BCEAO Instruction 032-11-2016 on the Accounting Treatment of Collection Operations

Governor of the Central Bank of West African States (BCEAO), Having regard to the Treaty of the West African Monetary Union (UEMOA) of 20 January 2007, particularly Article 34; Having regard to the Statutes of the Central Bank of West African States (BCEAO), annexed to the UEMOA Treaty of 20 January 2007, particularly Articles 30, 31, 32, 33 and 34; Having regard to Regulation No. 15/2002/CM/UEMOA of 19 September 2002 on payment systems and instruments in the member states of the West African Economic and Monetary Union; Having regard to the Uniform Act on banking regulation, particularly Articles 50, 51, 52, 53 and 54; Having regard to the Convention establishing the Regional Guarantee Fund for the Settlement of SICA-UEMOA Balances and defining its management rules; Having regard to Decision No. 357-11-2016 of 15 November 2016 instituting the Revised UEMOA Banking Accounting Plan and its annex, particularly Articles 75, 78, 81 and 99, DECIDES

Chapter 1: General Provisions Article 1 In application of the provisions of the Revised UEMOA Banking Accounting Plan, banks and financial institutions with a banking character, hereinafter referred to as subject establishments, account for collection operations they perform under the conditions set out in this Instruction.

Article 2 Collection is the operation by which a subject establishment receives instruments for presentation for payment, either on its own account or on behalf of third parties, credit institutions and customers. Payment may be received from clearing, correspondents or originate from internal collection circuits.

Article 3 The instruments concerned are notably cheques, commercial bills, transfer orders, direct debit orders or any other instrument duly authorized by the Central Bank.

Article 4 Interbank clearing is carried out through the Automated Interbank Clearing System in UEMOA, abbreviated SICA-UEMOA. The settlement of multilateral balances arising from this clearing and of transfers of a certain amount is effected from the settlement accounts of subject establishments, held at the Central Bank. A guarantee mechanism known as the Regional Guarantee Fund for SICA-UEMOA Balance Settlement has been established by participants to secure the functioning of the system.

Chapter 2: Rules on Accounting for Collection Operations Article 5 Collection operations concern discounted commercial bills, instruments received for collection with immediate credit as well as instruments received for collection and not yet available.

Article 6 Upon receipt, discounted bills and instruments for collection with immediate credit are recorded in the balance sheet of the subject establishment, respectively under the commercial bills portfolio account and instruments for collection with immediate credit account. As for instruments received for collection and not yet available, they are recorded in off-balance-sheet accounts created for this purpose and named: – instruments received from customers for collection and not yet available; – instruments received from correspondents for collection and not yet available.

Article 7 Discounted commercial bills, instruments received for collection with immediate credit as well as instruments received for collection and not yet available are maintained in their original accounts until maturity or actual collection. These accounts remain unchanged throughout the collection procedure.

Article 8 The dispatch of instruments into the collection circuit is accounted for by debiting the collection account and crediting the counterparty account of the collection accounts.

Article 9 The return from the collection circuit is recorded through the following entries: – debit of treasury accounts, notably BCEAO, liaison account, correspondents and credit of the instruments to be charged account; – debit of the instruments to be charged account and credit of original accounts, for discounted bills and remittances with immediate credit or, credit of ordinary beneficiary accounts for available remittances after collection; – debit of the counterparty account of collection accounts and credit of the collection account; – reversal of off-balance-sheet entries relating to unavailable remittances.

Chapter 3: Rules on Accounting for Operations Related to the Regional Guarantee Fund for SICA-UEMOA Balance Settlement Article 10 Every subject establishment participating in SICA-UEMOA adheres to the Convention establishing the Regional Guarantee Fund for SICA-UEMOA Balance Settlement and defining its management rules. In this capacity, it contributes to the Fund's endowment, in accordance with the provisions of the Convention. Upon payment by the subject establishment, the contribution is recorded by debiting the Permanent Guarantee Fund Endowment account and crediting the Central Bank Settlement account. This entry is reversed upon the return of funds to subject establishments under the conditions provided by the Convention.

Article 11 The replenishment of the fund's endowment following the default of one or more participants is accounted for, upon payment of the share, by debiting the Permanent Guarantee Fund Reconstitution - FGP account and crediting the Central Bank Settlement account. This entry is reversed upon the reimbursement of funds to subject establishments.

Article 12 The facilities enjoyed by subject establishments under the Regional Guarantee Fund for SICA-UEMOA Balance Settlement are recorded, upon establishment, by crediting an account named Loans Granted by the SICA-UEMOA Guarantee Fund and debiting the Central Bank Settlement account. Upon repayment of these advances, the accounts named Loans Granted by FGP-SICA-UEMOA and Interest on Loans Granted by FGP-SICA-UEMOA are debited against the Central Bank Settlement account.

Chapter 4: Final Provisions Article 13 This Instruction repeals and replaces all prior provisions dealing with the same subject. It enters into force on 1 January 2018 and shall be published wherever necessary. Done in Dakar, on 15 November 2016 Tiémoko Meyliet KONE