CMN Resolution No. 4,887 — Cooperatives Credit Audit

Resolution No. 4,887

CMN RESOLUTION NO. 4,887, OF JANUARY 28, 2021

Provides for cooperative audit of credit cooperatives.

The Central Bank of Brazil, in accordance with Article 9 of Law No. 4,595, of December 31, 1964, makes public that the National Monetary Council, in a session held on January 28, 2021, based on Articles 4, item VIII, of the aforementioned Law, 1, § 1, and 12, items V and VI, of Complementary Law No. 130, of April 17, 2009,

RESOLVED:

Article 1. This Resolution provides for cooperative audit of singular credit cooperatives, central credit cooperatives, and confederations of central cooperatives.

Article 2. The institutions mentioned in Article 1 must be subject to cooperative audit, with a minimum annual frequency, to be executed by:

I - A Cooperative Audit Entity constituted as a third-level cooperative entity, intended exclusively for the provision of audit services, integrated by central credit cooperatives, confederations of central cooperatives, or a combination of both; or

II - An independent audit company registered with the Securities and Exchange Commission (CVM).

Article 3. The cooperative audit activities referred to in Article 2 may only be executed by a Cooperative Audit Entity or an independent audit company accredited by the Central Bank of Brazil.

§ 1. The minimum requirements for the accreditation mentioned in the main text are:

I - the existence of an operational and administrative structure compatible with the activity to be performed, including with respect to the scope, the geographic area of operation, and the number of cooperatives and confederations audited;

II - the designation of a technical manager for the cooperative audit activities;

III - proof by directors, managers, and technical managers:

a) of specific technical knowledge related to the cooperative segment, with emphasis on topics related to operations carried out 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; and

b) of unblemished reputation; and

IV - the provision in statutes and internal regulations of:

a) governance criteria that safeguard and guarantee the technical autonomy of audit teams;

b) periodic replacement of all members, with management functions, of the team involved in the audit of each cooperative, after the issuance of reports relating to, at most, five complete social years; and

c) the obligation for audit team members to participate in a continuing education program, which must have, at minimum, a workload of forty hours annually, with predominance in the technical knowledge mentioned in item III, letter "a".

§ 2. If, at any time, the Central Bank of Brazil verifies the existence of a situation that may affect the technical autonomy of audit teams, the institutions mentioned in Article 1 must provide for its regularization, which may imply the replacement of the cooperative audit service provider.

§ 3. The return of members with management functions to the team involved in the cooperative audit work of the same institution can only be carried out after three years have elapsed, counted from the date of their replacement.

§ 4. The accreditation provided for in the main text must be renewed, at minimum, every five years.

§ 5. The accreditation request referred to in the main text must be accompanied by the Cooperative Audit Entity or independent audit company, in the manner defined by the Central Bank of Brazil, with documents proving compliance with the requirements set forth in § 1.

§ 6. The Central Bank of Brazil may perform the accreditation referred to in the main text with limitations on the operation of the Cooperative Audit Entity or independent audit company, due to their operational and administrative structures, in accordance with the requirement set forth in § 1, item I.

Article 4. The cooperative audit must cover the evaluation of the audited institution regarding:

I - the adequacy of operational performance and economic-financial situation;

II - the adequacy and adherence of institutional policies;

III - the formation, training, and remuneration compatible with the duties and positions; and

IV - compliance with legal and regulatory norms, including with respect to:

a) the adequacy of operational limits and capital requirements;

b) governance rules and internal controls;

c) the adequacy of risk and capital management;

d) the prevention of money laundering and terrorist financing;

e) rural credit and the Agricultural Activity Guarantee Program (Proagro) applicable to financial institutions operating in the National Rural Credit System (SNCR); and

f) the relationship with clients and users of financial products and services.

Article 5. The cooperative audit activity must have:

I - minimum annual frequency or in a shorter period, if requested by the Central Bank of Brazil; and

II - scope defined taking into account the following characteristics of the cooperative audit institution:

a) segment in which it is classified, according to current regulation;

b) category to which it belongs, according to current regulation;

c) affiliation to organized cooperative systems, of two or three levels;

d) complexity of its operations;

e) preliminary risk assessment;

f) adequacy of the economic-financial situation;

g) exposure of the cooperative to risks arising from its operations with other entities, including exclusive funds and funds in which there is substantial retention of risks or benefits; and

h) results of previously conducted audits.

Article 6. The providers of the cooperative audit service must be periodically subjected to external quality review of the processes of this service, carried out, at the discretion of the Central Bank of Brazil, by a Cooperative Audit Entity or independent audit company accredited in the manner of Article 3.

§ 1. The review mentioned in the main text must be:

I - funded by the provider of the cooperative audit service subject to review; and

II - concluded one year before the date of renewal of the accreditation referred to in Article 3, § 5, or in a shorter period, by determination of the Central Bank of Brazil.

§ 2. The Central Bank of Brazil may carry out the review work referred to in the main text, and the provider of the cooperative audit service subject to review must provide all requested information, in which case it is exempt from review by a Cooperative Audit Entity or independent audit company.

Article 7. The Central Bank of Brazil may, without prejudice to other measures provided for in legislation and regulation, require from audited entities:

I - the performance of complementary examinations by the provider of the cooperative audit service; and

II - review of the work executed.

§ 1. The review cited in item II of the main text may be carried out, at the discretion of the Central Bank of Brazil, by the provider of the cooperative audit service itself, by a Cooperative Audit Entity, or by an independent audit company.

§ 2. The costs related to the requirement referred to in the main text must be borne by the audited entity.

Article 8. Contracts entered into between the institutions mentioned in Article 1 and the providers of the cooperative audit service must contain specific clauses providing for:

I - integral and unrestricted access by the Central Bank of Brazil to working papers and other documents produced and used in the execution of the cooperative audit service, as well as in the review process referred to in Article 6, including by providing copies; and

II - communication by the provider of the cooperative audit service to the Central Bank of Brazil, to respective confederations, and, in the case of singular cooperatives, also to the central credit cooperatives to which they are affiliated, as well as to the fiscal and administrative councils of the audited entities, of materially relevant facts observed in the cooperative audit process, such as:

a) irregularities, deficiencies, or situations of abnormal exposure to risks;

b) non-compliance with current regulation or legislation; and

c) non-compliance with rules of the cooperative system to which the credit cooperative is affiliated.

Sole paragraph. The communication cited in item II of the main text must be carried out within a maximum period of ten days, counted from the issuance of the cooperative audit activity report or, when applicable, from the identification of the fact, and must be duly documented, with its custody maintained for a period of five years.

Article 9. The cooperative audit activities referred to in this Resolution may be performed cumulatively with the provision of external audit services provided for in specific regulation, provided that the minimum requirements established in Article 3 of this Resolution are met.

Article 10. Cooperative audit activities may be executed by a Cooperative Audit Entity in entities with which it has a corporate link, provided that the following conditions are met:

I - direct or indirect participations of the audited cooperative limited to 20% (twenty percent) of the equity of the Cooperative Audit Entity; and

II - absence of a link between a member of a statutory body, employee, or service provider of the audited cooperative and the Cooperative Audit Entity.

Article 11. The following are prohibited:

I - the hiring and maintenance of the cooperative audit service provider, if it is established that payment of fees and reimbursement of expenses by the audited entity, relating to the base year of the service, represents 25% (twenty-five percent) or more of the total revenue of that provider, in that year, relating to cooperative audit service; and

II - the participation of a member of a credit cooperative in cooperative audit work carried out in the respective cooperative.

Article 12. The provider of the cooperative audit service must prepare:

I - the detailed annual programming of cooperative audit activities to be carried out during the following year;

II - the general report of cooperative audit activities, containing the planned activities, the description of audit actions effectively carried out during the year, and a critical evaluation of the results achieved; and

III - specific reports of cooperative audit work, comprising, at least, the planning of work, the analysis of processes or activities, the evaluation of internal controls, the defined samples and tests performed, the identified weaknesses, audit findings, and recorded recommendations.

Sole paragraph. The reports mentioned in item III of the main text must remain available to the central cooperative, the confederation of central cooperatives, and the Central Bank of Brazil for a minimum period of five years, counted from the reference period.

Article 13. The institutions mentioned in Article 1 must ensure the provider of the cooperative audit service access to all information and documents necessary for the adequate provision of the cooperative audit service, including information regarding participations in other entities, exclusive funds, and funds in which there is substantial retention of risks or benefits.

Sole paragraph. The provider of the cooperative audit service must communicate to the Central Bank of Brazil, to respective confederations, and, in the case of singular cooperatives, also to the central credit cooperatives to which they are affiliated, situations in which the audited entity, by action or omission, causes hindrance, constraint, or obstacle to the access mentioned in the main text.

Article 14. The Central Bank of Brazil may, at any time:

I - consider the cooperative audit activity void for purposes of compliance with current regulation, if non-compliance with the provisions of this Resolution is found; and

II - cancel the accreditation of the cooperative audit service provider, if:

a) non-compliance with the minimum requirements established in Article 3 is found;

b) insufficient quality in the provision of the service is verified, in the review process referred to in Article 6; or

c) non-compliance with the prohibitions referred to in Article 11 is identified.

Article 15. The Central Bank of Brazil is authorized to issue norms and adopt measures necessary for the execution of the provisions of this Resolution, including with respect to:

I - the preparation, transmission, and dissemination:

a) of reports relating to the evaluations provided for in Article 4;

b) of the reports and other documents provided for in Article 12;

II - procedures for:

a) instruction and evaluation of the accreditation request referred to in Article 3;

b) cancellation of the accreditation referred to in Article 14, item II;

c) renewal of the accreditation, referred to in Article 3; and

d) external quality review of the cooperative audit service referred to in Article 6;

III - the definition of the scope requirements for cooperative audit referred to in Article 4.

Article 16. The following are repealed:

I - Articles 1 to 14 of Resolution No. 4,454, of December 17, 2015; and

II - Resolution No. 4,570, of May 26, 2017.

Article 17. This Resolution enters into force on July 1, 2021.

Roberto de Oliveira Campos Neto
President of the Central Bank of Brazil