Accounting system in Brazil
Companies Act is the basic law of accounting system in Brazil. And in the companies act, identifications of public companies and private companies, requirement of submit the audited financial statements, duties of obeying Brazil Accounting Standards and keeping accounting bookings and other requirements are stipulated in the law. And the fines of offending the regulates are also mentioned in the law.
Generally accounting bookings must be kept for 7 years. However, there is the case that keeping period may be set by province or city in Brazil. It should be written in Portuguese or English. However, companies that have the duty to disclosure the financial statements are required to declare the guideline in Portuguese.
Accounting period is generally 12 months and the accounting should be closed within the 12 months. It is possible to set the period by companies. From the year of 2007, digital accounting book system (SPED) is applied so that listed companies begin disclosing the by SPED.
According to the guideline of International Accounting Standards Board, on December 28th2007, laws about review of standards are established. Then, the standards become more similar with International Financial Reporting Standards. The application of IFRS is for listed companies from 2010 and it is also used for large-scale companies, which the gross capital is more than BRL 240,000,000 or profit is more than BRL 300,000,000. Except for these companies, the SMEs are applicable for the accounting standards only for SMEs.
Internal audit and external audit
Corporations in Brazil are required to appoint Internal Audit Committee. The work of internal audit committee is to do regular review of financial statements (one time per three months) and to confirm yearly financial statements. If in the Audit Committee there is external auditor, it is possible to provide information and special facts required by external auditor.
In Brazil, listed companies and large-scale companies must accept the external audit. And companies managed by financial companies and banks or insurance companies should do the medium audit and final audit every year.