Brazil Securities Commission clarifies responsibilities of fund administrators, managers and auditors when audit reports contain qualifications or disclaimers

The Brazil Securities Commission (CVM) issued Joint Circular Letter CVM/SNC/SSE/SIN 2/2025 setting out how fund administrators, portfolio managers and independent auditors should address qualified opinions and, in particular, disclaimers of opinion and scope limitations in audit reports on investment funds’ financial statements. The circular stresses that financial statements accompanied by modified audit opinions, especially disclaimers or scope limitations, do not fulfil their core purpose of providing adequate and transparent information to investors. The document notes there is no law or regulation requiring an auditor to accept an engagement subject to a management-imposed scope limitation, and that an auditor should not accept work where, at the time of engagement, it is known the limitation will lead to a disclaimer of opinion. It also highlights documentation expectations for auditors, including working papers supporting the opinion modification and communications with the appropriate level of management, and that repeated situations involving the same administrator or manager should be considered during client acceptance and audit planning. Against the backdrop of CVM Resolution 175, the circular reiterates administrators’ duties to keep accounting records orderly and up to date, prepare and disclose audited financial statements, appoint an independent auditor for a full-scope audit and provide necessary documentation, and ensure the auditor is informed of all investments, particularly material investees that are not audited, while managers must maintain and provide fund documentation to the administrator. CVM’s technical areas also warn that administrators, managers and auditors that fail to observe applicable rules remain subject to sanctions.