Circular No. 3950 — General Criteria for Preparation and Disclosure of Financial Statements by Consortium Administrators and Payment Institutions

The Collegiate Board of the Central Bank of Brazil, in a session held on June 25, 2019, based on arts. 6 and 7, item III, of Law No. 11,795, of October 8, 2008, 9, items II and IX, letter “b”, and 15 of Law No. 12,865, of October 9, 2013,

R E S O L V E S:

CHAPTER I

ON THE OBJECT AND SCOPE OF APPLICATION

Art. 1. This Circular establishes the general criteria for the preparation and disclosure of financial statements by consortium administrators and payment institutions.

Sole paragraph. The provisions of this Circular do not apply to associations and non-profit civil entities authorized to administer consortia.

CHAPTER II

ON MANDATORY FINANCIAL STATEMENTS

Art. 2. The institutions mentioned in art. 1 must prepare and disclose the following annual financial statements, relating to the fiscal year, and semi-annual, relating to the semesters ended on June 30 and December 31:

I - Balance Sheet;

II - Statement of Income;

III - Statement of Comprehensive Income;

IV - Statement of Cash Flows; and

V - Statement of Changes in Equity.

§ 1. The financial statements mentioned in the caput must be disclosed accompanied by their respective explanatory notes.

§ 2. The preparation and disclosure of the financial statements referred to in the caput are mandatory from the date of publication of the authorization for the institution's operation in the Official Gazette of the Union, except in cases where the Central Bank of Brazil, on an exceptional basis, determines another date with the objective of rationalizing the flow of information.

§ 3. Institutions that have net equity, on the base date of December 31 of the immediately preceding fiscal year, less than R$2,000,000.00 (two million reais), are exempt from preparing and publishing the Statement of Cash Flows.

§ 4. The semi-annual financial statements relating to the semesters ended on June 30 may be accompanied by selected explanatory notes, in accordance with specific regulation.

Art. 3. Consortium administrators must prepare and disclose, in addition to the statements referred to in art. 2, the following annual financial statements, relating to the fiscal year, and semi-annual, relating to the semesters ended on June 30 and December 31:

I - Consolidated Statement of Consortium Resources; and

II - Consolidated Statement of Variations in Group Availability.

Sole paragraph. The statements referred to in the caput must be prepared from the statements of each consortium group.

Art. 4. In the preparation and disclosure of the Statement of Cash Flows, the institutions mentioned in art. 1 must observe, in addition to the provisions of this Circular, Technical Pronouncement CPC 03 (R2) – Statement of Cash Flows, approved by the Accounting Pronouncements Committee (CPC) on September 3, 2010.

§ 1. The technical pronouncements cited in the text of CPC 03 (R2), while not received by a specific act of the Central Bank of Brazil, cannot be applied.

§ 2. References to other pronouncements in the text of CPC 03 (R2), for the purposes of this Circular, must be interpreted as references to CPC pronouncements that have been received by the Central Bank of Brazil, as well as to other regulatory provisions.

CHAPTER III

ON INTERMEDIATE FINANCIAL STATEMENTS

Art. 5. The institutions mentioned in art. 1 that, voluntarily or by virtue of legal, statutory, and contractual provisions or special situations, prepare and disclose intermediate financial statements, must disclose the set of financial statements provided for in art. 2:

I - prepared in accordance with the provisions applicable to semi-annual and annual statements; or

II - prepared in condensed form, including selected explanatory notes, in accordance with specific regulation.

Sole paragraph. For the purposes of this Circular, intermediate financial statements are considered those relating to periods of less than six months.

Art. 6. In the preparation of intermediate financial statements, institutions must apply the same criteria, procedures, practices, and accounting policies applied in semi-annual and annual statements.

CHAPTER IV

ON THE PRESENTATION OF FINANCIAL STATEMENTS

Art. 7. The institutions mentioned in art. 1 must, in the preparation and disclosure of the financial statements referred to in this Circular, appropriately represent the financial and equity position, performance, and cash flows of the institution, in accordance with the definitions and recognition criteria for assets, liabilities, revenues, and expenses provided for in current regulation.

§ 1. For the purposes of the caput, the institution must:

I - assume the continuity of its activities in the foreseeable future, unless management intends to liquidate the institution or cease its business, or there is no realistic alternative but its discontinuation;

II - present separately each relevant class of similar items, segregating items of different nature or function, unless they are not relevant;

III - observe that assets and liabilities, revenues, and expenses:

a) must be recognized according to the accrual basis; and

b) cannot be offset, unless required or permitted by specific regulation issued by the Central Bank of Brazil;

IV - disclose comparative information regarding the previous period for all values presented in the current period's financial statements, as well as for narrative and descriptive information that may be presented, if relevant to the understanding of the set of statements;

V - maintain consistency in the presentation and classification of various items in the financial statements from one period to another, unless there is a distinct determination in Central Bank of Brazil regulation, or if a change in presentation or classification represents reliable and more relevant information for the user; and

VI - present additional information to that required by current regulation if the requirements established therein are insufficient to allow understanding the impact of certain transactions, events, and conditions on the financial and equity position and performance of the institution.

§ 2. In situations of discontinuation of the institution mentioned in item I of § 1, the financial statements must be prepared on a different basis, considering the discontinuation situation, and this basis must be disclosed in explanatory notes.

§ 3. Financial information, including that relating to accounting policies, must be presented in a manner that provides relevant, reliable, comparable, and understandable information.

§ 4. The institution, when observing the provision of item II of § 1, must not conceal information, thereby reducing the clarity and understandability of its financial statements.

§ 5. The accrual basis referred to in item III of § 1 does not apply to the Statement of Cash Flows.

Art. 8. The institutions mentioned in art. 1 must declare in explanatory notes, explicitly and without reservation, that the financial statements are in compliance with the regulation issued by the Central Bank of Brazil.

CHAPTER V

ON THE DISCLOSURE OF FINANCIAL STATEMENTS

Art. 9. Subject to other current legal and regulatory provisions, the financial statements referred to in this Circular must be disclosed on the institution's website or in an internet repository of free public access, which has the specific objective of disclosing accounting and financial documents.

Sole paragraph. In the case of substitution or exclusion of statements disclosed on the institution's website or in the repository mentioned in the caput, the institution must:

I - keep the substituted documents available to the Central Bank of Brazil for a period of at least five years; and

II - disclose the facts determining the substitution or exclusion of the statements, on the same website or repository where the substituted or excluded statements were disclosed.

Art. 10. The financial statements referred to in this Circular must be disclosed accompanied by the independent auditor's report, observing specific regulation, and by the administration's report on social business and the main administrative facts of the period.

Art. 11. The financial statements referred to in this Circular must be signed by the administrators and by the director responsible for the institution's accounting and by a legally qualified accountant.

Art. 12. The institutions mentioned in art. 1 must, when determined by the Central Bank of Brazil, carry out new disclosure of the financial statements referred to in this Circular, with the corrections necessary for the appropriate representation of the equity and income items and cash flows mentioned in art. 7.

Sole paragraph. The institution must make the new disclosure, as provided in the caput, using the same communication channels used for the first disclosure, with the same prominence and with explicit mention in explanatory notes of the facts determining the new disclosure.

Art. 13. Consortium administrators must keep under their custody the documents relating to the financial statements of the administered groups and of the consolidation of these groups.

Sole paragraph. Documents of interest to the consortium member must be kept in a location that facilitates access.

CHAPTER VI

FINAL PROVISIONS

Art. 14. The accounting procedures established by this Circular must be applied prospectively to financial statements relating to base dates from January 2020.

Art. 15. The Regulation annexed to Circular No. 3,192, of June 5, 2003, shall be amended as follows:

“Art. 13. .......................................................

...................................................................

§ 3. The reports of the independent auditor relating to the semi-annual and annual financial statements of institutions constituted in the form of an open company must contain the communication of the main audit matters.” (NR)

Art. 16. The following are revoked:

I - art. 13 of Circular No. 2,381, of November 18, 1993; and

II - items II and III of art. 4 and arts. 5 and 6 of Circular No. 3,833, of May 17, 2017.

Art. 17. This Circular enters into force on January 1, 2020.

Otávio Ribeiro Damaso
Director of Regulation