CVM Resolution No. 149 of June 15, 2022 — CVM — BR

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CVM RESOLUTION NO. 149, OF JUNE 15, 2022
Ratifies Technical Interpretation ICPC 23 of the Accounting Pronouncements Committee - CPC, which deals with the application of the monetary updating approach provided for in Technical Pronouncement CPC 42.

THE PRESIDENT OF THE SECURITIES AND EXCHANGE COMMISSION OF BRAZIL - CVM makes it public that the Board, in a meeting held on May 4, 2022, based on §§ 3 and 5 of art. 177 of Law No. 6,404, of December 15, 1976, combined with items II and IV of § 1 of art. 22 of Law No. 6,385, of December 7, 1976, as well as arts. 5 and 14 of Decree No. 10,139, of November 28, 2019,

APPROVED the following Resolution:

Art. 1. The obligation for open companies to apply Technical Interpretation ICPC 23, which deals with the application of the monetary updating approach provided for in Technical Pronouncement CPC 42, issued by the Accounting Pronouncements Committee - CPC, as per Annex “A” to this Resolution, is hereby ratified.

Art. 2. CVM Deliberation No. 806, of December 27, 2018, is hereby revoked, from the effective date of this Resolution.

Art. 3. This Resolution enters into force on July 1, 2022.

Electronically signed by
Marcelo Barbosa
President

CVM RESOLUTION NO. 149, OF JUNE 15, 2022
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ANNEX “A”
ACCOUNTING PRONOUNCEMENTS COMMITTEE
TECHNICAL INTERPRETATION ICPC 23
APPLICATION OF THE MONETARY UPDATING APPROACH PROVIDED FOR IN CPC 42 Correlation to International Financial Reporting Interpretations Committee - IFRIC 7

Summary Item
REFERENCES
CONTEXT 1
ISSUES 2
CONSENSUS 3 – 5
EFFECTIVE DATE 6

References

CPC 32 – Taxes on Income
CPC 42 – Accounting in Hyperinflationary Economies

CVM RESOLUTION NO. 149, OF JUNE 15, 2022
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Context

This Interpretation provides guidance on how to apply the requirements of CPC 42 in a reporting period in which the entity identifies the existence of hyperinflation in the economy of its functional currency, which was not hyperinflationary in the previous period, and the entity, therefore, updates its financial statements monetarily in accordance with CPC 42.

Issues
2. The issues addressed in this Interpretation are:
(a) how the requirement “... presented in terms of the measuring unit current at the end of the reporting period” in item 8 of CPC 42 should be interpreted when the entity applies the pronouncement; (b) how the entity should account for opening deferred tax items in its financially updated statements.

Consensus
3. In the reporting period in which the entity identifies the existence of hyperinflation in the economy of its functional currency, which was not hyperinflationary in the previous period, the entity must apply the requirements of CPC 42 as if the economy had always been hyperinflationary. Therefore, regarding non-monetary items measured at historical cost, the entity's opening balance sheet at the beginning of the oldest period presented in the financial statements must be updated monetarily to reflect the effect of inflation from the date the assets were acquired and the liabilities incurred or assumed until the end of the reporting period. For non-monetary items recognized in the opening balance sheet at current values on dates other than the dates when the assets were acquired or the liabilities incurred, this monetary update must reflect the effect of inflation from the dates when these accounting values were determined until the end of the reporting period.

At the end of the reporting period, deferred tax items must be recognized and measured in accordance with CPC 32. However, the deferred tax values in the opening balance sheet of the reporting period must be determined as follows:
(a) the entity remeasures deferred tax items in accordance with CPC 32, after having updated monetarily the nominal accounting values of its non-monetary items on the date of the opening balance sheet of the reporting period, applying the measuring unit on that date; (b) the deferred tax items remeasured in accordance with item (a) must be updated monetarily due to the change in the measuring unit from the date of the opening balance sheet of the reporting period until the end of that reporting period. The entity applies the approach of items (a) and (b) in the monetary updating of deferred tax items in the opening balance sheet of any comparative periods presented in the financially updated financial statements of the reporting period in which the entity applies CPC 42.

1 The identification of hyperinflation is based on the entity's judgment based on the criteria of item 3 of CPC 42.

CVM RESOLUTION NO. 149, OF JUNE 15, 2022
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After the entity has updated its financial statements monetarily, all corresponding values in the financial statements for the subsequent reporting period, including deferred tax items, must be updated monetarily by applying the change in the measuring unit for that subsequent reporting period only to the financially updated financial statements of the previous reporting period.

Effective Date
6. The effective date of this Interpretation will be given by the regulators who approve it.

Lineage: No known changes