Loans and Investment Management element is one of the very important functions of the public sector financial management. In the context of Bhutan, outstanding loan of the government constituted over 90% of GDP and loan component forms substantial part of annual budgetary outlay. Government also invest huge amounts through DHI in various new commercial ventures.
This particular element also forms one of the important parameters in assessing the soundness of financial resources management accountability system in the financial institutions and corporations.
Loan management covers functions such as authorization, control and use, recording, repayments, reporting, etc. The assessment of loan management is based on main indicators like authority to obtain loan, authority to give loan, loan records, loan agreement, cost of borrowings, interest income and loan portfolios.
Investment management is essential to protect the interest of contributors and shareholders. The two main indicators assessed for the investment management are related to the Investment Committee (Establishment, composition, functions of committee) and the management of investment (Authority, maintenance of records, monitoring process and system).
The objective of audit of Loans and Investment Management System is to ascertain that loans and investments are duly authorized, managed and controlled.
The auditor verifies, observes, compares and ascertains the compliance of each main indicator and sub-indicator against specific criteria derived from applicable laws, rules, regulations, credit manuals, investment policy and other relevant documents.
The main indicators and sub-indicators to assess and evaluate the loans & investment management system are given in Table – 8.
TABLE – 8: Indicators for Loans & Investment Management
|Sl. No.||Main Indicators||Sub-Indicators|
|1||Borrowings||i. Borrowing policy and guidelines
ii. Need assessment
iv. Debt ceiling
vi. Borrowing options
vii. Cost of borrowings and loan covenants
x. Repayment of loans/debt servicing
xi. Government guarantees
ii. Investment options
iii. Management of investment