The Brazilian Securities and Exchange Commission publishes guidelines regarding the impact of coronavirus on the financial statements of publicly-held corporations
The Brazilian Securities and Exchange Commission (CVM), through the Department of Accounting and Auditing Standards (SNC) and the Department of Relations with Publicly-held Companies (SEP), recently released the Circular Letter No. 02/2020 which contains guidelines regarding the impact of coronavirus (COVID-19) on the financial statements of publicly-held corporations.
CVM advises publicly-held corporations and their independent auditors to pay closer attention to the impacts of COVID-19 on economic events that may affect the continuity of their business as well as the accounting estimates carried out. CVM highlights the importance of reporting the main risks in the financial statements.
For the corporations that have their financial year ending on December 31st, 2019, the effects of COVID-19 must be registered as subsequent events, as instructed by the CVM Resolution No. 593 of September 15th, 2019. On the other hand, for those with their financial year ending after the aforementioned date or that are drafting their first quarterly-statement forms (ITR), the risks will be reported directly in their financial statements.
In the Circular Letter No. 02/2020, CVM’s technical areas clarified that it is the corporation’s responsibility to asses the need to disclose material facts and projections regarding the risks and uncertainties arising from the COVID-19 epidemic in the drafting of the reference form.
Despite the difficulty in monetize future impacts, CVM emphasizes the need for publicly-held corporations and their independent auditors to endeavor their best efforts in the process of drafting and auditing the financial statements so that the information disclosed reflects their economic reality endowed with predictive potential.