International Accountancy in Brazil

In order for a foreign company to establish itself in Brazil and enjoy the opportunities the country offers, the first step is to have an international accountancy that is able to present solutions for all accounting matters practiced in Brazil. It’s important that the accountancy has international know-how in management, auditing and results balance.

The main reason is that each country has different rules, costumes and ways of dealing with accounting guidelines such as fiscal contributions, taxes, dues, legislation and to know the different guidelines of statements between countries. This accountancy experience will be very important when organizing the international accountancy of your company before it enters Brazil.

In this article by EUROPARTNER, you will be able to read some explanations about:

1. What are the benefits of the International Guidelines?
2. What are IFRS – International Financial Reporting Standards?
3. What is CPC – Conselho de Pronunciamentos Contábeis?
4. What is GAAP – Generally Accepted Accounting Principles?

What are the benefits of the International Guidelines?

For international negotiations, a way of obtaining benefits is when the accountancy complies with the GAAP or the IFRS. That makes the company more trustworthy for shareholders and investors, since the application of the guidelines of International Accountancy offers more agility when it comes to making comparative analysis of financial balances of international companies.

That means that when an International Accountancy experienced in Brazil apply to its clients sophisticated accounting resources such as IASB (International Accounting Standards Board), based on IFRS, GAAP and the CPC (Conselho de Pronunciamentos Contábeis – the Accounting Pronouncements Committee), this accountancy is aligned with the international financial market and with Brazil. These mechanisms allow for transparency when presenting data of a financial balance, which most of the times is required by experienced international investors that do business between countries.

But it’s not just that. The benefits of international guidelines stretch beyond organizing the company’s international balance. We are talking about the reduction of risks, the increase of market value, the company’s strengthening and international tax planning, aiming at the company’s financial present and future.

What is GAAP – Generally Accepted Accounting Principles?

GAAP is an international statement format based on rules and that always bring the country’s code, such as US GAAP and BR GAAP for Brazil.

In a practical way, GAAP defines actions to be taken to count, recognize, present and publicize the financial, economic, patrimonial and special information of the company’s statements.

In order to make this exchange of accounting information between countries friendlier, standardized methods were adopted so that it is easier for companies to evaluate the accounting numbers, even if in different countries.

For specialists in international accountancy, GAAP is a set of guidelines that rule the accountancy sciences of the country. GAAP (Generally Accepted Accounting Principles) is a dynamic model that is compatible with the law and economic managing practices of Brazil. GAAP was created by Americans and it is accepted in the whole continent of United States (USA) and other countries of Europe and Asia.

For an accountancy with no experience in Brazil, there can be some confusion, understanding that BR GAAP is a standard in Brazil, when in reality BR GAAP is international (American model) and complies with all guidelines issued by IASB (International Accounting Standards Board).

With GAAP, accountancy is able to deliver all resolutions, circular bulletins, balances, notices by entities such as the Banco Central (BACEN), the Conselho Federal de Contabilidade (CFC, the Federal Accountancy Council), the Conselho Nacional de Seguros Privados (CNSP, the Private Insurance Federal Council), Conselho Monetário Nacional (CMN, the National Monetary Council), Comissão de Valores Mobiliários (CVM, the Mobiliary Values Comission), Superintendência de Seguros Privados (SUSEP, the Private Insurance Superintendence), Receita Federal do Brasil (RFB, the Brazilian Federal Revenue), among others which show the economical essence of an international transaction and mainly in Brazil.

What are IFRS – International Financial Reporting Standards?

This is also a model of accounting statement practices in the whole world and that in a practical manner manages to present the balance of a company, being interpretable by any accountancy with international experience.

In Brazil, IFRS is the standard recognized as Normas Internacionais de Relatórios Financeiros (International Guidelines for Financial Reports), but in other countries, the acronym IFRS (International Financial Reporting Standards) is kept.

In order to prepare the IRFS, other accounting mechanisms are used, such as:

• IAS (International Accounting Standard)
• IASB (International Accounting Standards Board)
• IASC (International Accounting Standards Committee)
• IFRIC (International Financial Reporting Interpretations Committee)
• IFRS (International Financial Reporting Standard)
• SIC (Standing Interpretations Committee)

What is CPC – Accounting Pronouncements Committee?

CPC is a demonstrative model of financial balance which is based on IFRS, which use knowledge aligned to financial departments and institutions such as:

• Apimec – Associação dos Analistas e Profissionais de Investimento do Mercado de Capitais (Capital Market Investment Analysts and Professionals Association)
• Bovespa – Bolsa de Valores de São Paulo (São Paulo Stock Exchange)
• ABRASCA – Associação Brasileira de Companhias Abertas (Brazilian Association of Public Companies)
• Bacen – Banco Central do Brasil (Brazilian Central Bank)
• CFC – Conselho Federal de Contabilidade (Federal Accounting Council)
• CVM – Comissão de Valores Mobiliários (Mobiliary Values Commission)
• Febraban – Federação Brasileira de Bancos (Brazilian Banks Federation)
• FIPECAFI – Fundação Instituto de Pesquisas Contábeis, Atuariais e Financeiras (Accounting, Actuarial and Financial Researches Institute Foundation)
• Ibracon – Instituto dos Auditores Independentes do Brasil (Independent Auditors of Brazil Institute)
• Susep – Superintendência de Seguros Privados (Private Insurance Superintendence)
• SRFB – Secretaria da Receita Federal do Brasil (Brazilian Federal Revenue Secretary)

16 IRFS (International Financial Reporting Standards) are published in the international market and the latest one took effect in 2019, check them out:

IFRS 1: It covers the standards of international accountancy for the Brazilian companies.

IFRS 2: It refers to the payment based on stocks. IFRS 2 requires that the effects of transactions related to stocks are informed on accounting statements.

IFRS 3: It deals with the situations in which a company acquires and begins to control one or more organizations. IFRS 3 also requires that assets and liabilities of the acquired business are recognized under a fair value and by the acquisition date. The same applies to the goodwill occurred upon transaction (the difference between the acquisition value and the acquired one’s estate).

IFRS 4: It specifies that eminent of insurance contracts must frequently perfect the counting of issued contracts.

IFRS 5: It establishes the counting of noncurrent assets for the selling and publicizing of interrupted operations.

IFRS 6: It’s connected to mineral resources, in other words, to the counting of the values of their exploration and evaluation.

IFRS 7: It deals with the disclosure of information on financial instruments. Users must evaluate the relevance of such instruments for the company’s finances, besides the types, extension of the risks associated to publicized information, and the way such risks are managed.

IFRS 8: It establishes that users of accounting statements are able to evaluate the financial effects of the developed activities and of the economic environment in which the company is involved.

IFRS 9: Defines rules for the classification, counting and presenting of financial instruments.

IFRS 10: It establishes guidelines to be followed to create and present accounting statements of organizations that are controllers of other business.

IFRS 11: It requires that companies that are part of joint business initiatives determine the nature of the involvement through duties and rights, doing the accountancy in accordance with the operations.

IFRS 12: It establishes principles for the publicizing of statements for consideration of the ones who are interested.

IFRS 13: Defines what is fair value, the structure for measuring such value and how to publicize the measurement.

IFRS 14: Allows companies that register assets and liabilities, in compliance with its local accounting principles, to not need to convert their assets and liabilities according to the IFRS.

IFRS 15: It took effect in 2018 and it establishes principles for counting revenues and contracts with clients in connection with cash flow, times and values.

IFRS 16: It will become mandatory from 2019 on. The IFRS 16 establishes that leasing will have to appear in assets and liabilities of companies involved.

If you still have doubts about how an International Accountancy can help managing your accountancy in Brazil, contact EUROPARTNER and send your doubts.