force, on the date of the trial balance or balance sheet of the investing institution.

§ 3 The provisions of § 1 do not apply to the preparation of consolidated financial statements of the prudential conglomerate.

Art. 2 When profits generated by investments abroad are brought into the Country, the difference between the amount determined on the occasion of the effective inflow of the foreign exchange and the amount of that profit, converted on the date of the last trial balance or balance sheet, observing the regulations in force, must be recorded in the appropriate revenue or expense accounts, as the case may be.

Art. 3 The accounting procedures established in arts. 1 and 2 must be applied prospectively from 1 January 2017.

Art. 4 The function of accounting title 4.5.1.85.00-7 Orders of payment in foreign currencies is excluded from Annex I of Circular No. 2.106, of 20 December 1991.

Art. 5 This Circular enters into force on the date of its publication.

Art. 6 The following are revoked, from 1 January 2017:

• I - arts. 9 and 10 of Circular No. 2.397, of 29 December 1993; and

• II - Circulars nos. 2.125, of 24 January 1992, and 2.571, of 17 May 1995.

Otávio Ribeiro Damaso Director of Regulation