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 regulating 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 (QA) review system; (vii) setting and enforcing continuing professional development (CPD) requirements; and (viii) implementing an investigation and discipline system for the profession. The CRCs, as subsidiaries of 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 overseeing the profession.

In addition to being an IFAC Member, the CFC is a member of the Inter-American Accounting Association (AIC), the Group of Latin American Accounting Standard Setters (GLENIF), the Committee of Integration for Latin Europe and America (CILEA), and the Union of Accountants and Auditors of Portuguese Language (UCALP).

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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.

Methodology
Last updated: 09/2023
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SMO Action Plan

Status of Fulfillment by SMO

  • SMO 1: Quality Assurance

    As the accountancy profession regulator, the CFC shares responsibility with the Securities Exchange Commission (CVM) for establishing and implementing a mandatory QA review system for specific audits. 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 the scope of QA does not cover all mandatory audits and reviews happen every four years instead of three for selected PIEs. To address this, the CFC and IBRACON indicate that they carried out studies to evaluate the impact of changing the review cycle by creating different cycles for audit firms of PIEs (three years) and audit firms of other PIEs and non–PIEs (four or six years). As reported by CFC, during the next cycle of reviews that begins in 2023, the requirement will be changed to a three-year cycle for PIEs. 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. The CFC and IBRACON have established a dialogue with the CVM and other regulators in the jurisdiction to promote the proposed changes to align with global best practices.

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

    Additionally, the CFC and IBRACON have established ongoing processes to review and revise the methodology of the CRE to ensure and maintain the effectiveness of the QA review procedures and to evaluate the system against the SMO 1 requirements. As of 2022, the CRE is analyzing the adoption of ISQM 1 and 2 and the impact on the QA review system. IBRACON has developed training on the standards.

    Lastly, to facilitate the implementation of relevant standards, the CFC and IBRACON have developed training activities (37 trainings since 2012), 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 work with the CMV for the legal establishment and implementation of a mandatory QA review system for all audits in the jurisdiction in line with the SMO 1 requirements.

    Importantly, the new suite of IAASB Quality Management standards that will become effective in December 2022 will require significant change management for regulators and firms. The CFC is encouraged to refer to the new changes from quality control standards to quality management standards as it implements the QA reviews and prepares members and other relevant stakeholders for the change.

    Current Status: Review & Improve

  • SMO 2: International Education Standards

    In Brazil, the Ministry of Education (MEC), the CFC and it’s 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 MEC, successfully complete the CFC’s professional examination, and be registered with a CRC. In addition, regulatory bodies (i.e., 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 companies.

    To incorporate the IES into national educational requirements, the CFC, with the support of IBRACON, assessed the national educational requirements against the 2015 IES. The institutes report that IES 1-4 and IES 6 align with international requirements but found gaps in alignment with 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 gaps.

    The CFC and IBRACON, in collaboration with universities, participate in the authorization, recognition, and renewal of courses for the accountancy profession. In addition, in 2022, CFC undertook a public consultation to solicit input on amendments to the university curricula and presented this to the MEC for consideration. 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 further advancement. CFC does note that supervised internships are required to complete a bachelor’s degree in accounting sciences so that students fulfill some practical experience before graduation.

    While auditors providing services to companies participating in the securities market and companies with a turnover over R$78 million have already been subject to CPD requirements through the CVM, in 2015, the CFC issued a regulation that requires public accountants who prepare or oversee the preparation of financial statements of any public interest entity (PIE) to fulfill CPD obligations. In 2021, this was extended to auditors and public accountants of pension funds. The CFC reports it is planning to extend this requirement to all other public accountants gradually.

    Incorporating all the IES requirements goes beyond the CFC’s regulatory competency. The CFC has endeavored to coordinate with the MEC to enable the adoption of IES 8.

    CFC is encouraged to review the 2019 IES and provide any updates related to the progress on the incorporation of the latest IES requirements, particularly on IES 5 and 8—which are educational areas that have repeatedly been identified as benefiting from improvements. CFC is encouraged to consider completing IFAC’s IES Self-Assessment tool and utilizing the IFAC Accountancy Education E-Tool to review the current version of IESs and share these requirements with relevant stakeholders. This may require providing more detail in its Action Plan on its efforts to incorporate the concept of assessing “competence” as well as addressing revisions related to learning and development for information and communications technologies (ICT) and professional skepticism.

    Current Status: Review & Improve

  • SMO 3: International Standards on Auditing

    The CFC is responsible for the adoption of auditing standards for all companies and since 2005 has adopted ISA, through a convergence process, 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 become available. As of 2022, the 2020 ISA version is being applied

    To support the ongoing adoption & implementation 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, (iii) disseminate information on updates to the standards and international developments in the area 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 to IAASB exposure drafts.

    CFC has demonstrated an ongoing process to maintain its level of fulfillment with the SMO 3 obligations and is committed to continuous improvement.

    Current Status: Sustain

  • 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 that is mostly in line with the requirements of the 2016 version of the IESBA Code of Ethics, but with differences related to the NOCLAR standard due to national legislation.

    The CFC, in collaboration with the Brazilian Institute of Independent Auditors (IBRACON), has ongoing processes to continuously adopt and update the Code to remain aligned with the IESBA Code of Ethics. Both institutes monitor changes to the IESBA Code of Ethics to review, translate, approve, and subsequently issue new sections of its Code of Ethics or amend existing parts when necessary. The institutes are also committed to working in partnership with other relevant organizations towards adopting, implementing, and applying all the requirements in the IESBA Code in Brazil.

    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.

    In addition, CFC, in collaboration with IBRACON, reports that it participates in the international standard-setting process by providing comments to the IESBA exposure drafts and nominating and supporting representatives to the IESBA Board and task forces.

    It is in the public interest that professional accountants adhere to the latest ethical requirements issued by the IESBA. The CFC should advance its convergence process to eliminate differences between its Code and the current version of the International Code of Ethics in a timely manner. Apart from NOCLAR, there are other revised standards from the 2018 International Code, and the 2021 Handbook, currently effective, have changes in the terms and concepts used in the IAASB's International Standard on Assurance Engagements (ISAE) 3000 (Revised), and revisions to promote the role and mindset expected of all professional accountants. In addition, revisions on the objectivity of an engagement quality reviewer and other appropriate reviewers, non-assurance services, and fee-related provisions will be effective in December 2022.

    Current Status: Execute

  • 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), which are currently applied on a mixed accrual-cash basis, with the IPSAS. The convergence process started in 2017 and is expected to be completed by 2024.

    In 2015, CFC created a its Advisory Board for Public Sector Accounting Standards (GA/NBC TSP) 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. The committee has also signed a cooperation agreement with the National Secretariat of the Treasury (STN) related to the convergence process.

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

    A subgroup of the GA/NBC TSP was appointed to prepare an annual work plan which is subject to the approval of the GA/NBC TSP, as well as the communication strategies and progress reports of the convergence process. For example, the subgroup shares relevant information through conferences, training events, studies, handbooks, 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. In October 2021, CFC updated its Advisory Board for Public Sector Accounting Standards (GA/NBC TSP) into a Permanent Committee for Standards Applied to the Public Sector (CP CASP). This change will improve the committee's governance and ensure an ongoing system is in place to incorporate new and revised IPSAS as they become available.

    Finally, the CFC indicates it has developed training sessions on IPSAS for accountants from state and government entities.

    CFC has demonstrated an ongoing process to maintain its fulfillment with the SMO 5 obligations and is committed to continuous improvement.

    Current Status: Sustain

  • 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. Accordingly, the CFC and its CRCs have 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 has demonstrated an ongoing process to promote the incorporation of all SMO 6 requirements. It uses its best endeavors to fulfill the SMO 6 obligations and is committed to continuous improvement.

    Current Status: Sustain

  • SMO 7: International Financial Reporting Standards

    The Federal Council of Accounting (CFC) issued a regulation stating that the Brazilian Accounting Pronouncements Committee (CPC) must issue accounting standards for financial statements of all companies. As part of the national due diligence process, the standards are enforced by 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.

    The CFC created the CPC in association with the Brazilian Association of Listed Companies (ABRASCA), Association of Capital Market Investment Analysts and Professionals (APIMEC), Stock Exchanges Bolsa Brasil Balcão (B3), 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, have 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 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, 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.

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

    Current Status: Sustain

Disclaimer

IFAC bears no responsibility for the information provided in the SMO Action Plans prepared by IFAC member organizations. Please see our full Disclaimer for additional information.

 

Contact

SAS Quadra 5, Bloco J, Edificio CFC
CEP 70070-920 Brasilia DF
Brazil
Tel: +55-61-3314-951
Fax: +55+61+3314-951
vpadmin@cfc.org.br
http://www.cfc.org.br

 

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