Notice No. 4/GBM/2007 on Introduction of International Financial Reporting Standards

NOTICE NO. 4/GBM/2007 Subject: INTRODUCTION OF INTERNATIONAL FINANCIAL REPORTING STANDARDS (IFRS)

In view of harmonizing the accounting regime of credit institutions and financial societies with International Financial Reporting Standards (IFRS), the Bank of Mozambique, in the exercise of the competence attributed by Article 71 of Law No. 15/99 of 1 November, determines:

Article 1 (Object) This Notice establishes the rules governing the accounting of institutions subject to the supervision of the Bank of Mozambique.

Article 2 (Scope) This Notice applies to all institutions subject to the supervision of the Bank of Mozambique.

Article 3 (Exemption from Preparation of Financial Statements in Accordance with IFRS)

1. When the size, location, or other elements relating to institutions subject to prudential supervision do not justify it, the Bank of Mozambique may, upon a duly substantiated request, exempt them from preparing financial statements in accordance with IFRS.
2. Institutions exempted under the preceding paragraph must continue to prepare financial statements in accordance with the Chart of Accounts for Credit Institutions and Financial Societies, approved by Notice No. 13/GGBM/99 of 30 December.

Article 4 (Preparation of Consolidated Financial Statements) Credit institutions and financial societies must prepare consolidated financial statements in accordance with IFRS, as prepared at any given time by the International Accounting Standards Board (IASB), as well as with the conceptual framework for the presentation and preparation of financial statements that underpins those standards.

Article 5 (Preparation of Individual Financial Statements) Consolidating credit institutions must also prepare their individual financial statements in conformity with IFRS.

Article 6 (Preparation of Financial Statements of Institutions Without Consolidated Accounts) Credit institutions that do not present consolidated accounts, nor are consolidating entities, must also prepare their individual financial statements in conformity with IFRS.

Article 7 (Date of Adoption of IFRS) Institutions covered shall prepare their financial statements in accordance with Articles 4, 5, and 6 of this Notice as follows: a) Individual financial statements relating to fiscal years beginning on or after 1 January 2008; and b) Consolidated financial statements relating to fiscal years beginning on or after 1 January 2007.

Article 8 (Options)

1. Credit institutions and financial societies may opt, during the fiscal year beginning on 1 January 2007, to prepare individual financial statements in accordance with the provisions of Article 5 of this Notice.
2. Credit institutions and financial societies that, during the 2007 fiscal year, do not opt for the preparation of individual financial statements in accordance with the provisions of Article 5 of this Notice, shall prepare them in accordance with the Chart of Accounts for Credit Institutions and Financial Societies, approved by Notice No. 13/GGBM/99 of 30 December.
3. Credit institutions and financial societies referred to in the preceding paragraph 2 shall additionally report to the Bank of Mozambique the recalculation of those financial statements, as of 31 December 2007, in accordance with IFRS.

Article 9 (Instructions) The Bank of Mozambique shall issue instructions deemed necessary for the compliance with this Notice.

Article 10 (Clarification of Doubts) Doubts arising from the interpretation and application of this Notice shall be clarified by the Banking Supervision Department of the Bank of Mozambique.

Article 11 (Entry into Force) This Notice enters into force on the date of its publication.

Maputo, 30 March 2007.

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Ernesto Gouveia Gove Governor