On Nov. 23, BRZ CB issued accounting rules for financial instruments.
BRZ published Resolution 352 to provide accounting concepts and criteria on financial instruments, and hedge accounting for securities, forex and payment companies.
Accounting Criteria
Resolution provides accounting procedures to define cash flows of financial assets.
Future cash flows defined as only payment of principal and interest on principal value.
Also on how to calculate effective interest rate of financial instruments, providing for credit risk losses, disclosing information re financial instruments in explanatory notes.
Does not apply to bookkeeping of consortium groups, only applies for the measuring of financial instruments, measured at fair value, pursuant to the current regulations.
Institutions must classify financial assets based on the business model of financial asset management, and cash flows according to amortized and fair value categories.
Business models must be approved by board of directors, establish the management of financial assets, be defined to generate cash flows, reflect planned activities for goals.
Financial assets must be reclassified on first day of next accounting period, and financial liabilities must be classified in the amortized cost category, with exceptions.
Derivative instruments, non-derivative financial assets, and exchange rate non-derivatives instruments, with conditions, can be categorized as hedge instruments.
Annex attached to provide for incurred losses applicable to defaulted financial assets.
Resolution 352 will enter into force on Jan. 1, 2024, for Articles 24, 100 and 101, and items X and XI of Article 107; effective on Jan. 1, 2027 for Chapter IV of Title II.
Further, Jan. 1, 2025, will be the effective date in relation to the other devices.
Apr. 2024 BRZ CB Loss Estimate
On Apr. 11, 2024, BRZ CB issued Instruction 464 to clarify the parameters criteria for establishing projected credit risk loss referred to in Resolutions 4.966, 352 of 2023.
Instruction 464 enters into force on Jan. 1, 2025.
Dec. 6, 2024 BRZ CB Clarifications
On Dec. 6, 2024, BRZ CB published Instruction 560 to clarify the criteria for the application of Resolution 4.966 of Nov. 25, 2021, Resolution 352 of Nov. 23, 2023.
Prohibition on recognizing any revenue not received re a financial asset with a credit recovery problem does not apply to changes re exchange rate, fair value variations.
Article 37 of Resolution 4.966, of 2021 and Article 37 of Resolution 352, of 2023, apply to financial assets that are classified in the income category within the fair value.
Except those in Art. 1 of Resolution 4.966 of 2021 and Art. 1, of Resolution 352, 2023.
Institutions mentioned in Art. 1 that use the complete methodology for calculating expected losses linked to credit risk must individually estimate specified parameters.
Revoked Instruction 464, of Apr. 11, 2024, published on the official gazette on Apr. 12.
Instruction 560 in force on Jan. 1, 2025, except Art. 9, in force on publication date.
Regulators
BRZ CB
Entity Types
B/D; Bank; Inv Co
Reference
Ins 560, 12/6/2024; Ins 464, 4/11/2024; Res 352, 11/23/2023; Rpl Cir 2535, 2951, 3001, 3233, 3252, 3693, 3722, 3738, 3833, Res 219, Res 309;
