Circular CONAU 1 - 1350: Application of IFRS 9 Point 5.5 and IAS 29 Effective from 01.01.2020

"2019 - YEAR OF EXPORTS"
COMMUNICATION "A" 6778 05/09/2019
TO FINANCIAL ENTITIES:
Ref.: Circular
CONAU 1 - 1350
Point 5.5 of IFRS 9 and IAS 29 - Application from 01.01.2020.
____________________________________________________________ We address you to communicate to you the provisions related to the application of impairment of financial assets and restatement of financial statements, in line with what was duly established through Communications "A" 6430 and "A" 6651. For the purpose of applying point 5.5 of IFRS 9 "Impairment of financial assets", we inform you that entities must use their internal models for said calculation, which must meet all the requirements of IFRS 9 and must be applied to all assets included in the aforementioned international standard. Group "B" entities may prorate over 5 years the impact generated by the application of point 5.5 of IFRS 9. To this end, the relevant methodology will be disseminated in due course. Regarding the restatement of financial statements in accordance with IAS 29, we inform you that, for the purpose of recording the result from the monetary position, the following accounts are incorporated into the chart of accounts:
620001 – Monetary result of items with adjustment clause 620002 – Monetary result of items in foreign currency 620004 – Monetary result for other items Additionally, it is clarified that the frequency of restatement of accounting information in homogeneous currency will be monthly. It is worth noting that the index to be used for such purposes will be the National Consumer Price Index (CPI) prepared by the National Institute of Statistics and Census – INDEC – (base month: December 2016) and for those items with an earlier origin date, the price index published by the Argentine Federation of Professional Councils in Economic Sciences – FACPCE – must be used. Taking into account that the application of both provisions must be carried out retroactively, it is clarified that the transition date for financial entities is 01.01.2019.

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Notwithstanding what is established in the third paragraph of this communication, it is informed that for the purpose of result distribution, the total impact of credit losses determined according to IFRS 9 as well as that of the inflation adjustment will be taken into account. Complementary instructions on the restatement methodology and modifications to the relevant information regimes will be disseminated in due course. We greet you attentively. CENTRAL BANK OF THE ARGENTINE REPUBLIC Rodrigo Javier Danessa Estela M. del Pino Suarez Manager of Information Regime General Manager of Information Regime and Protection of Users of Financial Services