Article at the IBR Magazine about recent developments on financial reporting in Brazil.

1. focus on america: brazil
XBRL in
BRaziL:
current
StatuS anD
ProSPectS
by caetano nobre, iSc member and nelSon
carValHo, boD member, Xii
caetano nobre, iSc member,
anD nelSon carValHo, boD
member, Xii, outline tHe role
of Xbrl in buSineSS rePorting
in brazil.
in the last ten years or so, brazilian capital
markets have experienced ten-fold growth, with
market capitalization climbing from around 10%
of gDP in 2002 to close to 100% in 2010, when
gDP itself peaked at uS$1.3 trillion. this enormous
creation of wealth was accompanied by the
extensive implementation of best corporate
governance practices and a major overhaul
of accounting practices, with a formal decision
to converge brazilian gaaP with ifrS, both at
consolidated and individual company levels, as
of 1 January 2009.
nevertheless, despite the rapid development of
new corporate communications practices for
the dissemination of financial information, Xbrl
has still not gained the attention it deserves
from brazilian companies. the main factors
responsible for its delayed acceptance include:
• the lack of public regulation,
• the absence of standardization, and
• low demand from financial information users.
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2. focus on america: brazil
currently, there is no brazilian government body the first version of a brazilian taxonomy, in line
requiring listed firms to disclose their financial with local accounting practices (br gaaP), was
statements in Xbrl. Despite having indicated its submitted for approval to Xbrl international in 2007
interest in the new format, as the Sec did in the by a group of academics and it professionals from
uS, the cVm (brazil’s Sec) has yet to take any the university of São Paulo. currently, this taxonomy
concrete steps in this direction, although there is a is being revised in order to incorporate a series of
government agency studying the use of Xbrl for changes to the country’s accounting practices
the exchange of financial data among government introduced by the accounting Pronouncements
institutions. from a global perspective, this is committee (cPc), a local accounting-standards
definitely an anomaly, given that Xbrl is generally setting body subservient to the cfc, as well as
adopted by listed companies and banks. those changes required by the recently revised
company law. the latter was promulgated in 2007
even though brazil possesses no formal regulations and became effective in 2008, and was designed to
governing the use of Xbrl and, consequently, converge brgaaP with ifrS, issued by the iaSb.
one important factor is that users
of corporate financial information,
with few exceptions, know virtually
nothing about Xbrl. coupled with the
absence of tools for its use, this lack of
awareness is one of the main reasons
“currently, there is no why its take-up is so low. Shareholders,
buy- and sell-side analysts, and risk
brazilian government rating agencies still do not use it to
body requiring listed analyze the financial statements of
the companies they track. this means
firms to disclose their that the main users of financial
caetano nobre, iSc member, Xii financial statements in information (and potentially those
that would most benefit from it) are
Xbrl. Despite having not requiring companies to produce
indicated its interest in data in the new format.
the new format, as the among those brazilian firms with level
Sec did in the uS, the i or ii aDrs and which are required to
periodically file financial statements
cVm (brazil’s Sec) has with the Sec, only five were covered
yet to take any concrete in the first year of the Sec’s mandate
requiring such information be
steps in this direction,...” reported in Xbrl. in the second year,
only four were covered because
one of them had switched to ifrS.
nelSon carValHo, boD the great majority will be reporting
member, Xii in Xbrl in 2012 (2011 data), due
to the migration from uS gaaP to
there are no approved taxonomies for official use, ifrS for international compliance, since ifrS is now
such regulations are expected to be adopted substantially closer to the new improved br gaaP .
soon as part of a process led by the federal
accounting council (cfc) and public and private it is very likely that brazil will adopt Xbrl gradually,
partner institutions. relying more on the regulatory bodies and local
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3. XB R L i n BRa z iL : cu r r e n t S tatuS an D P r o S P e c tS
jurisdiction than on the companies themselves. the adoption of Xbrl by listed companies, as
this is very similar to other countries where Xbrl is well as by analysts’ training programs;
being implemented; however, given brazil’s history of 5. federal government departments have taken
adopting good international practices, the process unprecedented initiatives with regard to
is unlikely to be protracted or unduly arduous. studying the adoption of Xbrl for recording and
exchanging government financial data in all
the current schedule for Xbrl implementation in three spheres: federal, state and municipal;
brazil can be summarized as follows: 6. an ‘Xbrl dissemination or awareness’ project
1. the cfc has set up a Strategy committee to began at cfc level in august 2010 and
handle issues relating to the implementation of seminars, conferences and round tables are
a jurisdiction, the development of the related likely to be scheduled for the next 12 to 24
business plan and the definition of appropriate months.
governance mechanisms for the entity to
be formed. the idea is to submit it to Xii in there is one important missing link in this chain: the
September this year; central bank of brazil is still not convinced of Xbrl’s
2. at the same time the cfc formed a technical advantages over the virtual financial reporting
committee that is finalizing the update of a systems it imposed on the brazilian banking industry
brazilian taxonomy to be submitted to Xii in many years ago, and it is somewhat reluctant to
late august; engage in a convergence or migration of its long-
3. the brazilian association of listed companies time working system with Xbrl.
is showing interest in assessing the feasibility of
hosting the financial statements – not only of all in all, however, there are excellent prospects for
listed companies – but of unlisted corporations the wide-scale adoption of Xbrl in brazil. So far, the
as well, and its resulting study will be shared with problems have been well identified and defined
the cfc’s Strategy committee; and the cfc’s Strategy committee is preparing
4. the brazilian Securities, commodities and action plans that will in due course rely on the
futures exchange (bm&f boVeSPa) is discussing jurisdiction, when it is settled, to implement them.
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