Presentation made by Svetlana Klimenko, World Bank, at the 16th Annual OECD Accruals Symposium held at the OECD Conference Centre, Paris, on 21-22 March 2016.

1. Property, Plant and Equipment: Accrual
Accounting and Asset Management in
Latin America
Svetlana Klimenko
Lead Financial Management Specialist
World Bank

2. Fixed Assets Accounting and Management:
Revisiting the Status Quo (Study rational)
• Centrality of appropriate accounting and management of PP&E to strengthening
Public Financial Management (PFM), and Public Investment Management (PIM)
systems
• Key to governments capacity to:
• Improve the provision of public services;
• Contribute to economic growth through the improved assets planning and
enhanced management of infrastructure assets and other government
resources;
• Reduce corruption through better control of fixed assets
• Required annual investments in infrastructure - around $2.7 Trln., of which $400
Mln. could be saved by using existing assets more efficiently (McKinsey 2013)

3. Fixed Assets Accounting and Management:
“Must Haves”
• Legal and regulatory framework, accounting standards and operational
procedures
• Accurate opening balances for all PP&E categories and associated
challenges:
• Identification and regularization (obsolete versus “functioning” assets; preparation of
assets register; inventory stock-taking)
• Ownership and Valuation
• IPSAS 17 and…..???
• Measurement after recognition (including depreciation, impairment, etc.)
and asset replacement strategies
• Determination of the full cost of providing services in public sector
• Monitoring/enforcement mechanisms and performance indicators

4. Select Cases From the Trenches: Good Practices and Challenges
in PP&E Accounting and Management
• Select case studies of Chile, Colombia, Mexico, Panama, Paraguay, and
Uruguay, based on questionnaires and interviews
• Preliminary findings: Mexico (Oaxaca state), Colombia, and Chile
 Political environment & incentives are critical success factors
 Inventory stock-taking is a key prior action to the broader public sector accounting
reform
 Natural resources and land ownership
 First time valuation (capitalization of acquisition costs), and periodic revaluation
(recognition of effects of depreciation/impairment)
 National vs. sub-national realities (legal framework and capacity)
 Disclosure in financial statements

5. Getting from Here to There: Approaches to Overcome Main
Challenges
• There is no one “tried and true” method which fits every country
• Few countries have tried and succeeded: examples of Korea, New
Zealand, Chile (still in process) …
• How their experiences can be used to help other countries:
• Necessary elements of legal and regulatory frameworks and determination of
opening balances (approach to the identification and valuation of assets)
• Provision of suitable training to the staff
• Elimination of ghost assets
• Improvement of information and data systems
• Parallel focus on accounting and fixed assets management…

6. Expected Deliverables
• July 2016: Presentation of preliminary results of the study during
FOCAL event
• October 2016: Final Report
• Contacts: Svetlana Klimenko (sklimenko@worldbank.org), Juan-Carlos
Serrano-Machorro (jserranomachorro@worldbank.org), Dmitri
Gourfinkel (dgourfinkel@worldbank.org)