CMN Resolution No. 2267 on Independent Audit of Financial Institutions and Related Entities

RESOLUTION NO. 002267

Dispenses on independent audit in financial institutions, other entities authorized to operate by the Central Bank of Brazil, investment funds constituted in the modalities regulated by said Body and consortium administrators.

THE CENTRAL BANK OF BRAZIL, in accordance with Article 9 of Law No. 4,595, of December 31, 1964, makes public that the MONETARY COUNCIL NATIONAL, in a session held on March 28, 1996, considering the provisions of Articles 3, item VI, and 4, items VIII and XII, of the aforementioned Law, in
Article 2 of Law No. 4,728, of July 14, 1965, and in Articles 22, paragraph 2,
and 26, paragraph 3, of Law No. 6,385, of December 7, 1976, with the wording given by Article 13 of Provisional Measure No. 1,334, of March 12, 1996, and in Article 8, item IV, of the aforementioned Provisional Measure,

RESOLVED:

Article 1. Financial institutions, other entities
authorized to operate by the Central Bank of Brazil, investment funds constituted in the modalities regulated by the aforementioned Body and consortium administrators must have their financial statements, including the explanatory notes required by current legal and regulatory standards, audited by independent auditors registered with the Securities and Exchange Commission (CVM).

Sole Paragraph. The provisions of this article do not apply to individual credit cooperatives.

Article 2. The institutions and entities referred to in Article 1, as well as administrators of investment funds
mentioned therein and consortium administrators, when contracting audit services, must:

I - verify the existence of situations that may affect the independence of the auditor to be contracted, in accordance with regulations established by the Federal Council of Accountancy;

II - in the manner to be defined by the Central Bank of Brazil, inform said Body of the auditor's registration data.

Sole Paragraph. If, at any time, the existence of a situation that may affect independence is verified, the auditor must resign from the contract.

Article 3. The institutions and entities referred to in
Article 1, as well as administrators of investment funds
mentioned therein and consortium administrators, must proceed to replace the contracted independent auditor, at the latest, after four (4) complete fiscal years have elapsed since their hiring, with this requirement coming into force from the fiscal year starting on January 1, 1997.

Article 4. The re-hiring of an independent auditor may
only be carried out after three (3) complete fiscal years have elapsed since their replacement.

Article 5. Independent auditors must prepare, as a result of the audit work performed, the following documents:

I - audit report on the examined financial statements, opining on their adequacy to the fundamental accounting principles, as well as to accounting standards issued by the Monetary Council and the Central Bank of Brazil;

II - detailed report on the assessment of the quality and adequacy of internal controls, including controls and systems for electronic data processing and risk assessment, highlighting any deficiencies found;

III - detailed report regarding compliance with operational standards established by law and regulatory provisions, highlighting any irregularities found.

Paragraph 1. The independent auditor's reports must be prepared considering the same period and base date as the financial statements to which they refer.

Paragraph 2. The Central Bank of Brazil may dispense, totally or partially, with the preparation of the document referred to in item II of this article, under conditions determined by it.

Paragraph 3. The institutions and entities referred to in Article 1, administrators of investment funds mentioned therein and consortium administrators, as well as their independent auditors, must keep at the disposal of the Central Bank of Brazil, for a minimum period of five (5) years, the documents referred to in this article, as well as working papers, correspondence, service provision contracts, and other documents related to audit work, including those deemed necessary by said Body.

Article 6. The independent auditor must notify
the Central Bank of Brazil, as soon as detected, of irregularities considered serious offenses and of evidence verified that demonstrate the occurrence of situations that place the audited entity at risk of discontinuity.

Article 7. The institutions and entities mentioned in
Article 1, as well as administrators of investment funds
mentioned therein and consortium administrators, must designate a statutory member of their administration, technically qualified, to answer, before the Central Bank of Brazil:

I - for the monitoring, supervision, and compliance with standards and procedures:

a) of accounting, provided for in the Accounting Plan of the Institutions of the National Financial System - COSIF;

b) of audit, referred to in this Resolution;

II - for providing information related to these matters to the Central Bank of Brazil.

Sole Paragraph. The administrator referred to in the main text of this article shall be liable to third parties for the information provided and, primarily, before the Central Bank of Brazil, under the terms of current legislation, for the occurrence of situations indicating fraud, negligence, imprudence, or incompetence in the exercise of the functions provided for in this article, without prejudice to the application of penalties of suspension or disqualification for management or executive positions in institutions, entities, and administrators of investment funds and consortiums referred to in Article 1.

Article 8. The performance of independent audit on the financial
statements of the institutions and entities referred to in
Article 1, as well as on those of the investment funds mentioned therein and
consortium administrators, does not exclude or limit the supervisory action exercised by the Central Bank of Brazil.

Article 9. The Central Bank of Brazil must notify the
Securities and Exchange Commission (CVM) of the initiation of an administrative process against an independent auditor and its outcome.

Article 10. The Central Bank of Brazil may issue standards and adopt measures deemed necessary for the execution of the provisions of this Resolution.

Article 11. This Resolution enters into force on the date of its
publication.

Article 12. Resolutions No. 167, of January 22, 1971, No. 1,007, of May 2, 1985, and Nos. 1,038 and 1,041, both of August 15, 1985, are hereby revoked.

Brasília, March 29, 1996

Gustavo Jorge Laboissière Loyola
President