The legislation and laws in Brazil about accounting and bookkeeping are constantly changing and your company must stay aware and be fully compliant.
Financial reporting requirements in Brazil are governed by Laws No. 11638/07, 11.941/09 and 12.973/14, which align with International Accounting Standards (IAS/ IFRS). The specific accounting standards are published by an accounting entity that has existed since 2008 called CPC (Comitê de Pronunciamentos Contábeis). The standards are approved by the Federal Accounting Council (CFC) and the Brazilian Securities and Exchange Commission (CVM).
One of the newest, and most important standards, is CPC 47 (corresponding to the IFRS 15) which focuses on revenue recognition due to contracts. This revenue recognition should occur when the client obtains control over the acquired goods or services. Companies must be prepared to report their revenue in accordance to these rules through financial statements to avoid penalties and tax inspection. Businesses will have to evaluate their activities and where the revenue has come from. Under this new standard, there are risks for the companies that are not in compliance with the CPC 47.
Each CPC has a specific purpose and focus which can be very complex to navigate. There are a specific CPCs for small and medium sized entities which are called CPC PME. This CPC focuses on balance sheets and income statement accounts. In terms of fixed assets, they will only be recognized when the acquisition date is known and then costs are set.
One of the main concerns with the correct implementation of the CPCs is the change of mindset and training of accountants and companies. It is important to have a customized enterprise resource planning system to streamline the processes that are required by all of the CPCs. The CPCs are important for standardization of financial statements so they can be used and interpreted globally. This also helps with the reduction of costs for the preparation of financial reports, reduction of risks in the analysis and decision-making process and the lessening of capital costs.
We can help
TMF Brazil can help your small, medium or large entity to be compliant with the CPCs in Brazil. Our accounting experts will work with your company to understand your needs, help with putting together the financial statements and review all the accounting posting to make sure they are consistent with the rules. Talk to us.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.