Abstract
ABSTRACT The aim of this paper was to analyze the accounting treatment used by companies in Brazil that have investments in joint operations, in light of the Brazilian and international accounting standards. There are no doubts about the accounting treatment to be used in consolidated statements, but a divergence was identified between the international and Brazilian standards in relation to individual statements. IFRS 11 determines that investors recognize the values of a joint operation proportionally in consolidated and separate statements. However, the Brazilian standard includes a paragraph determining that only joint operations with no legal personality can be measured in individual statements proportionally. CPC 19 foresees different accounting treatments depending on the legal form of the joint operation, omitting the accounting treatment to be used in joint operations with a separate vehicle. The topic of joint operations is relevant, as the accounting treatment used in Brazil can mean our accounting practices do not comply with the international ones. Besides contributing to the literature on joint businesses, this essay indicates to regulatory bodies the need to modify the Brazilian standard so that it fits the international ones. As well as discussing the current standard, an analysis was carried out of companies in Brazil that have joint operations and the respective accounting treatments used to infer how well they fit the international standards. The results indicate that the accounting statements of the companies in Brazil with joint operations, composed through a separate vehicle, do not comply with the international standards. The main contribution of this essay is that it draws the attention of companies, auditors, and regulators to this non-compliance.
Highlights
The adoption of Law n. 11,638/2007 represented a milestone in the process of convergence with the international accounting standards in Brazil, as it determined convergence per se and introduced alterations to Law n. 6,404/1976, which impeded the adoption of various procedures required by the International Financial Reporting Standards (IFRS), issued by the International Accounting Standards Board (IASB)
The aim of this essay is to analyze the accounting treatment used by companies operating in Brazil, with investments in joint operations, in light of the Brazilian and international accounting standards
Macêdo: Both these companies have a single joint operation composed through a separate vehicle. Both mention in the accounting policies note that in the consolidated statements they recognize their share of the revenues, expenses, assets, and liabilities held in the joint operation, but that in the individual statements they use the equity method (EM), as the joint operation was composed through a separate vehicle
Summary
The adoption of Law n. 11,638/2007 represented a milestone in the process of convergence with the international accounting standards in Brazil, as it determined convergence per se and introduced alterations to Law n. 6,404/1976, which impeded the adoption of various procedures required by the International Financial Reporting Standards (IFRS), issued by the International Accounting Standards Board (IASB). Regarding the obligation to elaborate individual statements, it is important to highlight that Brazil was the first country in the world to adopt the international standards in consolidated statements, and in individual ones Because of this there are some difficulties in implementing certain accounting treatments foreseen in the IFRS in our individual accounting statements, which can require specific adaptations. The second point is that CPC 19 (R2) omits the accounting treatment to be used by companies with joint operations composed through a separate vehicle Because of this omission, companies are using different treatments from what is foreseen in the IFRS, meaning that their individual statements are not in compliance with the IASB standards. The other hope is to contribute to regulatory bodies, auditors, and companies with this type of investment, by drawing attention to the consequences of the inclusion of paragraph 27A in CPC 19 (R2) and to the possible non-compliance of the individual statements elaborated in Brazil with the international accounting standards (IFRS)
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