Instituto dos Auditores Independentes do Brasil
Member | Established: 1971 | Member since 1977
IBRACON is a private organization established in 1971 to promote the advancement of the audit profession. As a voluntary professional organization comprised of auditors, IBRACON represents and promotes the audit profession, develops training activities, and drives improvements to professional practices.
IBRACON cooperates with the CFC regarding technical and ethical issues involving the accountancy profession, assists with the translation and interpretation of accounting and auditing standards, supports the implementation of quality control/management standards, and works towards enhancing professional education. IBRACON is the official translator of the IFRS and IFRS for SMEs issued by the IASB in Brazil and also provides translation assistance for the Brazilian auditing standards.
In addition to being an IFAC Member, IBRACON is a member of the Inter-American Accounting Association (AIC), the Committee of Integration for Latin Europe and America (CILEA), and the Union of Accountants and Auditors of Portuguese Language (UCALP).
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 Federal Council of Accounting (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 companies participating in the securities market are subject to review every four years instead of three and there is no mandatory QA review system applicable to audits of other public interest entities (PIEs) or 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 of PIEs (three years) and audit firms of other PIEs and 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. As reported by CFC, in 2022 it is expected that the requirement will be changed to a three-year cycle 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 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, and IBRACON has developed training on the standards.
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.
IBRACON is encouraged to further its collaboration with CFC 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.
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. IBRACON is encouraged to refer to the new changes from quality control standards to quality management standards as it progresses with implementing the QA reviews and preparing members and other relevant stakeholders for the change.
SMO 2: International Education Standards
In Brazil, the Ministry of Education (MoE), the Federal Council of Accounting (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 (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, conducted an assessment of 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. As a result, the CFC now requires all professional accountants to pass a uniform examination before practicing and a Technical Qualification Exam before providing audit services to regulated companies.
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.
In addition, 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 also fulfill CPD obligations. The CFC reports it is planning to extend this requirement to all other public accountants gradually. Incorporating IES requirements go beyond the CFC’s regulatory competency. Based on this, the CFC has sought to align actions with the MoE to enable the adoption of IES 8.
IBRACON has demonstrated an ongoing process to support CFC initiatives to promote the incorporation of the latest IES in Brazil. It uses its best endeavors to fulfill the SMO 2 obligations and is committed to continuous improvement.
IBRACON 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. IBRACON is encouraged to consider completing IFAC’s IES Self-Assessment tool in collaboration with the CFC 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 addressing revisions related to learning and development for information and communications technologies (ICT) and professional skepticism.
SMO 3: International Standards on Auditing
The Federal Council of Accounting (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 IBRACON, report that there is an ongoing system 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 and implementation of the standards, IBRACON collaborates with CFC 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) participates in the international standard-setting process by submitting comments to IAASB exposure drafts.
IBRACON has demonstrated an ongoing process to maintain its level of fulfillment with the SMO 3 obligations and is committed to continuous improvement.
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, 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 IBRACON, has ongoing processes in place to continuously adopt and update the Code so that it remains 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 toward NOCLAR adoption, implementation, and application throughout Brazil.
Furthermore, IBRACON and the CFC have 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, IBRACON, in collaboration with CFC, 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.
IBRACON has demonstrated an ongoing process to support CFC initiatives to update the national Code with the requirements of the IESBA Code of Ethics. It uses its best endeavors to fulfill the SMO 4 obligations and is committed to continuous improvement.
It is in the public interest that professional accountants adhere to the latest ethical requirements issued by the IESBA. IBRACON is encouraged to continue assisting the CFC in its convergence process to eliminate differences between its Code and the current version of the International Code of Ethics. Apart from NOCLAR, there are new standards, and the 2021 Handbook, currently effective, has 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.
SMO 5: International Public Sector Accounting Standards
The Federal Council of Accounting (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. The convergence process started in 2017 with a hybrid approach (accrual-cash basis).
IBRACON has considered and evaluated ways to comply with the requirements of SMO 5 and, apart from its general intention to engage in policy dialogues, does not deem further involvement in public sector accounting matters feasible at this time.
SMO 6: Investigation and Discipline
The Federal Council of Accounting (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 established, respectively, the Superior Ethics and Discipline Court (TSED) and Ethics and Discipline Courts to carry out the I&D procedures.
IBRACON has demonstrated an ongoing process to support CFC initiatives 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.
SMO 7: International Financial Reporting Standards
Under the Federal Council of Accounting (CFC)-issued resolution, it 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 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 was integral to the founding of the CPC. 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, IBRACON and the CFC, 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 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.
Lastly, IBRACON support CFC, as 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.
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.