THE END OF THE OFF-BALANCE SHEET IN PROJECT FINANCE: A STUDY OF ACCOUNTING ASPECTS IN THE CONSOLIDATION OF SPECIFIC PURPOSE ENTITIES

Abstract

With the objective of presenting the main characteristics of project finance and in order to discuss the principal effects of the consolidation of special purpose companies according to Brazilian, International and North-American rules, an exploratory-bibliographical study was carried out, focusing on Petrobras as a primary example. In compliance with CVM Instruction 408/04, public companies are obliged to include SPC in their consolidated financial statements whenever the essence of the relationship between an SPC and the public company indicates that the activities of these entities, individually or not, are directly or indirectly controlled by the public company. IASB’s SIC 12 has a similar instruction. The FASB (FIN 46) rule deals with consolidation in a more comprehensive manner, not only in regard to SPC. In any case, the essence of the relationship prevails over the forensic form. The example of Petrobras indicated that including finance project accounting information in the financial statements of the holding company, in accordance with CVM’s Instruction, can lead to relevant impacts and allow all the risks involved in the business to be thoroughly evidenced, reflecting a more realistic financial position and culminating in the termination of the so called “off-balance sheet†information. Keywords: Special Purpose Entities. Consolidation. CVM Instruction n. 408/04. FIN 46. SIC 12.