The Brazil Securities Commission (CVM) issued a joint circular letter in Q&A format to clarify how accounting criteria set out in CVM Resolutions 489, 516, 577 and 579 should be applied to investment funds and their share classes following the structural framework introduced by CVM Resolution 175. Under Resolution 175, where a fund is constituted with share classes that have different rights and obligations, the administrator must establish a segregated pool of assets for each class and is prohibited from linking any portion of a class’s assets to any subclass. The circular also summarises Resolution 175 provisions on financial reporting and audit, including separate accounting records for the fund and each share class with segregated accounts and financial statements; a minimum set of statements (balance sheet, income statement and cash flow statement) for funds with multiple share classes with no requirement to prepare consolidated statements; preparation and disclosure of financial statements in line with CVM rules applicable to each fund category; and mandatory audits of the fund’s and share classes’ financial statements by an independent auditor registered with the CVM. It notes that CVM’s Accounting and Auditing Standards Superintendence received a query from ANBIMA seeking clarification on accounting matters related to the Resolution 175 criteria.

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