As determined by Resolution CGPC No. 4, dated 01/31/2002, the fixed income securities are recorded at acquisition cost, accrued by the per day pro rata yields incurred up until the date of the balance sheet and restated to their probable realization value. The premium and discount in the acquisition are amortized per day pro rata, over the period between the security's acquisition and maturity date. They are classified in the following categories:
(i) Securities for negotiation - acquired with the objective of being negotiated independently of the period since the date of acquisition. The accounting evaluation is made based on the market value.
(ii) Securities maintained until maturity - maintained in portfolio until maturity, considering the Entity's financial capacity, corroborated by an actuarial opinion. The accounting evaluation criterion is based on the yield curve in a proportional manner (pro rata) up until maturity.
The stock acquired in the spot market is recorded at its acquisition cost, accrued of brokerage expenses and other fees, and evaluated at market price based on the average price on the date closest to the balance sheet, in the Stock Exchange in which the share obtained its highest liquidity. The yields such as bonuses, dividends and interest on own capital are recorded on an accrual basis.
The shares that were not negotiated in stock exchanges or in organized over-the-counter markets, for a period greater than six months, are evaluated at their last equity value or at cost, whichever is least... Resolution CGPC No. 22, dated 9/25/2006, also establishes the evaluation of these assets at economic value in the portfolio.
The amounts relative to the investment funds are represented at their quota value on the date of the balance sheet. Relevant assets allocated to these funds have been evaluated at their economic value, in accordance with CGPC Resolution No. 4, dated 01/30/02, and with CVM Instruction No. 340 dated 06/29/00.
The real estate investments are recorded at acquisition or construction cost and periodically restated based on reevaluations. They are depreciated (except land) by the linear method at the rate of 2% per year or at the rates corresponding to the remaining useful life established in the reevaluation reports. The installations are depreciated using the linear method at the rate of 10% per year.
Real properties (buildings) are periodically restated in accordance with the applicable legislation. The restatement adjustments, positive or negative, are recorded in the specific accounts in compensation of the income.
The operations with participants correspond to simple loans and real estate financings and their balances include the principal, interest and monetary restatement up until the balance sheet date.
Provisions relative to losses in investments, considering the risks and uncertainties and the credit rights resulting from doubtful liquidations have been constituted, according to the criteria defined in CGPC Resolution No. 5, dated /1/30/02. The provisions are accounted for in an income account, in countermeasure to the reduction account in the respective asset segment. Therefore, the investments are presented at their net value.
The assets that constitute the permanent premises and equipment assets are depreciated using the linear method at rates established in function of the useful life that is established by type of asset. The expenses with software are amortized at the rate of 20% per year.
This account presents known or calculable values, accrued, when applicable, of charges and monetary variations, represented by liabilities resulting from agreements celebrated with the sponsor Banco do Brasil, participant rights to benefits and fiscal obligations.
Represented by provisions classified as probable losses, according to legal opinions. PREVI's administration understands that the provisions constituted are sufficient to meet the eventual losses resulting from administrative and/or judicial proceedings.
The pension plan mathematical provisions are determined base don actuarial calculations, according to opinions issued by professionals from the Pension Executive Board, and represent, at the end of each period the accumulated commitments relative to benefits granted and to be granted to assisted members and participants.
Benefits Granted - represent the Entity's future commitments to the retired participants and to the dependants' pensions.
Benefits to be Granted - represent the Entity's future commitments to the participants in activity.
Mathematical Provisions to be Constituted - correspond to the part of the provision to be constituted relative to the Banco do Brasil employees employed up to 04/14/1967, which is being paid in according to the Agreement signed in 1997, amended in 1998.
Determined by means of the difference between the Net Assets (Total assets minus Operational and Contingency Liabilities and Funds) and the Mathematical Provisions. It is recorded in a Contingency Reserve up to the limit of 25% in relation to the Actuarial Liability. Whatever exceeds this limit will be recorded as a Reserve for Plan Revision each tear, as determined by Article 20 of Complementary Law no. 109.
Register of the constituted funds, as follows:
Pension Program
funds created based on actuarial evaluations with specific destinations.
Administrative Program
the administrative fund has the objective of guaranteeing the future resources necessary for the maintenance of the Entity's administrative structure. The fund is constituted with the balance of the revenues equivalent to 5% of the normal pension contributions, amongst others.
Investment Program
funds intended for the liquidation of simple loans and real estate financings, in the case of the borrower's death and of residuals existing after the contractual term. Its constitution derives from fees charged from the borrowers.
The business year income is calculated on an accrual basis.
The year's Income Statement is presented with the details necessary for the composition of the result and to the determination of the year's technical surplus (or deficit), constitution of mathematical provisions, contingencies and funds, segregated by program.
Since 6/1/2004, the PREVI actuarial index is the National Consumer Price Index - INPC.
The cash flow statement indicates, on a cash basis, the equity variations occurred during the period and the migration of funds between the Pension, Administrative and Investment Programs.
These are used to identify the movement of funds between the programs, by means of fund transfers, collections and repasses between the different types of expenses of the referred to programs, with the use of normatized criteria:
Pension Program
receives amounts from the Investment Program, relative to the result of the investment of the benefit plan funds and transfers amounts to the Administrative Program. The surplus or deficit is determined in this Program after the respective transfers.
Administrative Program
receives amounts from the Investment Program, relative to the result of the investment of the Administrative Fund, in addition to the amounts transferred from the Pension Program for coverage of the administrative expenses. The surplus, if any, constitutes the Administrative Fund.
Investment Program
transferred to the Pension and Administrative programs, according to the funds of each program, the incomes from the monthly investment (profits from sales, monetary correction, interest, discounts, premiums, dividends, positive assessment and re-assessment adjustments) after deduction of expenses (taxes, premiums, negative assessment and re-assessment adjustments, losses from sales and provisions).
This represents the net amount of the values transferred to the Administrative Program for coverage of the expenses with pension administration and of investments in the respective benefit plans. The administrative costing has the following sources:
Pension Administrative Costing - corresponds to 5% of the ordinary pension resources collected every month. The expenses that exceed this percentage are covered by the Administrative Fund.
Investment Administrative Costing - this is based on the monthly transfer of Investment Program resources, corresponding to the administrative expenses incurred in the management of this program.