Tatiana Andrade

Partner at Kreston KBW Auditores

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Wellington Calobrizi

Partner Kreston KBW Auditores

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Financial reporting requirements in Brazil: A comprehensive guide for finance professionals

November 27, 2025

The Digital Transformation challenge

Financial reporting requirements in Brazil are seeing a major transformation. Over 90% of Brazilian companies now submit their financial data through the SPED system, representing one of the world’s most comprehensive digital tax administration frameworks. This remarkable transformation has fundamentally reshaped how we approach financial reporting and compliance in Latin America’s largest economy. As finance professionals operating in Brazil’s complex regulatory environment, we face an unprecedented convergence of technological advancement and regulatory evolution that demands both agility and precision when doing business in Brazil. It is also key to understanding the new investment appeal of Brazil.

Brazil’s unique regulatory landscape seamlessly blends International Financial Reporting Standards (IFRS) with stringent local requirements, overseen by the Federal Council of Accounting (CFC), the Securities and Exchange Commission (CVM), and the Central Bank (BACEN). This sophisticated framework creates both extraordinary opportunities and formidable challenges for multinational corporations and domestic enterprises alike. The integration of big data analytics and artificial intelligence into audit processes has revolutionised risk assessment and compliance monitoring, while simultaneously raising the stakes for accuracy and transparency.

Looking ahead, the implementation of mandatory sustainability reporting from 2026 and the sweeping tax reform introducing CBS/IBS systems will further intensify these digital transformation pressures, requiring finance professionals to master an increasingly complex technological and regulatory ecosystem.

Brazil’s evolving regulatory framework

Current financial reporting landscape

Brazil’s financial reporting framework has undergone significant transformation since the enactment of Law 11.638/2007, which initiated the country’s convergence with International Financial Reporting Standards (IFRS). This landmark legislation established the foundation for modernising Brazilian accounting practices and aligning them with global standards.

The Brazilian Accounting Pronouncements Committee (CPC), delegated by the Federal Accounting Council (CFC), serves as the primary standard-setting body responsible for developing accounting pronouncements that harmonise Brazilian GAAP with IFRS. This structure ensures that local requirements integrate seamlessly with international standards while maintaining regulatory oversight through various specialised bodies.

Historical development and framework structure

• Law No. 11,638/2007 marked the beginning of IFRS adoption in Brazil, requiring all companies to comply with international standards; however, there are more flexible rules for companies that are not listed on the stock exchange
• Gradual implementation occurred through phases, with different entity types adopting standards at varying timelines
• Full IFRS adoption for consolidated financial statements became mandatory for listed companies and large entities

Integration and regulatory relationships

• The Central Bank, Securities Commission (CVM), and other regulators provide sector-specific guidance
• RTT (Transitional Tax Regime)
  Start of validity: The RTT was established by Provisional Measure No. 449/2008 (later converted into Law No. 11,941/2009) and came into force retroactively starting from the 2008 calendar year. Its purpose was to ensure tax neutrality during Brazil’s adoption of the new international accounting standards (IFRS).
• End of validity: The regime was extinguished with the entry into force of the new rules established by Law No. 12,973/2014. Companies were allowed to apply the effects of this law early, starting in the 2014 calendar year, which resulted in the elimination of the RTT. The option to discontinue the RTT and adopt the new system formally ended for most companies at that time.

Recent developments (2024-2025)

• CFC Resolution No. 1,710, published in October 2023, approves the adoption of Brazilian standards for the preparation and assurance of sustainability reports, which converge with international standards. The resolution establishes that sustainability reports may be voluntarily prepared in accordance with international standards (IFRS S1 and IFRS S2) starting in 2024 and 2025, with mandatory application of the Brazilian standards (NBC TDS) beginning in the 2026 calendar year.
• Enhanced disclosure requirements for ESG-related matters
• Continued alignment with newly issued IFRS standards and interpretations

This evolving landscape requires finance professionals to stay current with both international developments and local regulatory changes, ensuring compliance while maintaining the quality and transparency of financial reporting in Brazil’s dynamic business environment.

Key regulatory authorities

Brazil’s financial and accounting landscape is governed by several key regulatory bodies, each with distinct roles and responsibilities that ensure market integrity and compliance.

CRC – Regional Accounting Councils:
Inspect the professional practice of accountants, ensure that only qualified professionals work in the field, regulate the profession, and apply ethical sanctions when necessary.

OAB – Brazilian Bar Association:
Represents, supervises, and defends the legal profession, ensuring ethical standards and quality.
It regulates the legal profession, issues the OAB professional license, conducts the mandatory Bar Exam, and also promotes social justice and improvements to the Brazilian legal system.

Recent regulatory changes

Significant regulatory updates are reshaping Brazil’s financial compliance landscape. Starting in 2026, sustainability reporting will become mandatory for large corporations, requiring comprehensive ESG disclosures aligned with international standards. Enhanced offshore asset reporting requirements have been implemented, demanding more detailed disclosure of foreign investments and holdings by Brazilian residents and entities.

From January 2025, fintech companies will face new data sharing requirements under open banking regulations, necessitating secure customer data transmission protocols. Additionally, the SPED system has undergone substantial updates, streamlining digital bookkeeping processes while increasing real-time reporting obligations for businesses.

These regulatory changes reflect Brazil’s commitment to international compliance standards and enhanced transparency, requiring organisations to adapt their financial reporting and compliance frameworks accordingly. Companies must ensure their accounting and auditing practices align with these evolving requirements to maintain regulatory compliance.

Digital Compliance Systems: SPED Framework

Understanding SPED Components

The Sistema Público de Escrituração Digital (SPED) represents Brazil’s comprehensive digital bookkeeping framework that has revolutionised tax administration through advanced data analytics and artificial intelligence capabilities. This mandatory system applies to virtually all companies operating in Brazil, with limited exceptions for certain entities under the Simples Nacional regime.

SPED encompasses several critical components that work together to ensure accurate and timely financial reporting:

Key SPED components:

• ECD (Digital Accounting Bookkeeping): This component requires companies to submit complete digital accounting records, including general ledgers, journals, and auxiliary books. The ECD must be filed annually by the last business day of May, containing detailed transaction-level data in standardised XML format.
• ECF (Digital Tax Bookkeeping): The ECF focuses specifically on tax-related accounting information, requiring submission by the last business day of July. This component reconciles accounting data with tax calculations, ensuring consistency between financial and tax reporting.
• Integration with Tax Reporting Systems: SPED seamlessly integrates with other Brazilian tax systems, including REINF, eSocial, and NFe platforms. This integration enables cross-referencing of data across multiple reporting obligations, enhancing audit capabilities and reducing compliance gaps.
• Technical Requirements and Validation Processes: The system implements real-time data validations, requiring specific file formats, digital certificates, and standardised chart of accounts. Companies must use certified software that meets technical specifications outlined by the Federal Revenue Service.

We observe that SPED’s sophisticated validation mechanisms automatically identify inconsistencies, mathematical errors, and compliance violations before submission. This proactive approach significantly reduces post-filing audit adjustments and enhances the overall quality of financial data submitted to Brazilian tax authorities, making it an essential component of modern Brazilian tax compliance.

Critical deadlines for 2025

As finance professionals and business owners prepare for 2025 compliance requirements, we must carefully track essential filing deadlines to avoid costly penalties. The following table outlines the key digital filing obligations:

The ECD deadline has been extended for 2025, moving from the traditional last business day of May to June 30, providing additional time for preparation. The ECF maintains its standard deadline of the last business day of July, falling on July 31, 2025.

Companies operating under the Simples Nacional regime receive exemption from filing these digital documents, though they must still maintain proper bookkeeping records. This exemption significantly reduces administrative burden for smaller enterprises while ensuring adequate financial record-keeping.

Both ECD and ECF submissions require valid digital signatures, emphasising the importance of ensuring certificate validity before the filing deadline. We recommend establishing internal calendars well in advance, as the automatic penalty system activates immediately upon missing deadlines. The substantial fines—particularly the R$5,000 monthly penalty for ECD—make timely compliance essential for financial planning.

Given these significant penalties and strict requirements, we advise reviewing preparation processes early and maintaining backup systems to ensure successful, timely submissions.

Entity-Specific reporting requirements

Public companies and enhanced disclosures

The Brazilian Securities and Exchange Commission (CVM) maintains stringent regulatory oversight of publicly traded companies, establishing comprehensive disclosure frameworks that significantly impact financial reporting practices. These requirements create substantial compliance obligations for entities operating within Brazil’s capital markets.

CVM-regulated companies face extensive reporting obligations designed to enhance market transparency and investor protection. The regulatory framework encompasses multiple disclosure dimensions, each carrying specific compliance requirements and deadlines.

Key CVM disclosure requirements:

• Quarterly and annual reporting obligations: Public companies must submit quarterly financial information (ITR) within 45 days of quarter-end and annual financial statements within four months of fiscal year-end. These reports require comprehensive management commentary and detailed financial analysis.
• New sustainability reporting standards from 2026: Beginning in 2026, entities with public accountability must comply with mandatory sustainability reporting requirements. These standards will encompass environmental, social, and governance (ESG) metrics, requiring integrated reporting approaches that align with international sustainability frameworks.
• Corporate governance considerations: CVM mandates enhanced corporate governance disclosures, including board composition, executive compensation structures, related-party transactions, and risk management frameworks. Companies must maintain transparent governance practices and provide detailed explanations of decision-making processes.
• Segment reporting requirements: Organisations operating multiple business segments must provide disaggregated financial information, enabling stakeholders to assess performance across different operational areas and geographic regions.

The regulatory environment demands that auditors of CVM-regulated entities obtain specific qualifications through CVM-mandated examinations while adhering to Brazilian Federal Accountancy Council standards. This dual compliance requirement ensures audit quality and regulatory alignment.

These enhanced disclosure requirements represent CVM’s commitment to maintaining robust capital market integrity. Companies must implement comprehensive compliance systems to meet evolving regulatory expectations, particularly as sustainability reporting integration approaches. The regulatory framework continues expanding, requiring proactive adaptation strategies from public companies and their professional advisors to ensure continued compliance and market access.

Financial institutions and BACEN requirements

Financial institutions operating in Brazil face stringent regulatory oversight from BACEN (Central Bank of Brazil), which establishes comprehensive accounting and reporting frameworks specifically designed for the banking sector. We observe that BACEN’s supervisory approach emphasises prudential reporting standards that align with international best practices while addressing Brazil’s unique financial landscape.

Under BACEN’s regulatory framework, financial institutions must prepare statutory accounts that converge with IFRS standards while adhering to sector-specific accounting practices. We note that CMN Resolution No. 5,252/2025, effective January 1, 2027, introduces enhanced requirements for corporate governance structures, mandatory audit committees, and comprehensive sustainability asset/liability disclosures.

Prudential reporting under BACEN oversight requires institutions to maintain robust risk management systems and comply with Basel III implementation guidelines adapted for Brazilian markets. We emphasise that these requirements include detailed capital adequacy reporting, liquidity coverage ratios, and stress testing protocols that institutions must regularly submit to regulatory authorities.

Risk disclosure requirements extend beyond traditional financial metrics to encompass operational, credit, market, and liquidity risks. Financial institutions must establish compliance policies that address regulatory capital thresholds, with audit committee requirements varying based on institutional size and complexity.

We recognise that BACEN’s enhanced supervision framework demands continuous monitoring of risk exposures and implementation of sophisticated internal controls. Institutions must demonstrate compliance through regular regulatory filings, internal audit functions, and comprehensive risk management documentation.

For multinational banking operations, coordination between BACEN requirements and international regulatory standards becomes crucial for maintaining consistent reporting across jurisdictions while meeting local compliance obligations.

SMEs and simplified standards

Brazil’s accounting framework recognises that small and medium-sized enterprises (SMEs) require simplified reporting standards that reduce compliance burden while maintaining transparency. The Comitê de Pronunciamentos Contábeis (CPC) developed CPC PME, a comprehensive framework fully converged with IFRS for SMEs, specifically designed for entities that do not meet large-sized entity criteria.

The size-based classification system establishes clear thresholds for determining applicable standards. Large entities with total assets exceeding R$240 million or gross revenue above R$300 million must apply full Brazilian GAAP. However, entities below these thresholds benefit from simplified standards under CPC PME.

The framework provides additional relief through specific standards issued by the Federal Accounting Council (CFC) in 2021. Small entities with gross revenue below R$78 million and micro-sized companies under R$4.8 million receive further simplified requirements, recognising their limited resources and administrative capacity.

Practical expedients within the SME framework include simplified measurement approaches, reduced disclosure requirements, and streamlined recognition criteria. These modifications eliminate complex fair value measurements, simplify business combination accounting, and reduce extensive note disclosures required under full GAAP.

The convergence with IFRS for SMEs ensures international comparability while maintaining practical applicability for Brazilian SMEs. This approach enables smaller entities to prepare reliable financial statements without incurring disproportionate costs, supporting their growth and facilitating access to capital markets while ensuring stakeholder confidence in financial reporting quality.

Mandatory financial statements and audit requirements

Required financial statements

Brazilian companies must prepare a comprehensive set of financial statements in accordance with Brazilian GAAP, which is converged with International Financial Reporting Standards (IFRS). These mandatory statements ensure transparency and provide stakeholders with essential financial information.

The six required financial statements are:

1. Balance Sheet (Balanço Patrimonial) – A statement of financial position presenting assets, liabilities, and equity at a specific point in time, providing insight into the company’s financial structure and solvency.
2. Income Statement (Demonstração do Resultado do Exercício – DRE) – A comprehensive profit and loss statement detailing revenues, expenses, and net income for the reporting period, essential for evaluating operational performance.
3. Statement of Comprehensive Income (Demonstração do Resultado Abrangente) – An extension of the income statement that includes other comprehensive income items not recognised in profit or loss, such as foreign currency translation adjustments.
4. Statement of Changes in Equity (Demonstração das Mutações do Patrimônio Líquido) – A detailed analysis of movements in equity accounts during the period, including capital contributions, retained earnings, and other equity components.
5. Cash Flow Statement (Demonstração dos Fluxos de Caixa) – A statement presenting cash receipts and payments classified into operating, investing, and financing activities, crucial for liquidity assessment.
6. Explanatory Notes (Notas Explicativas) – Detailed footnotes providing additional information about accounting policies, significant estimates, and supplementary disclosures required under Brazilian GAAP and IFRS.

Management reports and corporate governance

Larger companies and publicly traded entities face additional obligations beyond basic financial statements. Management must prepare comprehensive management reports discussing business performance, strategy, and risk factors. Public companies must also comply with extensive corporate governance disclosures, including board composition, executive compensation, and internal control assessments. These requirements enhance transparency and accountability, particularly for entities with significant public interest or complex corporate structures.

Audit thresholds and requirements

Brazil’s audit requirements vary significantly based on company size, type, and regulatory oversight. Understanding these thresholds is crucial for ensuring compliance with applicable standards.

Audit Requirements by Company Type and Size

Statutory audit requirements

All CVM-regulated entities must engage independent auditors who have passed technical qualification examinations administered by the Federal Accounting Council (CFC). These auditors must comply with Brazilian auditing standards and maintain continuous professional development.

BACEN-supervised financial institutions face additional requirements, including mandatory audit committees for larger institutions and enhanced risk assessment procedures.

Auditor rotation and independence

Brazil mandates auditor rotation for public companies every five years, with individual audit partners rotating every three years. Auditors must maintain strict independence, avoiding conflicts of interest and non-audit services that could compromise objectivity.

The CVM enforces transparency standards requiring detailed audit reports and public disclosure of audit fees. Independence requirements include restrictions on employment relationships, financial interests, and family connections between auditors and client companies.

These regulations ensure audit quality while maintaining public confidence in Brazil’s financial reporting system.

Emerging challenges and future outlook

Tax reform impact

Brazil’s tax reform, approved in 2023 (PEC 45), aims mainly to simplify and modernise the country’s complex consumption-based tax system.

In short, the main changes are:

• Tax unification: Five taxes (PIS, Cofins, IPI, ICMS, and ISS) will be replaced by a dual VAT system, composed of two new taxes:
• CBS (Contribution on Goods and Services): federal tax
• IBS (Tax on Goods and Services): jointly managed by states and municipalities
• Transparency: The tax will be charged “outside” the price and must be clearly shown on the invoice, allowing consumers to see the exact tax amount.
• Reduced bureaucracy: The goal is to reduce complexity and the large number of rules that generate disputes and unintentional errors for companies.
• Gradual implementation: The transition to the new system will occur progressively between 2026 and 2033.

In summary, the reform seeks a simpler, more transparent, and more efficient tax system, aligned with international VAT models. Brazil’s comprehensive tax reform introduces a transformative dual VAT system through the Implementation of CBS (Contribuição sobre Bens e Serviços) and IBS (Imposto sobre Bens e Serviços), replacing the complex array of PIS, Cofins, ICMS, and ISS taxes between 2026 and 2033.

This fundamental restructuring demands extensive modifications to financial reporting processes and technological infrastructure. Companies must reconfigure their tax calculation engines to accommodate the new dual VAT framework, requiring substantial system upgrades to handle the unified tax base calculations and credit mechanisms.

The reform significantly impacts invoice structuring requirements, necessitating enhanced data capture capabilities to support detailed transaction reporting. Organisations must prepare for updated SPED digital layouts that demand real-time data validation and submission protocols, fundamentally altering existing compliance workflows.

Financial reporting systems require comprehensive overhauls to integrate the new tax methodology into existing ERP platforms. This includes developing capabilities for automated CBS and IBS calculations, managing input tax credits across the unified system, and ensuring seamless integration with government digital platforms.

Finance professionals must anticipate substantial training requirements as the reform progresses through its phased implementation. The transition period demands parallel system operations, requiring robust testing protocols and contingency planning to ensure compliance continuity.

Companies should begin evaluating their current technological capabilities now, establishing implementation timelines that align with the reform’s phased rollout to minimise operational disruption and ensure regulatory compliance.

Sustainability reporting transition

Brazil’s sustainability reporting landscape is undergoing a significant transformation with Resolution CFC 1710, establishing a clear roadmap for ISSB-aligned standards implementation. Beginning in 2026, entities with public accountability must comply with mandatory sustainability reporting requirements, following the two-year voluntary adoption period currently available through 2025.

The transition represents a strategic alignment with global IFRS adoption trends, integrating sustainability disclosures directly within established financial reporting frameworks. This integration approach ensures consistency and comparability across international markets while maintaining regulatory coherence.

Companies subject to these requirements should initiate preparation immediately, focusing on several critical areas. First, organisations must assess current sustainability data collection capabilities and identify gaps in measurement systems. Second, finance teams need to establish robust internal controls for sustainability metrics, applying the same rigour used in financial reporting.

Third, companies should evaluate existing reporting processes to accommodate integrated sustainability disclosures, ensuring seamless coordination between financial and sustainability information. Training finance professionals on ISSB standards becomes essential, as traditional accounting teams will assume expanded responsibilities.

Early adopters during the voluntary period gain competitive advantages through enhanced stakeholder transparency and operational insights. Organisations should consider pilot implementations to test systems and processes before mandatory compliance. Engaging external advisors familiar with ISSB frameworks can accelerate preparation while ensuring comprehensive compliance readiness for the 2026 implementation deadline.

Conclusion: Successful compliance

Brazil’s regulatory landscape presents unprecedented challenges as finance professionals face converging transformations across multiple fronts. The digital evolution through SPED systems, mandatory sustainability reporting from 2026, and the comprehensive tax reform introducing CBS/IBS create a complex compliance matrix requiring immediate attention.

We recommend establishing cross-functional teams now to assess current systems against upcoming requirements. Organisations must invest in technology infrastructure capable of handling integrated reporting across CFC, CVM, and BACEN frameworks while ensuring data quality and audit trails remain intact.

Successful compliance strategies require continuous monitoring of regulatory updates, staff training programs, and robust internal controls. We’ve observed that companies beginning preparation early demonstrate superior compliance outcomes and reduced implementation costs.