The Value Added Declaration (DVA) is an accounting statement that aims to show the wealth generated by the company over a period of time and how it was distributed among the various sectors involved in the process.
The concept of wealth that is at the base of DVA corresponds to the difference in values between what the company produced and the goods and services it used in this process, which were produced by third parties.
To carry out its activity, a company buys raw materials, hires workers and obtains bank financing, for example. All of this can be measured in monetary values. When the company places its product or service on the market, it will be worth more than the sum of the factors acquired for its production. This value that the company “added” during the process is the wealth generated.
What DVA does is detail how this wealth was distributed among employees, suppliers, financial agents, shareholders and the government, that is, among all the sectors that participated, directly or indirectly, in its generation. It is, therefore, a way of showing how the company contributed to the Gross Domestic Product (GDP) of the country.
What is DVA for?
The DVA is mandatory for listed companies, called SA, in accordance with Law No. 11,638 of December 28, 2007, and its adoption was regulated in 2008 by the technical pronouncement CPC 09. In these trading companies shares on the stock exchange, The statement of account is usually prepared annually, along with other accounting reports.
However, although the law does not require other companies to publish the document, they can do so for management purposes. To this end, DVA can be used to measure the efficiency of the company in transforming resources into wealth.
From a more social perspective, the analysis in this report is also useful to assess how the organization contributes to the society in which it operates. This can be used, for example, to give public administration bodies an idea of the kind of benefits that setting up a business can bring to a community.
This document also serves as a basis for unions to make comparisons, between companies in the same segment, of the amounts allocated to workers and the evolution of remuneration, as well as helping governments to understand how each category contributes to the tax revenue of the country, among other functions.
How to prepare the DVA
To do the DVA, the information available in the Income Statement for the Year (DRE) is used , a document that is also prepared by the company’s accounting.
In practice, DVA is a different way of viewing DRE information. Instead of showing the results of the company for the period, that is, how it reached a certain profit or loss, in DVA the data is organized between what the company received and what it paid.
DVA begins by distributing the information about the securities that the company has received. In this first group of the spreadsheet are, for example, gross sales income and capital gains. The second group presents the inputs that the company acquired from third parties, which includes not only goods and raw materials, but also services and energy, among others.
The difference between the values of the first and the second group represents the gross value added. From this amount, the expenses with amortization, depreciation and depletion will be discounted, resulting in the net added value produced by the organization.
In addition to this amount that it produced, the company may have received other amounts by transfer, such as interest and donations. The sum of these two groups results in the total added value to be distributed.
After detailing how the company built wealth, the second half of the DVA aims to show how its distribution took place. This step begins by showing how much was spent on personnel (salaries, benefits, etc.) and then how much was paid on taxes and other contributions to the three spheres of government.
The distribution of wealth also includes the remuneration of the wealth of third parties, for example, the interests paid and the rents, and, finally, the remuneration of the company’s equity, which is where the profits retained by the company and the profits are reported. distributed profits. among its partners, among other information.
The result calculated in the first half of the report, that is, the total distributed value added, must be equal to the result of the second half of the DVA, which corresponds to the distribution of the added value. If not, there is an error in the accounting.
The basic DVA model organizes accounts as follows:
1, INCOME (gross, with taxes)
1.1 Sale of goods, products and services.
1.2 Other income
1.3 Non-operating results (capital gain)
1.4 Reserve for credit losses – Incorporation / revocation
2. SUPPLIES PURCHASED FROM THIRD PARTIES (with ICMS and IPI)
2.1 Cost of products, goods and services sold (amounts paid to third parties, does not include expenses with own personnel)
2.2 Materials, energy, third party services.
2.3 Loss / recovery of assets
3. GROSS VALUE ADDED (= 1-2)
4.1 Depreciation, amortization and depletion
5. NET ADDED VALUE PRODUCED BY THE ENTITY (= 3-4)
6. ADDED VALUE RECEIVED ON TRANSFER
6.1 Equity (can be negative or positive)
6.2 Financial income (for example, interest received)
6.3 Other income (includes rents received, franchise rights, etc.)
7. TOTAL AMOUNT ADDED TO DISTRIBUTE (= 5 + 6)
8. DISTRIBUTION OF ADDED VALUE
8.1.1 Direct remuneration (salaries, 13, vacations, commissions, overtime, among others)
8.1.2 Benefits (health insurance, food, transportation, etc.)
8.2 Taxes, fees and contributions
8.3 Remuneration of third party capital
8.3.1 Interest (paid to third parties)
8.3.3 Others (other amounts paid to third parties, such as royalties, deductibles, copyrights, etc.)
8.4 Remuneration of own capital
8.4.1 Interest on equity
8.4.3 Retained earnings / losses for the year
8.4.4 Non-controlling interest in retained earnings (only in consolidation)
Attention! The values of 7 and 8 must be exactly the same.