Resolution BCB No. 97 of May 25, 2021: Procedures for Accreditation and Decreditation of Cooperative Audit Entities and Independent Audit Companies

RESOLUTION
BCB NO. 97, OF MAY 25, 2021

Establishes the procedures related to the process of accreditation and decreditation of Cooperative Audit Entities and independent audit companies for the performance of cooperative audit activities, the requirements for defining the scope of cooperative audit activities, and the criteria for preparing and submitting the reports and documents resulting from cooperative audits.

The Collegiate Board of the Central Bank of Brazil, in a session held on May 25, 2021, based on arts. 9, 10, item IX, of Law No. 4,595, of December 31, 1964, 1, § 1, of Complementary Law No. 130, of April 17, 2009, and 15 of CMN Resolution No. 4,887, of January 28, 2021,

R E S O L V E S:

CHAPTER I
OF THE OBJECT AND SCOPE OF APPLICATION

Art. 1. This Resolution establishes:

I - the procedures to be observed in the process of accreditation and decreditation of Cooperative Audit Entities and independent audit companies for the performance of cooperative audits in single credit cooperatives, central credit cooperatives, and confederations of credit cooperatives;

II - the definition of the scope requirements for cooperative audit activities; and

III - the criteria for preparing and submitting the reports and documents resulting from cooperative audits.

CHAPTER II
OF COOPERATIVE AUDIT ACTIVITIES

Art. 2. The cooperative audit activities referred to in Art. 1 may only be performed by a Cooperative Audit Entity or an independent audit company accredited by the Central Bank of Brazil.

CHAPTER III
OF THE ACCREDITATION PROCESS

Section I
Of the Request

Art. 3. The request for accreditation of a Cooperative Audit Entity or an independent audit company must be sent to the Central Bank of Brazil containing, at a minimum:

I - proof of regular constitution of the applicant, by providing an authenticated copy of the following documents:

a) statutes or articles of association filed with the competent authority; and

b) internal regulations or equivalent document;

II - executive summary, containing, at a minimum, the following information about the applicant:

a) organizational chart;

b) description of operational and administrative structures;

c) address of the headquarters and regional offices;

d) criteria and mechanisms for corporate governance;

e) description of internal control systems;

f) criteria and mechanisms to safeguard and guarantee the technical autonomy of audit teams;

g) processes for the periodic replacement of members with management functions of the team involved in the audit of each cooperative;

h) description of the continuing education program;

i) short-term goals and long-term strategic objectives, of the market, addressing, including, the geographic area of operation and the number of single credit cooperatives segregated by capital and loan cooperatives, classic and full, of central credit cooperatives and of confederations of credit cooperatives to be audited; and

j) description of the processes for evaluating the quality of the work performed;

III - code of ethics or conduct;

IV - list of directors, managers, and technical responsible, as well as individual information on:

a) professional experience, addressing activities performed in single credit cooperatives, central credit cooperatives, and confederations of credit cooperatives;

b) audit work performed, including in financial institutions and other institutions authorized to operate by the Central Bank of Brazil, in the last three years, discriminated by institution, nature of the work, and total hours spent; and

c) specific technical knowledge, documented, related to the cooperative segment, with emphasis on topics related to operations performed by credit cooperatives, analysis of operational performance and economic-financial situation, corporate governance, internal controls, risk management, financial regulation, relationship with customers and users of financial products and services, and prevention of money laundering and terrorist financing;

V - act of designation of the technical responsible for cooperative audit activities;

VI - list of services provided by the applicant to single credit cooperatives, central cooperatives, and confederations of credit cooperatives, as well as to other institutions in the financial system, in the last three years, discriminated by institution, nature of the service, and total hours spent;

VII - annual budget forecast, for a five-year period, based on the number of single credit cooperatives, central cooperatives, and confederations of credit cooperatives, with detail of the type of institution, size, complexity, and geographic location, compatible with the organizational structure of the applicant and the team presented in the accreditation request;

VIII - detail of the technical staff, indicating academic background, professional experience, and participation in audits in the last three years;

IX - authorization, to the Central Bank of Brazil, for the conduct of register research on the technical responsible for cooperative audit activities, the directors, and the managers of the entity; and

X - declaration regarding the existence of administrative sanctioning and judicial processes in which directors, managers, or technical responsible for cooperative audit activities appear as defendants.

Sole Paragraph. The request mentioned in the main text must be signed by the managing director, or by a holder of an equivalent position, of the Cooperative Audit Entity or by an administrator of the independent audit company.

Section II
Of the Analysis

Art. 4. For the purpose of analyzing the accreditation process, the Central Bank of Brazil may:

I - request information, clarifications, or additional documents considered necessary for the decision regarding the accreditation request; and

II - summon for a technical interview directors, managers, administrators, and the technical responsible.

Art. 5. The process will be considered regularly documented only when all necessary documentation, as well as relevant information, is provided to the Central Bank of Brazil.

Art. 6. Accreditation processes will be archived, without analysis of the merits, when the requests or summons mentioned in Art. 4 are not met within the established deadlines.

Art. 7. From the approval of the accreditation request, the Cooperative Audit Entity or the independent audit company must permanently keep updated the records of directors, managers, and the technical responsible, and the list of audited cooperatives.

Sole Paragraph. In the case of inclusion or substitution of directors, managers, and technical responsible, the Cooperative Audit Entity or the independent audit company must send to the Central Bank of Brazil the documents and information regarding these persons specified in Art. 3, items IV, V, IX, and X of this Resolution.

Art. 8. The request will be denied, regardless of other analyses, if it is found:

I - circumstances affecting the reputation of the directors, managers, or technical responsible for cooperative audit activities; or

II - falsity in the declarations or documents presented in the documentation of the process.

Sole Paragraph. To evaluate the circumstance mentioned in item I of the main text, the Central Bank of Brazil may take into account the following situations and occurrences:

I - judicial process, police inquiry, or civil process to which the elected, appointed, or any society of which he is or has been, at the time of the facts, controller or administrator is responding;

II - administrative process or administrative sanctioning process related to the National Financial System; and

III - other situations, occurrences, or analogous circumstances judged relevant by the Central Bank of Brazil.

Art. 9. The Central Bank of Brazil will communicate to the Cooperative Audit Entity or the independent audit company:

I - the complementary documentation necessary to regularize the accreditation request, in case the lack of information or documents required by current regulation is found; and

II - the result of the analysis of the accreditation request, including, in case of denial, the motivation.

CHAPTER IV
OF THE CANCELLATION OF ACCREDITATION

Art. 10. The Central Bank of Brazil may cancel the accreditation of the Cooperative Audit Entity or the independent audit company ex officio, if it is found, at any time:

I - relevant or repeated non-compliance with the minimum requirements established in Art. 3, § 1, of CMN Resolution No. 4,887, of January 28, 2021;

II - falsity or serious omission in the declarations or documents presented in the documentation of the process;

III - insufficient quality in the provision of the service, verified in the external quality review process referred to in Art. 6 of CMN Resolution No. 4,887, of 2021; or

IV - relevant or repeated non-compliance with the prohibitions established in Art. 11 of CMN Resolution No. 4,887, of 2021.

§ 1. The Central Bank of Brazil, prior to the cancellation referred to in the main text, will initiate a specific administrative procedure, notifying the interested Cooperative Audit Entity or independent audit company to manifest its opinion on the intention to cancel.

§ 2. In case of cancellation of accreditation, the Central Bank of Brazil will communicate the motivation to the interested Cooperative Audit Entity or independent audit company.

CHAPTER V
OF THE SCOPE OF COOPERATIVE AUDIT ACTIVITIES

Art. 11. The scope of cooperative audit activities must be defined by the provider of the cooperative audit service, observing the provisions of Arts. 4 and 5 of CMN Resolution No. 4,887, of 2021, covering the evaluation of the institution subject to audit, at a minimum, regarding the following aspects:

I - regarding the adequacy of operational performance and economic-financial situation:

a) economic-financial situation, including aspects of short and long-term soundness, liquidity, and adequate evaluation of assets, liabilities, equity, and surpluses or losses;

b) integrity and reliability of accounting information;

c) reconciliation of relevant accounting balances;

d) credit granting and management processes; and

e) criteria adopted for the distribution of surpluses, allocation of losses, formation of reserves, establishment of specific funds, and allocation of resources of the Technical, Educational, and Social Assistance Fund (Fates);

II - regarding the adequacy and adherence of institutional policies:

a) segregation of functions and conflicts of interest in critical activities;

b) manuals, internal regulations, as well as determinations of the central cooperative and the system, when applicable; and

c) process of providing information on the financial situation, performance, business management policies, and relevant facts to the administration bodies, supervisory board, and associates;

III - regarding the formation, training, and remuneration compatible with the duties and positions:

a) remuneration policy for the board of directors, the board of administration, and the supervisory board, including possible performance bonuses or similar; and

b) training, capacity, and time availability of members of statutory bodies, managers, and members of the technical team;

IV - regarding the adequacy of operational limits and capital requirements, compliance with:

a) minimum requirements for Reference Equity (PR);

b) exposure limits per client; and

c) other operational limits;

V - regarding the rules and practices of governance and internal controls:

a) constitution, functioning, segregation of functions, and effectiveness of the board of directors, the board of administration, and the supervisory board, considering the duties provided for in statutes and current legislation;

b) implementation, adequacy, and compliance of the internal control system;

c) strategy, policies, and procedures for information and communication technology;

d) norms, structure, and processes related to information security and data integrity;

e) compliance with the special duties of central credit cooperatives and confederations of central cooperatives, according to current regulation; and

f) compliance with action plans to address findings from internal audit, external audit, cooperative audit, and the Central Bank of Brazil;

VI - regarding the adequacy of risk and capital management:

a) the institution's ability to identify, evaluate, monitor, control, and mitigate the risks to which it is exposed, according to the size and complexity of its operations;

b) segregation of risk management activities in relation to trading areas;

c) contingency and business continuity plans; and

d) capital management process, including periodic review of its compatibility with assumed risks;

VII - regarding the prevention of money laundering and terrorist financing (AML/CFT), the adequacy of procedures and internal controls to be adopted, according to current regulation, aiming to prevent the use of the financial system for the practice of crimes of "money laundering" or concealment of assets, rights, and values, and terrorist financing;

VIII - regarding rural credit and the Agricultural Activity Guarantee Program (Proagro), applicable to financial institutions operating in the National Rural Credit System (SNCR):

a) adherence to the provisions of the Rural Credit Manual (MCR), mainly on topics dealing with beneficiaries, supervision, limits, expenses, formalization, registration, and accounting of rural credit and Proagro; and

b) existing controls for the adequate classification and approval of rural credit operations and Proagro coverage; and

IX - regarding the relationship with customers and users of financial products and services:

a) adherence to norms for contracting products and providing financial services, including regarding the content and transparency of contractual relationships;

b) adequacy of the collection and disclosure of fees related to the services and products offered;

c) adequacy of the management of demands from customers and users arising from the Ombudsman's Office and other institution service channels; and

d) compliance with the contracting of correspondents in the Country, including regarding the provision of information to the Central Bank of Brazil and the disclosure of information to the public.

Sole Paragraph. The evaluation referred to in the main text must observe the professional standards of independent audit applicable and include risk and control analysis linked to the operations and activities under review.

CHAPTER VI
OF THE DOCUMENTS AND REPORTS RESULTING FROM COOPERATIVE AUDIT

Art. 12. The provider of the cooperative audit service must send to the Central Bank of Brazil:

I - the detailed annual program of cooperative audit activities, by October 31 of the year prior to that to which it refers; and

II - the general report of cooperative audit activities, by April 30 of the following year to that to which it refers.

§ 1. The documents referred to in the main text must be signed by the technical responsible for cooperative audit work.

§ 2. If the annual program of cooperative audit activities referred to in item I of the main text is reviewed by the provider of the cooperative audit service, the new program must be sent to the Central Bank of Brazil in advance.

§ 3. The Central Bank of Brazil may determine changes in the annual program of cooperative audit activities.

Art. 13. The provider of the cooperative audit service must prepare, at a minimum, annually, a cooperative audit report for each audited entity, relating to the evaluations provided for in Art. 11, presenting the conclusions of the work in clear, objective, and easy-to-understand language.

Sole Paragraph. The report referred to in the main text must:

I - contain the description of the results of the analyses performed according to the scope defined in the form of Art. 11 of this Resolution;

II - be signed by the technical responsible for the cooperative audit work;

III - be issued, in final form, within thirty days after the date scheduled in the annual program of activities for the completion of the work; and

IV - be sent to the senior administration of the institution subject to cooperative audit within ten days after the issuance date.

Art. 14. The institution subject to cooperative audit must, within ten days after the date of receipt of the cooperative audit report referred to in Art. 13, send it to the Central Bank of Brazil and:

I - to the central cooperative and the confederation, in the case of a single cooperative affiliated; or

II - to the confederation, in the case of a confederated central cooperative.

CHAPTER VII
FINAL PROVISIONS

Art. 15. For the purposes of this Resolution, a manager is considered the professional who holds a strategic management position coordinating audit work in the Cooperative Audit Entity or the independent audit company.

Art. 16. The documents and reports referred to in this Resolution must remain available to the Central Bank of Brazil for a minimum period of five years.

Art. 17. The following are revoked:

I - Circular No. 3,790, of May 5, 2016; and

II - Circular No. 3,799, of June 28, 2016.

Art. 18. This Resolution enters into force on July 1, 2021.

Otávio Ribeiro Damaso Paulo Sérgio Neves de Souza Director of Regulation Director of Supervision