Master's – The impact of Public Consultation 60/2018 on Expected Credit Loss in Brazilian Financial Institutions
Advisor: Prof. Dr. Luiz Nelson Guedes de Carvalho
Comission: Profs. Drs. Guillermo Oscar Braunbeck, Andrea Maria Accioly Fonseca Minardi and Marta Cristina Pelucio Grecco
Class: 217, FEA-5
The financial institutions, regulated by BACEN, underwent a process of accounting changes different from other companies in the last years, mainly due to the need to present their financial statements in compliance with the parameters of IFRS and also the standards imposed by the regulatory agencies. In 2018, another major challenge was placed, with the replacement of IAS 39 (based on Incurred Losses) for IFRS 9 (based on Expected Loss), with relevant changes in Credit Losses. In the same year, BACEN issued Public Consultation 60/2018, adapted from IFRS 9, with immense impacts for financial institutions, auditors and even those responsible for banking systems. This account is one of the most representative for Brazilian financial institutions’ P&L, and considering the impacts of the publication, those impacted by it had the opportunity to propose changes into the final version of the norm. With this scenario in mind, the following research problem is presented: What would the possible impacts on Brazilian financial institutions in case of the adoption of the Public Notice 60/2018? To answer this question, we used the opinions of those affected by the norm, which are available for consultation on the website of Banco Central. Analyzing these answers, it was concluded that the Public Consultation seeks to comply with the BACEN's objective, protecting citizens as it seeks to mitigate possible credit risks and prevent financial institutions from going bankrupt. However, in order for the Public Consultation to become a definitive Resolution, BACEN still needs to mature the discussion at some points, including financial institutions in eventual studies and adjusting its vision to cover all the specifics of the Brazilian banking sector.
*Abstract provided by the author