Dimension 12.1. Financial asset monitoring DIMENSION MEASUREMENT GUIDANCE 12.1:1. This dimension assesses the nature of financial asset monitoring, which is critical to identifying and effectively managing the key financial exposures and risks to overall fiscal management. The rating criteria use the term ‘performance’ to refer to the return on invested capital in the form of dividends, interest, and capital appreciation or loss, rather than any specific target. 12.1:2. Information on financial assets, for the purposes of this indicator should be cross-checked against government financial reports as assessed in PI-29. Annual financial reports and the reporting of public corporations in PI-10. Fiscal risk reporting. Financial assets categories include8 :
- cash, securities, loans, and receivables owned by the government;
- foreign reserves and long-term funds such as sovereign wealth funds and equity in stateowned and private sector institutions; and
- financial claims and gold bullion held by monetary authorities as a reserve asset. A financial claim is an asset that typically entitles the owner of the asset (the creditor) to receive funds or other resources from another unit, under the terms of a liability.
12.1:3. Market or fair value refers to the amount at which an asset could be exchanged between willing parties at the current time. Acquisition value refers to the amount paid for the assets when they were purchased.
12.1:4. If financial asset management involves a large number of significant entities or is highly decentralized, complete information on the government’s financial assets may be impractical to collect. Assessors may consider using a sampling methodology. If sampling is used, they should then explain the reason and justify the sampling approach adopted. It would be preferable that assessors and government agree on the sampling approach. In case of disagreement, differences of views can be accommodated in an annex as explained in the Framework under Part 3: The PEFA report, paragraph 4.
12.1:5. When foreign reserves and assets pertaining to category (ii) above described are held and owned by the central bank and the central bank complies with the PEFA definition of a public corporation, they are not covered by this dimension. In such cases, narrative should explain it and describe how the central bank reports to the CG.
Dimension 12.1. Scoring
|Score||Minimum requirements for scores|
|A||The government maintains a record of its holdings in all categories of financial assets, which are recognized at fair or market value, in line with international accounting standards. Information on the performance of the portfolio of financial assets is published annually.|
|B||The government maintains a record of its holdings in major categories of financial assets, which are recognized at their acquisition cost or fair value. Information on the performance of the major categories of financial assets is published annually.|
|C||The government maintains a record of its holdings in major categories of financial assets.|
|D||Performance is less than required for a C score.|
8 GFS Manual 2014, page 403.
PEFA Handbook Volume 1: The PEFA Assessment Process – Planning, Managing and Using PEFA