MD&A and Financial Statements (PDF) - Banco Itaú

NOTE 2 – PRESENTATION OF THE FINANCIAL STATEMENTS
a) Presentation of the Financial Statements
The financial statements of ITAÚ UNIBANCO HOLDING and of its subsidiaries (ITAÚ UNIBANCO HOLDING
CONSOLIDATED) have been prepared in accordance with accounting principles established by the Brazilian
Corporate Law, including the amendments introduced by Laws No. 11,638, of December 28, 2007, and No.
11,941, of May 27, 2009, in conformity, when applicable, with instructions issued by the Central Bank of
Brazil (BACEN), the National Monetary Council (CMN), the Brazilian Securities and Exchange Commission
(CVM) and the Superintendency of Private Insurance (SUSEP), and National Council of Private Insurance
(CNSP), which include the use of estimates necessary to calculate accounting provisions.
On May 12, 2010 SUSEP approved the contract signed on November 12, 2009 related to the acquisition by
ITAÚ UNIBANCO HOLDING of a minority interest in the subsidiary company Itaú XL Seguros Corporativos
S.A. for the amount of R$ 157,299, giving rise to a goodwill of R$ 24,700. The transaction was approved on
October 6, 2010 by SUSEP.
On September 20, 2010, ITAÚ UNIBANCO HOLDING purchased 50% of the quotas in the companies SFR
Software and Análise de Sistemas LTDA and Previtec – Previdência e Tecnologia LTDA, according to the
purchase agreement, for the amount of R$ 47,000, giving rise to a goodwill of R$ 42,530, and these
companies became wholly-owned subsidiaries.
In order to enable the proper analysis of the net income, the heading “Net income without nonrecurring
effects” is presented below the Consolidated Statement of Income, and this effect is highlighted in a heading
called “Exclusion of nonrecurring effects” (Note 22k).
As set forth in the sole paragraph of article 7 of BACEN Circular No. 3,068, of November 8, 2001, securities
classified as trading securities (Note 4c) are presented in the Balance Sheet under Current Assets
regardless of their maturity dates.
Lease Operations are presented, at present value, in the Balance Sheet, and the related income and
expenses, which represent the financial result of these operations, are presented, grouped together, under
loan, lease and other credit operations in the Statement of Income. Advances on exchange contracts are
reclassified from Other Liabilities – Foreign Exchange Portfolio. The foreign exchange result is presented on
an adjusted basis, with the reclassification of expenses and income, in order to represent exclusively the
impact of variations and differences of rates on the balance sheet accounts denominated in foreign
currencies.
b) Convergence into international accounting standards
The CMN Resolution No. 3,786, of September 24, 2009, and BACEN Circular No. 3,472, of October 23,
2009, established that from December 31, 2010 the financial institutions shall prepare and annually report
their consolidated financial statements adopting the international financial reporting standards according to
the pronouncements issued by the International Accounting Standard Board (IASB), translated into the
Portuguese language by a Brazilian company registered with the International Accounting Standards
Committee Foundation (IASC Foundation).
The accounting pronouncements issued by the Accounting Pronouncements Committee (CPC) and the
respective international standards of IASB that will be adopted in the consolidated financial statements until
the end of 2010 and may impact the stockholders’ equity and or results are as follows:
• CPC 2 (IAS 21) - Effects on changes in foreign exchange rates and conversion of financial
statements: Effect on results from January 1 to September 30, 2010 (without effect on stockholders'
equity) for allocation of foreign exchange variation in the stockholders' equity related to controlled
companies using functional currency other than Real, basically represented by the Itaú Europa,
Chile, Argentina, Uruguay and Paraguay units (Note 20).
• CPC 11 (IFRS 4) – Insurance contracts: Management does not expect significant effects;
• CPC 15 (IFRS 3) – Business combinations: in the period from January 1 to September 30, 2010,
there was not any transaction that could exert significant effects;
• CPC 24 (IAS 10) – Subsequent events: dividends and interest on capital declared after the
accounting period to which the financial statements refer, if these are above the minimum mandatory
dividend they shall be reversed with effect on stockholders' equity (Note 16b I);
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