The Brazilian Securities, Commodities and Futures Exchange (BM&FBOVESPA) will announce the signing of a Memorandum of Understanding between the International Accounting Standards Board (IASB), the Brazilian Federal Council of Accounting (CFC) and the Brazilian Accounting Pronouncements Committee (CPC) on Thursday, 28 January 2010, at 11:00 a.m., in Sao Paulo. The partnership of these three organisations is an important step towards the inclusion of Brazil in the international forum on the establishment and adoption of a set of accounting standards known as International Financial Reporting Standards (IFRSs). Since only a handful of countries have signed such a memorandum with the IASB, the creation of the partnership demonstrates Brazil's commitment and leadership on global regulatory issues.
The objective of the Memorandum of Understanding is to promote the convergence with IFRSs in Brazil and to encourage Brazilian companies to play a greater part in standard-setting discussions. The Memorandum suggests, for example, that Brazil will uphold its commitment to accelerate the pace of convergence with IFRSs all over the country, including small and medium-sized companies. For listed companies, complying with international financial reporting standards helps to improve the quality of financial reporting, thus allowing investors to enhance their decision-making and companies to reduce their cost of capital.
The signing of the Memorandum of Understanding will take place in the same year as the deadline set by Brazilian regulators for all companies and financial institutions to follow IFRSs. In March 2006 the Brazilian Central Bank decided that financial intermediaries under its supervision must regularly publish consolidated financial statements in full compliance with IFRSs as from December 2010. The Brazilian Securities Commission (CVM) and the Brazilian Insurance Supervisor issued similar rulings in 2007 aimed at companies that they regulate and supervise. In December 2007 the Brazilian Congress passed legislation amending the Company Law, requiring all listed companies, as well as all for-profit ‘large enterprises', organised under any of the forms permitted by Brazilian law, to comply with IFRSs.
