Conselho Federal de Contabilidade
Member | Established: 1946 | Member since 1986
The CFC, established by the Decree Law 9295/46, as amended by Law 12249/10, is an independent, non-governmental entity responsible for regulation of the accountancy profession. The CFC, along with its regional arms—Regional Accounting Councils (CRCs)—carries out regulatory activities throughout the country.
The CFC's responsibilities include: (i) monitoring accountancy practices; (ii) setting accounting and auditing standards; (iii) conducting the professional examination; (iv) establishing the requirements for technical qualifications; (v) setting ethical standards for the profession; (vi) establishing and operating a quality assurance review system for all audits; (vii) setting and enforcing continuing professional development requirements; and (viii) implementing an investigation and discipline system for the profession. The CRCs, subordinated to the CFC, are responsible for administering the CFC directives, as well as for registering professional accountants (as either one of the two qualifications: public accountant or auditor), and providing support in the oversight of the profession.
In addition to being an IFAC Member, the CFC is a member of the Inter-American Accounting Association, the Group of Latin American Accounting Standard Setter, and the Committee of Integration for Latin Europe and America.
Statements of Membership Obligation (SMO)
The Statements of Membership Obligations form the basis of the IFAC Member Compliance Program. They serve as a framework for credible and high-quality professional accountancy organizations focused on serving the public interest by adopting, or otherwise incorporating, and supporting implementation of international standards and maintaining adequate enforcement mechanisms to ensure the professional behavior of their individual members.
SMO 1: Quality Assurance
The CFC—as the accountancy profession regulator—shares responsibility with the Securities Exchange Commission (CVM) for the establishment and implementation of a mandatory QA review system for audits of companies participating in the securities market. In 2001, an External Quality Review Managing Committee Program (CRE) was established, led by representatives of 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 SMO 1 requirements although audits of public interest entities (PIEs) are subject to review every four years instead of three and there is no QA review system applicable to audits of non–PIEs. The CFC and IBRACON indicate that they are carrying out studies to evaluate the impact of changing the review cycle by creating different cycles for audit firms that audit PIEs (three years) and audit firms that audit non–PIEs (four or six years). Nonetheless, at this time, the CFC states that a significant number of auditors or audit firms are in a cycle of less than four years, since reviews with non-clean conclusions are automatically rescheduled for the following year. In addition, as reported by CFC, during 2019 it is expected to change the requirements for a three-year inspection for PIEs. The CFC and IBRACON have established a dialogue with the CVM and other regulators in the jurisdiction to promote the changes.
Additionally, the CFC and IBRACON have established ongoing processes to review and revise the methodology of the CRE to ensure and maintain the efficiency and precision of the QA review procedures, and to evaluate the system against the SMO 1 requirements. After the SMOs were revised in 2012, the CFC created a working group to review the QA review system to better align its operations with the SMO 1 requirements. In 2017, the CFC reported that there would be another review and revision of the QA review system to improve its effectiveness and oversight; further details on this review have been requested as part of the 2017 Action Plan update.
Lastly, to facilitate the implementation of the standards, the CFC and IBRACON have developed training activities, such as the National Seminar for Independent Auditors; disseminated information on the QA review system; and translated the IFAC Guide for Quality Control for Small- and Medium-Sized Practice.
The CFC is encouraged to update its activities to promote the legal establishment and development of a mandatory QA review system for all audits in the jurisdiction in line with the SMO 1 requirements. Also, the CFC is encouraged to include in its SMO Action Plan specific actions about processes it has in place to support its members with the implementation of quality controls standards.
SMO 2: International Education Standards
In Brazil, the Ministry of Education (MoE), the CFC and it’s the Regional Accounting Councils (CRCs), and the Securities Exchange Commission (CVM) all have a role in setting and implementing initial professional development (IPD) and continuing professional development (CPD) requirements for professional accountants. Individuals wishing to qualify as a public accountant or auditor are required to complete a Bachelor’s degree in accounting sciences offered by an institution recognized by the MoE, successfully complete the CFC’s professional examination, and be registered with a CRC. In addition, regulatory bodies require a Technical Qualification Exam, administered by the CFC, for auditors providing services to regulated companies.
To incorporate the IES into national educational requirements, the CFC, with the support of the Brazilian Institute of Independent Auditors (IBRACON), conducted an assessment of the national educational requirements against the IES, and found the main gaps in alignment in IES 5, 7 and 8—practical experience and CPD. Subsequently, the institutes have undertaken different studies and projects to reach solutions that would address the differences. As a result of this work, the CFC now requires all professional accountants to pass a uniform examination prior to practicing and a Technical Qualification Exam before providing audit services to regulated companies. In addition, while auditors providing services to companies participating in the securities market and companies with a turnover over R$78 million—have been subject to CPD requirements through the CVM, in 2015, the CFC issued a new regulation that requires public accountants who prepare or oversee the preparation of financial statements of public interest entities (PIEs) to also fulfill CPD obligations. The CFC reports it is planning to gradually extend this requirement to all other public accountants. Lastly, the CFC and IBRACON indicate that they continue to use their best endeavors to adopt the IES 5 requirement around practical experience; however, a legal impediment is currently preventing the advancement of adopting this requirement. Nonetheless, CFC does note that supervised internships are required as part of completing a Bachelor’s degree in accounting sciences such that students fulfill some practical experience prior to graduation.
The CFC and IBRACON both monitor new and amended standards issued by the International Accounting Education Standards Boards (IAESB). Both institutes report that they have established mechanisms, to distribute information to members and stakeholders regarding recent developments and revisions issued by the IAESB.
During the next submission of its Action Plan, the CFC is encouraged to provide any status update on the incorporation of the remaining IES requirements for all professional accountants—for example, a specific timeline and plans for extending CPD requirements to all professionals and any progress made in regards to incorporating practical experience aligned with IES 5. As part of this update, it should consider how any plans to review the revised (2015) IES requirements and assess the impacts and implications of the IES against its national IPD and CPD requirements, particularly on IES 5, 7 and 8—which were previously identified as needing improvements—fit in to any established timelines. Subsequently, the CFC is then encouraged to develop or refine its roadmap for bringing national educational requirements for all professional accountants in line with revised IES. Along these lines, the CFC is encouraged to continue promoting the adoption and implementation of the revised IES to all stakeholders involved (i.e. the MoE, CVM, universities, etc.) in the education of professional accountants in the jurisdiction.
SMO 3: International Standards on Auditing
The CFC is responsible for the adoption of auditing standards for all companies and has adopted ISA, through a convergence process, as Brazilian auditing standards. The CFC and the Brazilian Institute of Independent Auditors (IBRACON), report that since 2005, Brazilian auditing standards have been fully converged ISA, with an ongoing system in place to incorporate new and revised ISA as they become available.
To support the ongoing adoption of the standards, the CFC collaborates with IBRACON to: (i) monitor new and amended standards issued by the IAASB, (ii) complete timely translations of the ISA, and (iii) disseminates information on updates to the standards and international developments in the area through printed materials and its website. The 2016–2017 ISA and amendments were translated and issued being effective for all audits of financial statements with the year ending in and after December 31, 2016.
To facilitate ongoing members’ implementation of the standards, the CFC and IBRACON have provided professional development activities. For example, to address the new auditor’s report, the organizations developed 40 training sessions related to the new auditor´s report throughout 2016–2017 and participated in 10 panels, conferences, and workshop that included regulators and investors to present the changes, benefits, and necessary interactions as a result of the new auditor’s report.
SMO 4: Code of Ethics for Professional Accountants
The CFC is legally responsible for setting ethical requirements for all professional accountants in Brazil. Accordingly, the CFC has adopted a Code of Ethics, in line with the requirements of the 2012 version of the IESBA Code of Ethics.
The CFC in collaboration with the Brazilian Institute of Independent Auditors (IBRACON) has ongoing processes in place to continuously adopt and update the Code so that it remains aligned with the IESBA Code of Ethics. Accordingly, the CFC and IBRACON monitor changes to the IESBA Code of Ethics in order to review, translate, approve, and subsequently issue new sections of its Code of Ethics or amending existing parts when necessary. In 2016, CFC and IBRACON formed a committee to analyze, the 2016 IESBA Code including, which includes non-compliance with laws and regulations (NOCLAR) standard, as well as examining the consequential and conforming changes made to sections 100, 140, 150, 210, and 270 of the IESBA Code. The institutes are also committed to working in partnership with other relevant organizations toward NOCLAR adoption, implementation and application harmonization throughout Brazil. As of 2019, CFC plans to update its code of ethics, including some differences with the 2016 IESBA Code related to the
Furthermore, the CFC has taken steps to support its members with the implementation of the current Code by disseminating updates, providing training activities for professional accountants in all regions, and maintaining a dialogue with regulators.
During the next submission of its Action Plan, the CFC is encouraged to provide an update on its efforts and actions to adopt the latest version of the IESBA Code of Ethics and its application within Brazil, thereby eliminating differences with IESBA Code and its Code for all professional accountants.
SMO 5: International Public Sector Accounting Standards
The CFC is the entity that is legally responsible for public sector accounting standards and has made the decision to converge the current Brazilian public sector accounting standards (NBCT–SP) with the IPSAS. In 2015, CFC created a Convergence Management Committee (CMC) to lead the convergence of IPSAS with the Brazilian accounting standards for the public sector. Members of the committee include Brazilian government representatives given that the government agencies will ultimately be responsible for the standards’ implementation.
Subsequently, in collaboration with the Brazilian Institute of Independent Auditors (IBRACON), the translation of 2016 IPSAS into Portuguese and a gradual adoption framework of IPSAS was established in 2017. The committee has also signed a cooperation agreement with the National Secretariat of the Treasury (STN) related to the convergence process.
In addition, a subgroup of the CMC was appointed to prepare an annual work plan which is subject to an approval of the CMC, as well as the communication strategies and progress reports of the convergence process. For example, the subgroup shares relevant information through conferences and training events, studies, manuals, printed materials and the CFC website. Additionally, this subgroup is also responsible for identifying potential partners that may join in supporting the convergence process given the identified challenges to implementing the standards such as the necessary IT systems and infrastructure, human resources, and supporting government agencies to understand the benefits of adopting IPSAS.
Finally, the CFC indicates it has developed training sessions on IPSAS for accountants from state and government entities.
In its Action Plan, the CFC is encouraged to provide a status update on the execution of actions it has planned to adopt and support the implementation of IPSAS.
SMO 6: Investigation and Discipline
The CFC and its Regional Accounting Councils (CRCs) have the authority to carry out investigative and disciplinary (I&D) processes for professional accountants in accordance with the Decree Law 9295/46, amended by the Law 12249/10. In addition, the Securities and Exchange Commission (CVM) as empowered by the Securities Law No 6385/76, is responsible for I&D of auditors providing services to companies participating in the securities market. Accordingly, the CFC and its CRCs have respectively established, respectively, the Superior Ethics and Discipline Court (TSED) and Ethics and Discipline Courts to carry out the I&D procedures.
The CFC has established ongoing processes to conduct assessments of its own and its CRCs I&D policies and processes against the requirements of SMO 6 and have identified only one gap, members of the Ethics and Discipline Courts do not include non-accountants. This is due to a legal impediment that the CFC continues to review and strategize potential reforms in order to enhance its I&D system. Nevertheless, the CFC reports that it continues to review and consider the best strategy for potential legal reforms to include non-accountants in the Ethics and Discipline Courts.
The CFC, is encouraged, in collaboration with the IBRACON and CVM, to carry out a self-assessment of the CVM’s I&D policies and processes against the requirements of SMO 6. If gaps in compliance exist, the CFC should prioritize collaborating with the CVM to develop plans to support the adoption and implementation of any missing elements of good practice and update its SMO Action Plan accordingly.
SMO 7: International Financial Reporting Standards
Under CFC-issued resolution, is the responsibility of the Brazilian Accounting Pronouncements Committee (CPC) to set corporate accounting standards for financial statements of all companies. As part of the national due diligence process, the standards enforced by the respective regulator. 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.
The CFC was integral to the founding of the CPC as the CPC was established through a CFC-issued resolution. The CFC created the CPC in association with the Brazilian Association of Listed Companies (ABRASCA), Association of Capital Market Investment Analysts and Professionals (APIMEC), Sao Paulo Stock Exchange (BM & FBOVESPA), Foundation for Accounting, Actuarial and Financial Research (FIPECAFI), and Brazilian Institute of Independent Auditors (IBRACON) with the primary objective of successfully implementing a convergence process.
As part of these efforts, the CFC and IBRACON, through the CPC has established ongoing processes for monitoring changes to the standards and pronouncements issued by the IASB and promptly translating and incorporating them into the Brazilian GAAP. In addition, the CFC and IBRACON have a mechanism in place to disseminate the standards and maintain an ongoing dialogue with regulators of public interest entities so that new and amended standards are enforced for companies’ under their respective supervision.
Furthermore, the CFC has developed a training program, in cooperation with IBRACON, on the standards and developing business cases for the convergence, 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 providing comments to IASB-issued exposure drafts which are collated through GLENIF at a regional level.
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