Complexity In Drafting Financial Statements In Brazil

Companies operating in Brazil still have difficulties in drafting financial statements, despite new guidelines put in place.

Companies operating in Brazil are required to prepare financial statements, as per Law No. 11.638/07 and Provisional Measure No. 449/08, which aligns Brazilian accounting practices to international standards. Financial statements include the balance sheet, income statement, comprehensive income statement, statement in changes in net worth position, cash flow statements, and the added value statement. Companies under the Securities and Exchange Commission of Brazil (CVM) standards also require explanatory notes, which assist in interpreting information. The benefits of properly prepared financial statements include attracting investors, finding new funding sources, presenting results to the board and shareholders, and market credibility. In recent years, the relevancy of information in financial statements has been questioned. Aware that improvements were needed, the Accounting Pronouncements...