Conselho Federal de Contabilidade

As the regulator of the accountancy profession, the Federal Council of Accounting (CFC) shares responsibility with the Securities and Exchange Commission of Brazil (CVM) for establishing and implementing a mandatory quality assurance (QA) review system for specific audits. In 2001, the External Quality Review Managing Committee Program (CRE) was established, led by representatives from the CFC and the Brazilian Institute of Independent Auditors (IBRACON), under the oversight of the CVM.

The CFC and IBRACON report that the QA review system largely incorporates the requirements of SMO 1, although the scope of QA does not cover all mandatory audits, and reviews for selected Public Interest Entities (PIEs) occur every four years instead of the recommended three. To address this, the CFC and IBRACON have conducted studies to evaluate the impact of changing the review cycle, proposing differentiated cycles: three years for audit firms of PIEs, and four or six years for firms auditing other PIEs and non-PIEs. According to the CFC, beginning with the next review cycle in 2023, the requirement will shift to a three-year cycle for PIEs.

Nonetheless, the CFC notes that a significant number of auditors or audit firms are already subject to review cycles of less than four years, since engagements that receive non-clean conclusions are automatically scheduled for follow-up reviews in the following year. The CFC and IBRACON have established an ongoing dialogue with the CVM and other regulators within the jurisdiction to promote these proposed changes and align with international best practices.

In 2019, the CFC created the Cadastro Nacional dos Auditores Independentes Pessoa Jurídica (CNAIPJ), a voluntary registry of audit firms providing services to non-PIEs. Firms in the CNAIPJ registry have been subject to QA reviews since 2021.

Additionally, the CFC and IBRACON have implemented ongoing processes to review and revise the CRE’s methodology to ensure the effectiveness of QA review procedures and evaluate compliance with SMO 1 requirements. As of 2022, the CRE is analyzing the adoption of ISQM 1 and 2 and their impact on the QA review system. IBRACON has developed training related to these standards.

To facilitate the implementation of relevant standards, the CFC and IBRACON have carried out 37 training activities since 2012, including the National Seminar for Independent Auditors; disseminated information about the QA review system; and translated the IFAC Guide to Quality Control for Small- and Medium-Sized Practices.

The CFC is encouraged to continue working with the CVM to legally establish and implement a mandatory QA review system for all audits within the jurisdiction, in alignment with SMO 1 requirements.

Importantly, the new suite of IAASB Quality Management standards, which became effective in December 2022, requires significant change management efforts by both regulators and audit firms. The CFC is encouraged to incorporate the transition from quality control standards to quality management standards into its QA review system and to prepare members and other relevant stakeholders for these changes.

Current Status: Review & Improve

In Brazil, the Ministry of Education (MEC), the CFC and its Regional Accounting Councils (CRCs), and the Securities and Exchange Commission (CVM) all play a role in setting and implementing initial professional development (IPD) and continuing professional development (CPD) requirements for professional accountants. Individuals wishing to qualify as public accountants or auditors are required to complete a bachelor’s degree in accounting sciences offered by an institution recognized by the MEC, successfully pass the CFC’s professional examination, and register with a CRC. In addition, regulatory bodies—such as the Securities and Exchange Commission (CVM), Central Bank of Brazil (BCB), Superintendence of Private Insurance (SUSEP), and/or the National Superintendence for Complementary Pensions (PREVIC)—require a Technical Qualification Exam, administered by the CFC, for auditors providing services to regulated entities.

To incorporate the IES into national educational requirements, the CFC, with support from IBRACON, assessed national education standards against the 2015 IES. The institutions report that IES 1 – 4 and IES 6 are aligned with international requirements but identified gaps in compliance with IES 5, 7, and 8 — particularly regarding practical experience and CPD. As a result, they have undertaken various studies and initiatives to address these gaps.

The CFC and the IBRACON, in collaboration with universities, actively participate in the processes of authorization, recognition, and renewal of accounting degree programs in Brazil. In 2022, the CFC conducted a public consultation to collect input regarding proposed changes to university curricula and submitted the results to the Ministry of Education (MEC) for consideration. This initiative contributed to the development of the new Resolution CNE/CES No. 1, dated March 27, 2024, which establishes the National Curriculum Guidelines for the bachelor’s degree in accounting sciences. The CFC and IBRACON continue to make efforts to fully implement the requirements of IES 5, particularly those related to practical experience; however, they note that existing legal constraints still limit further progress in this regard. Nonetheless, supervised internships remain a mandatory requirement for the completion of the bachelor’s degree, providing students with valuable practical experience prior to graduation.

While auditors providing services to companies participating in the securities market—and those auditing companies with annual revenues above R$78 million—have long been subject to CPD requirements through the CVM, in 2015, the CFC issued a regulation requiring public accountants who prepare or oversee the preparation of financial statements for any Public Interest Entity (PIE) to fulfill CPD obligations. In 2021, these requirements were extended to auditors and public accountants working with pension funds. The CFC reports that it plans to gradually expand CPD obligations to all public accountants.

Full incorporation of the IES requirements extends beyond the CFC’s regulatory authority. Nevertheless, the CFC has sought to coordinate with the MEC to facilitate the adoption of IES 8.

The CFC is encouraged to review the 2019 IES and provide updates on progress made in incorporating the most recent IES requirements, particularly IES 5 and IES 8—areas that have consistently been identified as needing improvement. The CFC is further encouraged to complete IFAC’s IES Self-Assessment tool and make use of the IFAC Accountancy Education E-Tool to evaluate the current IES standards and share them with relevant stakeholders. These efforts may require providing greater detail in its Action Plan, including initiatives aimed at assessing “competence” and addressing updates related to learning and development in areas such as information and communications technologies (ICT) and professional skepticism.

Current Status: Review & Improve

The CFC The CFC is responsible for adopting auditing standards for all companies in Brazil and, since 2005, has adopted the International Standards on Auditing (ISA) through a convergence process, thereby establishing them as Brazilian auditing standards. The CFC and the Brazilian Institute of Independent Auditors (IBRACON) report that an ongoing system is in place to incorporate new and revised ISA as they are issued.

To support the ongoing adoption and implementation of these standards, the CFC collaborates with IBRACON to: (i) monitor new and amended standards issued by the IAASB; (ii) ensure timely translations of the ISA; (iii) disseminate information on updates and international developments through printed materials and its website; (iv) provide training activities; (v) develop technical guidelines; and (vi) participate in the international standard-setting process by submitting comments on IAASB exposure drafts.

The CFC has demonstrated a sustained commitment to fulfilling the requirements of SMO 3 and continues to engage in efforts aimed at continuous improvement.

Current Status: Sustain

The Decree Law 9295/46, as amended by Law 12249/10, grants the Federal Council of Accounting (CFC) the authority to establish ethical requirements for the accountancy profession in Brazil. In collaboration with the Brazilian Institute of Independent Auditors (IBRACON), the CFC has adopted a Code of Ethics that is fully aligned with the 2024 edition of the IESBA Handbook of the International Code of Ethics for Professional Accountants (including International Independence Standards).

The CFC, in collaboration with the Brazilian Institute of Independent Auditors (IBRACON), has established ongoing processes to adopt and update the Code in order to maintain alignment with the IESBA Code of Ethics. Both institutions monitor changes issued by the IESBA to review, translate, approve, and issue new sections or amend existing parts of the national Code of Ethics as needed. They are also committed to working in partnership with other relevant stakeholders to adopt, implement, and apply the full set of requirements from the IESBA Code in Brazil.

In support of implementation, the CFC has taken steps to assist its members by disseminating updates, providing training activities across all regions, and maintaining ongoing dialogue with regulatory bodies.

Additionally, the CFC, together with IBRACON, reports its participation in the international standard-setting process by submitting comments on IESBA exposure drafts and by nominating and supporting representatives to serve on the IESBA Board and its task forces.

Current Status: Sustain

The CFC is the entity legally responsible for setting public sector accounting standards in Brazil and has made the decision to converge the current Brazilian public sector accounting standards (NBC TSP), which are presently applied using a mixed accrual-cash basis, with the International Public Sector Accounting Standards (IPSAS). The convergence process began in 2017 and is expected to be completed by 2024.

In 2015, the CFC established its Advisory Council for Public Sector Accounting Standards (GA/NBC TSP) to lead the convergence of IPSAS with Brazilian public sector accounting standards. The committee includes representatives from various levels of government, as public entities are ultimately responsible for implementing these standards. In addition, the committee signed a cooperation agreement with the National Treasury Secretariat (STN) to support the convergence process.

Subsequently, in collaboration with the Brazilian Institute of Independent Auditors (IBRACON), the translation of 2016 IPSAS into Portuguese and a phased adoption framework was established starting in 2017..

A subgroup within the GA/NBC TSP was designated to prepare an annual work plan—subject to approval by the full council—as well as to develop communication strategies and progress reports related to the convergence. This subgroup shares relevant information through conferences, training events, technical publications, handbooks, printed materials, and the CFC’s website. It is also responsible for identifying potential partners to support the convergence process, given the identified challenges to implementing the standards — such as the need for adequate IT systems and infrastructure, qualified human resources, and engagement of government agencies to understand the benefits of adopting IPSAS.

In October 2021, the CFC transformed the GA/NBC TSP into the Permanent Committee for Standards Applied to the Public Sector (CP CASP). This change enhanced the committee’s governance structure and ensured the establishment of a continuous process for incorporating new and revised IPSAS as they are issued.

Additionally, the CFC reports having developed training sessions on IPSAS for accountants working in state and federal government entities.

Currently, the CFC is conducting a comprehensive review and update of the existing public sector accounting standards based on the most recent 2024 IPSAS Handbook. This initiative aims to ensure the continued alignment of Brazilian public sector accounting practices with internationally recognized standards. Through this ongoing effort, the CFC reaffirms its commitment to international accounting harmonization and to promoting greater transparency, comparability, and quality in public sector financial reporting across all levels of government. Additionally, the CFC, through its Public Sector Accounting Standards Working Group (GT-CASP), is actively monitoring international discussions on the development of public sector sustainability reporting standards, with the goal of supporting their future adoption in Brazil.

The CFC has demonstrated an ongoing process to maintain compliance with SMO 5 requirements and remains committed to continuous improvement in the development and implementation of high-quality public sector accounting standards.

Current Status: Sustain

The CFC and its Regional Accounting Councils (CRCs) have the authority to conduct investigative and disciplinary (I&D) processes for professional accountants in accordance with Decree Law 9295/46, as amended by Law 12249/10. To that end, the CFC and the CRCs have established the Superior Ethics and Discipline Court (TSED) and the Ethics and Discipline Courts, respectively, to carry out I&D procedures.

The CFC has implemented ongoing processes to assess the Investigation and Discipline (I&D) systems under its supervision—both at the federal and regional levels—against the requirements of SMO 6. These assessments have identified one significant gap: the current composition of the Ethics and Discipline Courts does not include non-accountant members. This limitation is due to a legal constraint established by Brazilian legislation.

It is important to clarify that the inclusion of non-accountants in the composition of the Regional (TRET) and Federal (TSET) Ethics and Discipline Courts has never been considered by the CFC, as Brazilian law does not permit such inclusion, and there is no current legal framework or space for modifying this provision.

Despite this structural limitation, the CFC continues to work diligently on a robust plan of action, ensuring that I&D systems across the profession remain effective, transparent, and fully adapted to the national regulatory environment, while also aligned as far as legally possible with international best practices.

Regardless of this challenge, the CFC has demonstrated a sustained commitment to promoting the incorporation of all SMO 6 requirements. It continues to make its best efforts to fulfill its obligations and is dedicated to the continuous improvement of its investigative and disciplinary framework.

Current Status: Sustain

The Federal Council of Accounting (CFC) issued a regulation stating that the Brazilian Accounting Pronouncements Committee (CPC) must issue accounting standards for the financial statements of all companies. As part of the national due process, the standards are enforced by the respective regulators. Since 2010, Brazilian GAAP and the Brazilian GAAP for Small- and Medium-sized Entities (SMEs) have been fully converged with IFRS and IFRS for SMEs.

Currently, the CPC is composed of 14 members representing the following entities: the Brazilian Association of Public Companies (Abrasca); the Association of Capital Market Analysts and Investment Professionals of Brazil (APIMEC Brasil); B3 S/A - Brazil, Stock Exchange, Over-the-Counter Market; the Federal Accounting Council (CFC); the Institute of Independent Auditors of Brazil (Ibracon); the Foundation Institute for Accounting, Actuarial and Financial Research (Fipecafi); and entities representing capital market investors. The CPC's objective is to study, prepare, and issue technical documents related to accounting procedures and to disseminate such information to support the issuance of regulations by the Brazilian regulatory authority. Its mission is to centralize and standardize the country's accounting rule-making process, always aiming for the convergence of Brazilian accounting practices with international standards.

As part of these efforts, the CFC and IBRACON, through the CPC, have established ongoing processes for monitoring changes to the standards and pronouncements issued by the IASB, and for promptly translating and incorporating them into Brazilian GAAP. In addition, the CFC and IBRACON have developed mechanisms to disseminate the standards and maintain ongoing dialogue with regulators of public interest entities to ensure that new and amended standards are enforced for companies under their respective supervision.

In October 2023, the Brazilian Securities and Exchange Commission (CVM) enacted Resolution No. 193, requiring listed companies to publish sustainability reports in accordance with IFRS S1 and IFRS S2, with reasonable assurance beginning in 2026. Early adoption is permitted, provided that the reports are also subject to reasonable assurance. Brazil became the first country in the world to officially mandate the adoption of IFRS S1 and S2, underscoring its commitment to aligning corporate sustainability reporting with international best practices.

Subsequently, CVM Resolution No. 232 clarified the scope of this requirement, establishing that only listed companies with annual gross revenue exceeding BRL 500 million, as well as securitization companies and investment funds, will be subject to mandatory compliance with the new sustainability reporting standards. This approach reflects a phased implementation strategy, focused on entities with greater economic relevance and broader market impact

Furthermore, the CFC has developed a training program in cooperation with IBRACON to facilitate members’ implementation of the standards.

Lastly, the CFC is a member of Latin American Accounting Standard Setters Group (GLENIF) and participates in the international standard-setting process by submitting comments on IASB-issued exposure drafts, which are coordinated regionally through GLENIF.

The CFC has demonstrated an ongoing process to maintain its level of fulfillment with the SMO 7 obligations and remains committed to continuous improvement.

Current Status: Sustain