Organisation to set up a common accounting framework for monetary gold
The World Gold Council is now seeking views on the draft guidance provided herein with respect to a recommended practice in accounting for gold. The views of monetary authorities, as well as those of international accounting standards boards, advisory institutions, global auditors, and other interested parties are requested by Monday 31 July 2017.
Below is the announcement as it was published:
Monetary authorities hold gold in the performance of their official functions, typically as part of the county’s official reserves. This functional purpose differs from the objectives of other entities who hold gold. Monetary authorities also commonly hold gold in much larger quantities than other entities. General purpose financial reporting frameworks lack appropriate guidance on accounting for gold, in particular for the gold classified as monetary gold, held by monetary authorities.
To match accounting for gold to its functional objectives, monetary authorities require an accounting framework that recognises the several reasons that the entity may hold gold and reflects the economic substance of these holdings.
In the absence of a suitable framework, monetary authorities have adopted a variety of different treatments. In June 2016, the World Gold Council published a discussion paper Working towards a common accounting framework for gold , which reviewed the different approaches to gold accounting demonstrated by monetary authorities, and the findings ultimately served as the foundation for the guidance recommended in this consultation paper.
This guidance, in the form of recommended practice, aims to help standardise accounting practices of monetary authorities with respect to gold, by establishing a suitable framework that is consistent with the conceptual framework of current financial reporting standards. The framework needs to consider both the presentation in the statement of financial position and in the income statement (or comprehensive income statement where presented), and the treatment of unrealised revaluations. For those monetary authorities where issues of distribution to the central government arise, guidance is included as to what should be regarded as distributable, though this will be subordinate to local laws.
Finally, it is important to note that the current variety of treatments limits the comparability of financial statements and risks a reduction in their credibility, a key element in monetary authorities’ independence and accountability. There has, accordingly, been interest for some form of standardisation in this area.
Source: World Gold Council