The crisis in Greece has enraged people and demands prompt action from the European Union, and such is the case of financial troubles in Spain and Portugal, which alter investors’ moods and make economic analysts stay alert at how the facts unravel.
In this scenario, the question rises: can liquidity or solvency of the expanding financial brazilian market run any risk?

The Central Bank has given the right response to this in its latest report on Fiancial Stability: no. Thanks to its strong capital and regulatory framework, Brazil will remain steady, although increased stress can be expected. As the CB says, there has been a sustained expansion of quality credit portfolio - credit with low delinquency risk.
Another important fact revealed in this report refers to liquidity assessment: the amount of liquid assets available to brazilian banks is enough to support their operations, even in the - today – remote scenario of worsening crisis.

The Basel rate forcing banks to have no less than R$ 11 capital for each R$ 100 loaned has remained in satisfactory levels because the increased banks’ credit risk has been supported by capital contributions and rise in profits. The BC report states that the european crisis is really severe, especially in Greece. Based on data of the first 2010 quarter, the bank says that risk aversion in Euro zone economies has deteriorated because of the fiscal situation affecting part of the local economies. In this scenario, Euro lost value as compared to us Dollar.

Therefore, Brazil must remain to be “today’s choice” for foreign investors. There is no doubt forecasts fail in the economic universe. But we know well that the Bovespa rate has ranged in accordance to the european crisis, and that world press is beginning to discuss whether Brazil actually is the large and powerful giant which arose after the 2008 and 2009 crises.
 

However, good management never fails. It can and must be put in practice by every entrepreneur, irrespective of business type or size and, in this respect, financial bodies in Brazil are an example to be followed worldwide.  Apart from good management of economy in the wider sense of this term, sound management at all sectors – including businesses – is a key factor which contributes to the country’s strength, And good management necessarily involves impeccable accontancy practices.  After all, it’s a long time since accountants, managers and administrators understood that the scope of accounting information exceeds mere tax assessments and monitoring compliance related to commercial, legal or labor regulations.

Accountancy is expensive when it is understood as merely red tape to comply with government regulations. But if it is regarded to be a management tool it allows to obtain and benefit from relevant information, cash flow projections, analyze indicators, calculate break even points, determine standard costs, make tax planning and prepare budget and budget monitor.  Needless to say, company’s competitiveness increases if information is well used, because decisions are based on real facts obtained through an efficient technical process: accounting.

As opposed to capital markets, management accounting does not create or inflate data. It is based on regular notarizing of documents, accounts and facts which affect the company’s equity.

Crisis cannot hit hard a well managed company, and this is what really matters.
 

Author: Eduardo Pocetti, CEO of BDO In Brazi