Accounting for gold

Overview

Monetary authorities hold gold in the performance of their official functions, typically as part of the country’s official reserves. This functional purpose differs from the objectives of other entities who hold gold, and 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 gold classified as monetary gold.

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 our consultation paper Guidance for Monetary Authorities on the recommended practice in accounting for gold.

This guidance aims to help standardise the 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.

Invitation to take part in an open industry consultation

The World Gold Council is now seeking views on the draft guidance provided. 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.
Please address all comments and enquiries to:

World Gold Council
Central Banks and Public Policy Programme
685 Third Avenue, 27th Floor
New York, NY 10017
United States of America
Email: [email protected]

Industry roundtable events

Accounting for gold - Industry roundtable events

The World Gold Council will be holding a series of roundtable events in 2017, bringing together central banks and industry stakeholders to discuss a proposed global best practice accounting standard for gold. 

Any key stakeholders (including central banks, international accounting standard boards, advisory institutions, global auditors, and sovereign wealth funds) wishing to participate in and/or host one of these roundtable events, please contact us at: [email protected].