CVM Orientation Opinion 20

SUMMARY: Procedures to be observed by publicly held companies and their respective independent auditors in the preparation of Quarterly Information Reports - ITRs.

1. INTRODUCTION
   This opinion aims to guide all publicly held companies and their respective independent auditors regarding the preparation of quarterly information (ITRs) and the completion of the respective form.

The guidelines contained herein result from observations made during the analysis of information related to the first quarter of the current year. Since they result from samples of the reality found, there was concern in specifying them to avoid repetition. The constant search for their improvement stems from the fact that they constitute a regular and valid mechanism of communication between the publicly held company and its investors.

The CVM is also convinced that it fulfills its role by requiring that minimum data in ITRs be disclosed, since, it being possible to presume that controlling shareholders, in most cases, have access to such data analytically and timely, it falls to minority shareholders to ensure equal conditions.

With the objective of improving them qualitatively, some procedures are indicated that aim to remove obstacles to the completion of the ITR forms, such as:

• Table 12 (page 5/ITR) should not be restricted to the maximum number of 1920 characters, since such limitation constitutes an obstacle to the presentation of explanatory notes considered essential. It is emphasized that companies may use photocopies of the page in question, expanding the space for information, if necessary;
• The presentation of page 10/ITR and the reports, which are required in the tables therein, are dispensed with, and the information required in the tables therein must be treated as follows:
• Table 19 - the company must include any information deemed relevant in Table 13 (page 6/ITR), together with the comment on the performance of the quarter;
• Tables 20 and 21 - the ITR must be headed with an index that will contain:
  a) name of the publicly held company and the quarter to which it refers;

b) the indication of all pages that make up the form (guidance that is already contained in item 14, letter "n" of Technical Communication CT/IBRACON No. 02/90); c) signature of the Director of Investor Relations.

2. GENERAL CONSIDERATIONS
   The CVM recommends to those responsible for the preparation of quarterly information, particularly the Directors of Investor Relations and independent auditors, careful reading of the following normative acts:
   a) CVM INSTRUCTIONS: 60, 64 and 73/87; 108/89; 118/90; b) ORIENTATION MANUAL of CVM INSTRUCTION No. 60/87. c) CVM ORIENTATION OPINIONS: 15, 17 and 18.

3. BALANCE SHEET: ASSETS AND LIABILITIES (Tables 09 and 10):
   Regarding the re-elaboration of the asset and liability balance sheet, it is essential to observe the following procedures:
   a) CONSTANT MODE COMPARISON - the comparability of items and aggregates of the balance sheet must be between the data from the end date of the quarter of the information and those from the end date of the immediately preceding quarter, the latter corrected for the currency at the end of the period to which the ITR refers:
   b) REALIZED CAPITAL - this item of shareholders' equity must include its monetary correction (even if not incorporated by the Shareholders' Meeting), due to the full correction method; c) REVALUATION RESERVE - it is essential that realized gains occurring in the quarter due to the company's operations be recognized, and for the criteria to be uniform with those observed when preparing the end-of-year financial statements. The procedure must be adopted, extensibly, to reserves formed as a result of revaluations carried out by affiliates and controlled companies.

4. STATEMENT OF QUARTERLY RESULT (Table 11):
   a) GAINS AND LOSSES ON MONETARY ITEMS AND PRESENT VALUE ADJUSTMENTS - must necessarily be distributed among the income accounts to which they are linked, as required by Article 4 of CVM Instruction No. 108/89. The other rules contained in paragraphs 1, 2 and 3 of that provision must be observed, as is done during the preparation of end-of-year financial statements. In explanatory notes, the accounts in which such gains and losses were allocated and the amounts involved must be disclosed; b) PROVISIONS - it is essential to establish all provisions, among which we highlight, non-exhaustively: income tax, social contribution, and withholding income tax on net profit.

5. EXPLANATORY NOTES (Table 12):
   a) With the purpose of eliminating any doubts that may arise, it is necessary that the introductory note inform that the financial statements being presented were prepared following principles, methods, and criteria uniform with those adopted at the close of the last fiscal year. Only in the event of changes in the adoption of principles, methods, and criteria must notes be presented detailing the changes and their relevant effects. b) The presentation of the reconciliation between the results calculated by the full correction method and corporate law is mandatory when they are different. A suggestion of how this reconciliation could be evidenced is presented below:
   R$
   Result according to Corporate Law
   ........................................................................... xxx (+/-) Updates of non-monetary items .......................................................................... xxx (+/-) Monetary correction of previous partial results ........................................................ xxx

(+/-) Differences resulting from the use of different indices between Corporate Law and full correction ............................................. xxx (+/-) Adjustments in Equity Method ............................................................................ xxx (+/-) Fiscal effects on above adjustments (Specify) .......................................................... xxx Result according to full correction .................................................................................. xxx This suggestion, of a simplified nature, must be expanded in its descriptions and informative character, whenever this is deemed required for adequate communication with readers, by those preparing the ITRs, the Director of Investor Relations, and independent auditors. c) Provisions established or the reason why they were not must be informed, with the degree of detail that respective relevance recommends.

6. EFFECTS OF THE STABILIZATION PLAN (Table 12):
   It is necessary for companies to update the information provided in the ITR of the first quarter of the current year related to the rebatements of the Stabilization Plan in their activities, so that while relevant reflections derived from it are observed, all information must be disclosed objectively. The rule applies to the segregation of assets and liabilities in cruzeiros and new cruzados, with the classification regarding realization periods in accordance with Article 2 of CVM INSTRUCTION No. 118/90.

7. PERFORMANCE COMMENTARY (Table 13):
   It has been observed that the information contained in this table is frequently limited to the repetition of innocuous and superficial data regarding the informative character, and as such, it has not met market expectations regarding the report of the companies' activities in the quarter of information, nor regarding the relevant influences occurring in the business between the end of the period and the disclosure of the ITR.

Based on this finding, the minimum scope considered for filling out this table is indicated:
a) Summary of the market behavior in which the company operates in the quarter, covering aspects of supply and demand for goods and services, influence of government acts, foreign trade, and others deemed important; b) Summary of the company's activities in the previously described scenario, addressing items such as: sales behavior, investments in human resources, projects, research and product development, in controlled and affiliated companies, administrative reforms, corporate reorganization, and others considered relevant; c) Shareholders' rights and market data, such as: distribution of rights, stock splits and consolidations, and book value per share. d) In the case of holding companies, the report must include the above-mentioned information regarding relevant invested companies taken individually; e) Relevant subsequent events must be disclosed, indicating as the minimum scope to be considered that contained in the explanatory note accompanying CVM INSTRUCTION No. 118/90; f) It is required that, particularly regarding the initial and/or expected effects resulting from the Stabilization Plan and disclosed in the ITR that includes the month of March 1990, publicly held companies rectify or update the originally disclosed information, in light of the operations of subsequent quarters, while applicable. In the event that the company uses monetary values to support its comments, they must be taken in currency with constant purchasing power (full correction).

8. INTERESTS IN CONTROLLED AND/OR RELEVANT AFFILIATED COMPANIES (Table 14):
   Only companies controlled and/or affiliated whose percentage of participation added to credits is equal to or greater than 10% of the investee's shareholders' equity, taken individually, must appear in the table.

9. FINANCIAL INSTITUTIONS AND INSURERS
   The main difficulty brought to the attention of the CVM, faced by these entities when preparing their quarterly financial statements, stems from the eventual inadequacy of the current ITR form to certain specificities of the sectors in which they operate, as well as the chart of accounts that the Central Bank of Brazil and the Superintendence of Private Insurance oblige them to follow.

In view of the above, the CVM allows, on an exceptional basis, until specific tables are defined, the substitution of Tables 09, 10, and 11 of CVM INSTRUCTION No. 60/87 by similar documents prepared based on the chart of accounts of said autarchies, maintaining the obligation that they be filled out only and always with data calculated by the full correction method. The only exception required is the treatment of the equity method result in insurers, which must be reported in the ITR as a component of operating result.

10. REPORT OF INDEPENDENT AUDITORS
    Quarterly information must be subject to special review by independent auditors according to the methodology provided in Technical Communication CT/IBRACON/No. 02, of 07/23/90, approved by Resolution No. 678, of 07/24/90, of the Federal Council of Accounting. Any reservations, qualifications, or wordings that differ from the basic text provided in the aforementioned Technical Communication CT/IBRACON/No. 002 must specify the effects on all relevant items applicable, such as: net profit, earnings per share, total dividends, dividends per share, net current assets (or liabilities), accumulated profits, or any others where such effects occur. Due to its simultaneous characteristic of critical analysis of the quality of information contained in each ITR and anticipation of year-end problems, the CVM considers technically inadmissible reservations or qualifications in auditors' reports on annual financial statements that, not having arisen from specific situations of the last quarter of the fiscal year (4th), failed to appear in the special review reports of the quarters in which they were applicable.

Signed originally by
SULI DA GAMA FONTAINE
Superintendent of Corporate Relations

Signed originally by
HUGO ROCHA BRAGA
Superintendent of Accounting Standards

Approved by the Collegiate Body on August 01, 1990.
Publish.

Signed originally by
LUIZ LEONARDO CANTIDIANO
Acting President