Sovereign Wealth Funds: Angola's Example

This assignment examines Angola's Sovereign Wealth Fund (Fundo Soberano de Angola). It delves into the fund's establishment, objectives, and investment strategies. The analysis also explores the Fundo Soberano de Angola's impact on the Angolan economy and its role in managing national resources for future generations. It utilizes a variety of academic sources, reports from the Fundo Soberano de Angola, and online publications to provide a comprehensive understanding of this crucial financial institution.

Do sovereign wealth fund has sound accountability,
disclosure and reporting standards?
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ABSTRACT
Sovereign wealth fund (SWF) is the investment which is created by it for the diversification
of revenue streams. Fund is invested by the institutions in financial assets such as stocks, bonds,
real estate, precious metals and other alternative investment projects. Present dissertation is based
upon SWFs which is having responsibility to invest funds given by Central bank for making high
value addition on the same. In this, researcher will develop understanding about sovereign fund and
then it will be assessed that whether SWF uses effective accounting and reporting standards or not.
Furthermore, it can be said that SWF also appointed Deloitte as an independent auditor for the
financial accounts of fund. Sovereign Wealth Fund prepares its financial statement by taking into
account generally accepted principles so that performance of the same can be measured in terms of
rate of return and effectiveness on nation. From the secondary data, it has been assessed that
performance level of Sovereign Wealth Fund has significantly improved as compared to the past
years. Apart from that, it also has been articulated that SWF has sound accountability, disclosure
and reporting standards for the preparation and disclosure of information.
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ACKNOWLEDGEMENT
Completing the entire study at own level is a typical task where one needs greater assistance.
Hereby, I would like to impart my sincere thanks to my mentor who provided guidance throughout
the study. I would also like to say thanks to my colleagues for collecting secondary data in order to
reach at the aim of research. Apart from this, my friends' have also made a great contribution in
accomplishing the objective of study and drawing a valid conclusion. For assessing the level to
which sovereign wealth fund has disclosed information according to the standard reporting
standards, interpretivism philosophy and inductive approach has been undertaken by the scholar.
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TABLE OF CONTENTS
ACKNOWLEDGEMENT....................................................................................................................3
CHAPTER 1: INTRODUCTION.........................................................................................................5
1.1 Background of the study............................................................................................................5
1.2 Research aim and objectives......................................................................................................5
1.3 Research questions.....................................................................................................................6
1.4 Rationale of the study................................................................................................................6
1.5 Significance of the study............................................................................................................6
1.6 Structure of dissertation.............................................................................................................7
CHAPTER 2: LITERATURE REVIEW..............................................................................................8
2.1 Introduction................................................................................................................................8
2.2 Sovereign wealth fund...............................................................................................................8
2.3 Main problems of sovereign wealth funds.................................................................................9
2.4 Ways to overcome the difficulties that are faced by Sovereign Wealth Fund..........................10
2.5 Identifying whether sovereign wealth fund is adopting effective accounting and reporting
standards........................................................................................................................................10
2.6 Understanding standards adopted for disclosure of information by sovereign wealth fund
(SWF).............................................................................................................................................12
2.7 Generic characteristic of Angolan sovereign wealth fund.......................................................13
2.8 Literature Gap..........................................................................................................................15
Chapter 3: RESEARCH methodology...............................................................................................16
3.1 Introduction..............................................................................................................................16
3.2 Research Type..........................................................................................................................16
3.3 Research approach...................................................................................................................16
3.4 Research philosophy................................................................................................................17
3.5 Research design.......................................................................................................................17
3.6 Methods of data collection.......................................................................................................18
3.7 Data analysis plan....................................................................................................................18
3.8 Ethical consideration................................................................................................................19
3.10 Reliability and validity...........................................................................................................20
CHAPTER 4: DATA ANALYSIS.......................................................................................................21
Theme 1:Sovereign wealth fund aims to support government's strategic objectives....................21
Theme 2: Sovereign wealth fund undertakes accounting and reporting standards........................22
Theme 3:Sovereign wealth fund follow effective disclosure practices for publishing report.......23
Theme 4: Present performance of Sovereign wealth fund is better in comparison to the before
times...............................................................................................................................................24
Theme 5: Several issues are facing by Sovereign wealth fund in relation to the adoption of
accounting standard.......................................................................................................................25
Chapter 5: CONCLUSION and Recommendations...........................................................................27
Conclusion.....................................................................................................................................27
Recommendations..........................................................................................................................28
REFERENCES...................................................................................................................................29
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CHAPTER 1: INTRODUCTION
Topic: Do sovereign wealth fund has sound accountability, disclosure and reporting standards?
1.1 Background of the study
Sovereign wealth fund (SWF) refers to the state-owned investment which is created for the
diversification of revenue streams. Such fund is invested by company in the financial assets such as
stocks, bonds, real estate, precious metals and other alternative investment projects. This fund is
invested by the authority at global level with an aim to earn high returns by lowering the risk level.
In this regard, foreign-exchange reserves held by central bank is the main financial source which is
undertaken by SWFs for the investment purpose (Megginson and Fotak, 2015). In the highly
dynamic and strategic business environment, SWFs plays a vital role in maximizing the long-term
returns, managing liquidity and making stabilization in the currency rates. In this way, SWFs makes
remarkable contribution for the growth and development of economy to a large extent by offering
hedging and other investment opportunities.
Sovereign wealth fund has the responsibility to invest fund in such kind of securities which
may result in higher profit margin. Hence, for assessing the performance level of SWF, stakeholders
make assessment of reports which are published by them. In this regard, faith can be developed and
maintained among stakeholders when reports are prepared as well as disclosed according to the
rules of IFRS. Moreover, reports which are prepared according to the rules and regulations of IFRS
ensures high level of accountability, understanding and reliability. This in turn provides
stakeholders with an effectual framework for decision making (Kreander, McPhail and Beattie,
2015). Present dissertation is based upon SWFs which has responsibility to invest fund given by
Central bank for making high value addition on the same. In this context, dissertation will discuss
the level to which SWFs follows reporting standards for disclosing information in a highly
structured manner.
1.2 Research aim and objectives
Researcher’s aim behind this study is to evaluate accountability, disclosure and reporting
standards that are adopted on the part of sovereign wealth fund. By taking into consideration the
aim, following objectives have been drafted by the scholar:
 To develop understanding of sovereign fund
 To identify whether sovereign wealth fund is adopting effective accounting and reporting
standards or not
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 To understand the standards adopted for disclosure of information by sovereign wealth fund
(SWF)
 To evaluate performance of sovereign wealth fund in the recent past and recommend ways
to incorporate improvements
1.3 Research questions
In order to carry out the whole study in right direction, researcher is required to frame
suitable questions on the basis of aim and objectives. This in turn helps scholar in conducting the
study effectually. Research questions for the present study are enumerated as below:
Q 1. What is sovereign fund?
Q 2. What is the extent to which sovereign wealth fund undertakes accounting and reporting
standards?
Q 3. Which kind of standards are adopted by sovereign wealth fund for the disclosure of
information?
Q 4. What is the difference between past and present performance of sovereign wealth fund?
1.4 Rationale of the study
The rationale behind conducting such investigation is to gain deeper insight to the level at
which SWFs consider reporting standards while framing and disclosing accounting reports. It is the
main issue now because faith of stakeholders is associated with the level of accuracy maintained by
institution in financial information. Moreover, reports which are drafted and published according
the reporting standards such as IFRS are highly reliable and comparable in nature (Wang and Li,
2016). Further, reports published in accordance with the rules and regulations of IFRS are highly
transparent in nature. Thus, this investigation helps in assessing the transparency which is
maintained by SWFs in accounting and reporting aspects. This issue will be investigated by scholar
through the means of primary and secondary data. In this way, by analysing the both; researcher has
become able to find out a fair solution of the research issue or problem.
1.5 Significance of the study
Present study defines the level to which accountability has been maintained by SWFs in
information disclosed by it. In this regard, outcomes of the present study will provide stakeholders
with the most valuable information for decision making. Along with this, study and its outcomes
also provide a deeper insight to SWFs regarding the level to which it has maintained sound
accountability, disclosure and reporting standards. Further, study and its results will also provide
assistance to other scholars who are going to conduct study on such topic. Hence, by taking
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assistance of such study, other scholars can develop the understanding about such issue. This in turn
also provides assistance to them for developing new research topic on the basis of gap identified in
study. Thus, it can be said that findings of this study will offer several benefits to other scholars,
SWFs and learners.
1.6 Structure of dissertation
Chapter 1: Introduction
In introduction chapter, researcher sheds light on the background of study. On the basis of
research background, scholar frames aim and objectives of study for directing his efforts in the right
direction. Further, researcher also discusses rationale behind conducting the present study. Along
with this, investigator also presents the extent to which current study and its outcomes are highly
significant. In this section, researcher depicts the structure that will be undertaken by the scholar
during study.
Chapter 2: Literature review
In this, scholar will critically evaluate all secondary sources such as books, journals and
scholarly articles which are associated with the research issue. Hence, by evaluating all such
sources, scholar has become able to gain deeper understanding regarding the research issue. This in
turn helps researcher in preparing thesis for the section of data analysis.
Chapter 3: Research methodology
Researcher determines the approaches and philosophies in this section that will be adopted
by him for the purpose of data collection and analysis. Further, in this, scholar also identifies the
type of investigation that will be undertaken by him for assessing the level to which sovereign
wealth fund follows reporting standards and other norms.
Chapter 4: Data analysis and findings
In fourth chapter, researcher makes evaluation of the data which is gathered by him by
taking into account the suitable technique. Hence, in this, scholar exhibits outcomes of study in a
highly structured format through the means of graph and tables.
Chapter 5: Conclusion and recommendations
Investigator concludes all findings of study in such a manner which reflects that the aim and
objectives are fulfilled by scholar to a large extent. Besides this, scholar also gives
recommendations on the basis of issues identified during study.
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CHAPTER 2: LITERATURE REVIEW
2.1 Introduction
Literature review is the most important chapter of dissertation which consists of detailed
information related to research. It assists scholars to understand the concept behind associated
matter and accordingly, develop in-depth understanding. In the current study that is on evaluating
accountability, disclosure and reporting standards adopted by sovereign wealth fund, researcher has
used secondary study under which number of sources were considered for the collection of
information. Here, researcher has gathered important information related to topic so that fruitful
results can be produced. At first, researcher developed understanding about sovereign wealth fund
and then it has been assessed that whether sovereign fund uses effective accounting and reporting
standards or not. Apart from this, standards adopted for disclosure of information of by SWF has
also been understood with the help of different sources of information. Apart from this, performance
of SWF in the recent past has been evaluated.
2.2 Sovereign wealth fund
The Fundo Soberano De Angola (FSDEA) is known as sovereign wealth fund owned by
Republic of Angola. It follows investment policy and guidelines for the purpose of diversification
across asset classes and number of industries. It aids to generate long term financial return for the
enhancement of society and to determine economic development with specific focus upon
generating wealth of people of Angola. It was launched in October and receiving huge coverage
from media such as CNN, Euro-money and New York Times. During April 2015, FSDEA thought
to allocate finance on new vehicles which will perform the investment activities in different sectors
such as timber, mining and agriculture (Fundo Soberano De Angola, 2016). Along with that,
healthcare sector of country was also considered with investment of 400 million dollar whereas 250
million dollar were decided to be invested on timber, agriculture and mining. It proves to be
effective to generate appropriate return and accordingly, to fulfil the expectations of people living in
society.
Sovereign wealth fund (SWF) is a state owned investment that is being spent on real and
financial assets such as bonds, precious metals and stocks. Along with that, alternative investments
hedge funds and private equity fund are also included. Main objectives of sovereign wealth fund is
to protect & stabilize the budget from excess volatility in export or revenue (Fundo Soberano de
Angola announces 2015 investment update, 2016).
Political strategies are also adopted by fund in order to ensure successful operation. It proves
to be effective to earn greater rate of return than on foreign exchange reserves. It enables the
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management to assist monetary authorities in an effectual manner because unwanted liquidity is
dissipated. Another aim of this fund is to increase the saving for future generation that will be
effective for corporation or entire society. However, the basic purpose behind this fund is to
establish balance of payment and fiscal surpluses as well as sum related to transfer. It proves to be
effective to cater the requirement of nation as well as economic growth can be ensured. Here,
classification of sovereign wealth fund can be done in several forms such as pension reserve,
reserve investment as well as stabilization. Along with that, strategic development SWF and future
generation funds are also included which can be used for the purpose of investment.
Truman (2011) reflected that the investor’s classification is also done on several basis such
as liability sovereign investor and their main objectives are to get investment return and liability.
Furthermore, intergeneration sovereign investor fulfils the objective of investment return where a
liquidity sovereign investor and his main objective is to get investment return and liability. He
further argued that fiscal, constitution and company as well as constitutive law are included. It
facilitates to set regulations and resolve all related queries. Clark, Dixon and Monk, (2013) asserted
that sovereign wealth fund supports macroeconomic directly however, with three exceptions, it is
supported. The first one is related to transfer to budget by taking into account exceptional needs.
The second exception is showing that domestic businesses are stabilized whereas third one reflects
that funds are drawn down for transferring to the central bank. In addition to this, different types of
sovereign investment vehicles are included such as public pension funds, state owned enterprises
and SWFs. All of these vehicles play an important role in bringing balance in the economy by
catering requirement of all associated parties (Gelb and et. al., 2014).
2.3 Main problems of sovereign wealth funds
The lack of transparency and fiscal discipline during the period of 1997 to 2002, sovereign
wealth fund failed to fulfil its goals and objectives. In this period, around $4.2 billion disappeared
from government coffers. Thus, this aspect has placed a negative impact on the growth and
performance level of same. This fund is also facing issue related to external interference whereby it
becomes typical to manage the performance of the same. However, this fund work well just because
of economical reasons only. Owing to this, effective improvement can be done for effective
performance of the fund and ensure its well being for all related community members or citizen. It
can be critically evaluated that possible external interference must be reduced for better
management all its fund. This proves to be effective to cater need of all related parties and resolve
potential issues associated with funds.
Furthermore, a fund must have specific span of control in order to ensure its promotion and
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advantage to all related parties. It can be critically evaluated that interference of different parties
make it highly complicated and delay in delivering the advantage to end users. It happens because
of investment decision of varied stakeholders and its direct impact on cost of the same. Here, the
fund get affected due to investment decisions and performance of the project. However, the assets
prices might distorted by SWFs as it deals in non-commercially motivated securities. Through,
information are not passes or leaked to others still the impact can be seen due to external
interference. This against shows that lack of transparency create issue of investors and all other
stakeholders which increases their level of dissatisfaction. In this manner, external interference can
be reduced to a great extent for the support all other parties and provide then appropriate rate of
return as well as effective life.
2.4 Ways to overcome the difficulties that are faced by Sovereign Wealth Fund
In accordance with the views of Castelli and Scacciavillani, (2012) by using corporate
governance technique Sovereign wealth fund can overcome the issue of transparency. Corporate
governance implies for the rules and practices which are undertaken by the company to control the
performance aspect. This technique is highly effectual which in turn enables personnel to ensure
proper and high of stakeholder’s interest such as management, suppliers, customers, government,
financiers etc. Hence, by following specific rules and guidelines Sovereign wealth fund can
maintain better transparency in the accounting aspects or practices. Thus, by conducting corporate
governance team of Board of Directors and committees can offer high level of benefit to the
stakeholders. However, Megginson and Fotak, (2015) criticized that not only corporate governance
rules are sufficient to develop transparency is the accounts and operations. However, Sovereign
wealth fund is required to employ the rules and regulations which are introduced by International
accounting standard. In this way, by following standard accounting rules and principles Sovereign
wealth fund can provide investors highly suitable financial reports for decision making. Moreover,
now investors take decision about investment after making comparison of one performance with
another. In this, by adopting standard principles Sovereign wealth fund can attain ensure greater
transparency in the accounts and thereby enables investors to make suitable decisions.
2.5 Identifying whether sovereign wealth fund is adopting effective accounting and reporting
standards
According to Al-Hassan and et. al., (2013) state owned fund is important for a nation
because it supports the society to improve the living standards of people. This fund handles
different activities related to management of social and economic condition of nation. At this
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juncture, it becomes important to adopt effective accounting and reporting standards. It proves to be
appropriate to meet the expectations of all stakeholders. However, sovereign wealth fund is
adopting effective accounting and reporting standards whereby record related to return in particular
year can be maintained. However, investment decisions are taken on the basis of economy and
finance in nation. At this juncture, Generally Accepted Principles and Practices (GAPP) serve as the
guidelines through which fund can be operated successfully. GAAP refers to the common set of
accounting principles and procedures which organization must follow while preparing the financial
statements. Further, it also entails the ways and standards in relation to the recording as well as
reporting information. In this way, GAAP ensures high level of clarity in the financial statements
which are prepared by the firm. However, GAPP is followed with an objective to maintain a global
financial system and to maintain flow of capital as well as investment. It can be critically evaluated
that regulatory requirement is fulfilled on the basis of country where they invest. Not only this, but
disclosure requirements are also considered by SWFs so that transparency can be maintained
accordingly.
However, maintaining transparency is a crucial aspect for any state owned fund to follow the
sound governance structure laid down by government. It facilitates to control the operations and
manages risk as well as accountability aspects. Moreover, the existing SWF practices are used to
draw general accepted principles and practices in number of countries. Apart from this, GAPP
makes it possible for SWF to ensure successful operation with increased rate of return so that
accordingly, expectations of all associated people can be met. Here, guidelines set by GAPP help to
clarify about SWF in an effectual manner in home as well as in foreign financial market. In such a
manner, guidelines stated in GAPP tends to extract economic and financial benefits for home
countries as well as for international financial system. Monk (2011) asserted that macroeconomic
policy framework is complied with support of GAPP in the mentioned fund. In this manner, open
and stable investment climate is created because of stated legislation related report which helps to
reduce protectionist pressure and makes the global financial system stable. He further argued that
reporting and accounting standard assists SWFs to develop, strengthen as well as to review their
investment practices and policies effectively. In such a manner, transparency is maintained and open
investment environment is created for investors who are willing to take part in SWF.
According to Megginson and Fotak, (2015) GAPP covers different aspects such as legal
framework and objectives as well as investment and risk management along with governance
structure. However, sound governance structure is important in such kind of state owned fund
because it separates the owner's function and governing body so that operational independence can
take place. Accordingly, investment decision and operations will be free from any kind of political
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influence. On the other hand, reliable risk management framework plays a vital role in promoting
the soundness in accountability and reporting. As per FSDEA by laws, audit report of financial
account is required to be published for disclosure purpose in the local press. Not only this, but
FSDEA also provides detailed information related to portfolio allocation and financial performance
as well as investment strategy. Moreover, by evaluating the portfolio, investors can determine the
relationship between risks and return aspect. Earning high returns by reducing the risk level is one
of the main objectives of investors. In this regard, by evaluating securities which are involved in
portfolio, investors can make idea about the return which will be generated by them in the near
future. Along with this, investors and other stakeholders are highly concerned in relation to gain
information about the liquidity and solvency aspect of firm. In this, by disseminating complete
important information related to financial results of fund to associated parties, fruitful decisions are
taken by keeping transparency into account (Hammond, 2011).
2.6 Understanding standards adopted for disclosure of information by sovereign wealth fund (SWF)
There are several standards adopted by FSDEA for disclosure of information. For this
purpose, board of fund will appoint an independent auditor so that entire accounting information
will be presented effectively. Furthermore, Article 10 reflects the Statutes of FSDEA, internal
supervision of the activities and operations of fund. It is responsible for different aspects where first
one is about overweening management and complying the stated rules and regulations for fund in
an effectual manner. Similarly, value of assets held by SWF is also certified along with the
supervision of assets of fund. Not only this, but relevant authorities ensure that fund works well in
accordance with the stated objectives. Doriye (2010) asserted that regular information is provided to
the government along with proper record keeping. In this regard, investment policy, annual report as
well as annual and multi-annual business plans are important to meet the expectations of
stakeholders. It will be effective for fund to secure the right of investors and other associated
parties. Moreover, investment objectives and principles are increasing the wealth of nation by
maximizing returns along with risk minimization. Similarly, infrastructure and industry is
developed by taking into account short time span. Castelli and Scacciavillani, (2012) reported that
efficient fiscal policy contributed towards the wellbeing of fund so that welfare of society can be
ensured.
However, financial or annual report of fund is published publicly where facts and figures
related to own equity, net assets detail and income statement are also shown. This aids to provide
information related to funding interest and operating cost so that details of net or operating profit
can be collected. By taking into account such information, stakeholders can evaluate the
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profitability aspect of institute. Moreover, profit is the one of most effectual measures which furnish
information regarding the level to which company has managed its fund effectually. Truman (2011)
has also given results of financial intermediation which are presented through which FSDEA to
meet the expectations of all associated parties. Here, International Financial Reporting Standards set
by government are followed while preparing financial statements. Accordingly, important financial
statements are prepared and details related to the same are disseminated. Sovereign wealth fund
prepares all financial statements namely balance sheet, income and cash flow as well as statement
of changes in equity, etc. as per the rules and regulations of IFRS. Further, SWF also specifies notes
which represent aspects on the basis of which transactions are recorded. Other regulations and laws
applied on fund are also complied by the management with appointment of independent suitable
auditor.
Moreover, it also follows principles and practices set or developed by Santiago Principles. It
is a voluntary set of principles and practices which are initiated in October 2008 by the International
Working Group (IWG) of Sovereign Wealth Funds (SWFs). Moreover, SWF is considered as the
transparent fund which discloses important information to appropriate parties along with the future
strategies (Weiner, 2011). Apart from this, these stated policies milestones are achieved by fund,
SWFI and International Forum of Sovereign Wealth funds which strengthen FSDEA's commitment
to accomplish or comply all stated international regulations. However, FSDEA is a member of
IFSWE and accordingly, it is controlled with internal as well as external procedures. For
maintaining transparency and accountability, primary custodian has been appointed in the year
2014. Along with that, annual and quarterly report is disclosed to parliament as per the agreed time
through which performance of fund can be assessed. At the same time, investment policy is
disclosed on regular basis through which it becomes helpful for assessing the performance of fund
(Aguilera, Capapé and Santiso, 2016). Three simple steps are followed by FDSEA where at first,
annual surplus of oil reserve is received which is also called as endowment. The second step is of
investment under which long term investment return is generated (Fundo Soberano de Angola,
2013). In addition to this, wealth is generated for Angolans by disseminating important information
to end users as well as government.
2.7 Generic characteristic of Angolan sovereign wealth fund
In accordance with the viewpoints of Weiner, (2011), there are several issues which affected
the performance of sovereign wealth fund in recent past. However, Doriye (2010) said that Angolan
government invested high amount in raising institutional capacity over the past years. This is also
one of the main aspects which affected the performance of sovereign wealth fund in negative
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direction. In this, for making improvement in the situation, government has created and introduced
institutions such as SWF which is highly transparent and accountable in accordance with the
international accounting standards. Now, sovereign wealth fund which is created by Angolan
government manages substantial investment portfolio. SWF believes that risk can be mitigated
when fund is invested in different types of securities. By considering such aspects, SWF invests
fund in number of industries and asset classes which are related to both public and private sectors.
In the present thesis, Clark, Dixon and Monk, (2013) presented that during economic and
financial crisis that is in the years 2008-09, performance level of SWF declined to a large extent.
Moreover, during this period, assets which were managed by SWF stopped growing. At the time of
investment, personnel of SWF has assumed that all the assets will grow at a high pace. However,
unfortunately, due to unfavourable economic condition, SWF failed to attain the desired level of
outcomes or success. During this period, sovereign wealth fund has learned about the manner in
which they need to invest and manage fund effectually (Progress on Sovereign Wealth Fund
Transparency and Accountability: An Updated SWF Scoreboard, 2016). Moreover, over the past
years, SWFs have not grown in accordance with the estimation made for same. However, on the
critical note, Wang and Li, (2016) claimed that SWF is the most important international financial
player still it has faced problems in the recent past. After the period of 2008, value of assets of SWF
is estimated around $50 billion. Besides this, out of 18, 9 SWF have assets amounted to $100
billion. On the other hand, value of assets of 5 SWF is more than $300 billion. However, public of
both; home and host country is highly concerned in relation to the transparency and accountability
of SWF.
Truman, (2011) found that in the recent past, Angola fund was established with an aim to
promote economic and social development. Angolan government has framed FSDEA’s strategy with
an aim to attract long term risk adjusted return. In order to manage the risk level, SWF invests fund
in different kind of securities. Along with this, SWF has also invested fund at both national and
international level. This in return diversifies the risk level to a large extent and offers high level of
returns to the investors. Megginson and Fotak, (2015) stated that the financial period of 2013
proved to be a highly challenging investment environment for SWF. Due to fluctuating equity
market condition, sovereign wealth fund failed to get suitable returns which is anticipated by it.
However, it is to be critically evaluated by Kreander, McPhail and Beattie, (2015) that FSDEA has
adopted several strategies in the last year with an aim to manage the level of risk effectually. SWF
decided the limit of investment in relation to specific geographic area. Moreover, economic and
political conditions vary from one country to another (Rise of the African sovereign wealth fund,
2016). Through this, risk level can be reduced to the specified limit by SWF. Hence, by considering
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all such aspects, it can be said that SWF has performed well in the recent past to some extent.
2.8 Literature Gap
From secondary data evaluation, it has been assessed that several studies or thesis have been
conducted by researchers on the performance aspect of sovereign wealth fund. In thesis, researchers
have presented information about the extent to which sovereign wealth fund manages portfolio from
its establishment to the present time. In this way, varied researchers have satisfied the information
need of different stakeholders. Moreover, return aspect is highly influenced by the manner in which
sovereign wealth fund manages their portfolio. However, in the present time, financial statements
prepared by the institute according to GAAP and IFRS are highly reliable and comparable in nature.
In this regard, present study will shed light on the level to which accountability has been maintained
by sovereign wealth fund while disclosing financial information. In this, scholar will assess extent
to which institute adheres with the rules, regulations and code of practices of GAAP, IFRS, etc.
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CHAPTER 3: RESEARCH METHODOLOGY
3.1 Introduction
Research methodology serves as an outline which entails the philosophies and approaches
that have been adopted by the scholar for resolving problem or issue. Further, it also provides a
deep insight to the methods which have been undertaken by the researcher for gathering data
regarding accountability and reporting standards employed by sovereign wealth fund. Thus, it
underlines ways which have been used by the scholar for analysing data with an aim to derive
suitable solution of research issue.
3.2 Research Type
Specifically, there are mainly two types of researches namely qualitative and quantitative. To
carry out study in the right direction, it is highly required for the scholar to assess and select suitable
type of investigation according to the research issue or problem. Qualitative investigation places
high emphasis on the reality which is developed on the social ground. In this, data is recorded and
analysed by scholar to evaluate the results of human deeds and experiences (Hoy, 2009). This type
of research is highly suitable when aspects of investigation are based on perception, values and
beliefs. Hence, when subject matter of issue cannot be quantified then researcher can resolve the
issue through qualitative investigation.
On the contrary, under quantitative research, scholar investigates observable phenomenon by
using statistical and mathematical tools or techniques. In this, researcher evaluates hypothesis and
makes effort to assess suitable solution of the problem (Kuada, 2012). Hence, in quantitative
research, scholar makes evaluation of numeric facts and figures which are gathered by him/her via
primary methods such as survey, interview, etc. This research type provides high level of assistance
to the scholar in obtaining better results in a scientific manner.
Current study is focusing on accounting standards and rules followed by sovereign wealth
fund while disclosing the financial information. Hence, to evaluate such aspects, qualitative
investigation has been conducted by the researcher. In this regard, by emphasising on qualitative
aspects like rules as well as code of conducts and practices of IFRS & GAAP, researcher can
present the level to which financial information is disclosed by SWF in a proper manner.
3.3 Research approach
Inductive and deductive are two main approaches which can be undertaken by the scholar
for assessing suitable outcomes of research issue. Under inductive approach, scholar frames
hypothesis by taking into account the existing theoretical framework. In this, scholar observes each
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and every aspect in a detailed manner with an aim to confirm the extent to which hypothesis is true.
This research approach offers favourable outcomes when quantitative investigation is conducted by
the investigator (Jackson, 2010). In contrast to this, deductive approach is highly suitable for the
qualitative investigation. According to this approach, research starts with specific observation,
pattern, tentative hypothesis and ends with development of new theory on the basis of evaluation.
In the present study, scholar has selected inductive approach for doing qualitative
investigation effectively and efficiently. Hence, in this, specific pattern has been followed by
investigator to assess the level to which sovereign wealth fund adhered with accounting and
reporting standards.
3.4 Research philosophy
Philosophies of the research can be divided into two types such as positivism and
interpretivism. Research philosophy entails the ways in which data should be gathered and
analysed. Further, selection of research philosophy also vary according to the type of investigation
conducted by scholar. Hence, with an aim to conduct investigation in an effectual way, it is highly
required for the researcher to opt any one philosophy according to the type of investigation
undertaken. In interpretivism philosophy, qualitative aspects of the issue are investigated by the
researcher (Johnson and Clark, 2006). On the other hand, positivism philosophy is highly suitable
for quantitative investigation. In this, realistic facts and figures are evaluated by the scholar to find
out appropriate solution of the issue. In this, no changes are made by the researcher in phenomena
which is being studied. Hence, on the summary note, it can be said that positivism philosophy
presents data which is highly suitable in every scenario. Moreover, facts which are globally
accepted does not change in other situations.
For assessing the level to which sovereign wealth fund has disclosed information according
the standard reporting standards, interpretivism philosophy has been undertaken by the scholar. The
rationale behind this is qualitative investigation which has been undertaken by the scholar. Hence,
by following such philosophy, scholar has addressed the research issue.
3.5 Research design
There are several research designs which can be undertaken by scholar for the present study
like exploratory, case study, experimental and descriptive. In exploratory research, scholar defines
each and every aspect in a detailed manner. This type of design is highly suitable for the study in
which problems have not been clearly defined. Hence, in this, researcher presents solution by
diagnosing each aspect of the problem. In contrast to this, under case study, researcher makes study
on specific aspects which are highly related to the specific area. On the other side, in experimental
17

research, study makes efforts to determine cause and effect relationship. Further, descriptive
analysis helps in gaining deeper insight about the topic with the help of several methods like survey,
interview, etc. Hence, case study design has been undertaken by the scholar to assess accountability,
disclosure and reporting standards employed by sovereign wealth fund. Hence, by making analysis
of case study of SWF, researcher can draw a valid conclusion.
3.6 Methods of data collection
For developing suitable or appropriate findings, it is highly required for the researcher to
gather enough data. In this regard, researcher can gather various sets of information by taking into
account two methods namely primary and secondary. Information which is specifically gathered by
scholar for fulfilling the aim and objectives of research is primary data. Survey, observation, focus
group, etc. are main methods which can be used by the researcher to collect primary data (Jonker
and Pennink, 2010). By employing such methods, scholar can gather information in a clear and
specific manner which directly addresses the research issue. On the other hand, secondary data
refers to the information which is already gathered and analysed by other scholars for meeting their
own objectives. In this regard, books, journals and other scholarly articles can be assessed by the
scholar to obtain a deep insight about the research topic.
In this, secondary data has been gathered and analysed by the researcher to get information
about rules and regulations followed by sovereign wealth fund for the disclosure of financial
information. For this purpose, several articles which are published by SWF and other researches on
this issue have been evaluated by the scholar. Further, information regarding accounting standards
such as IFRS and GAAP principles have also been gathered by the researcher. Hence, by making
evaluation of all such data, fair view of the study has been presented by investigator.
3.7 Data analysis plan
Data analysis is the most important part of study in which researcher makes analysis and
evaluation of information accessed by him/her through the means of primary and secondary
sources. With an aim to draw valid conclusion or final results, investigator undertakes a systematic
process to describe, illustrate and evaluate the data (Kimmel, 2009). For evaluating data, several
statistical and other techniques are undertaken by scholar in accordance with the type of
investigation carried out. Moreover, data analysis techniques are also highly influenced by the
nature and type of research. To evaluate quantitative data, SPSS (Statistical package for social
science) technique and other software are used by the scholar. Moreover, quantitative investigation
is highly based on numeric facts and figures. In this regard, both these techniques help in arranging
and simplifying huge amount of data in a highly structured as well as understandable format. In this
18

way, SPSS helps the researcher in presenting fair aspects or results of issues that are going to be
investigated within suitable time frame (Kimmel, 2009). In contrast to this, thematic perception
technique is another highly suitable method which provides assistance to the researcher in making
analysis of qualitative data. Under qualitative investigation, scholar prepares several themes by
taking into consideration the research aim and objectives. Along with this, outcomes of data are also
portrayed by the investigator in a graphical manner.
Thematic perception technique has been adopted by the scholar for doing qualitative
investigation more effectually. In this, several themes have been prepared by researcher in relation
to the standards adopted by sovereign wealth fund. In this way, researcher has evaluated the extent
to which SWF disclosed its financial information according to the standards of IFRS and GAAP.
Theme regarding past and future performance has been drafted by the scholar to fulfil research aim
and objectives. Hence, effectual presentation of data has been done by researcher through the means
of graphs and charts.
3.8 Ethical consideration
For raising the effectiveness of study, researcher is required to follow all ethical aspects and
considerations. In this regard, scholar needs to ensure that all data has been analysed by him/her
without any biasness. Further, researcher also requires making proper analysis of data which shows
that study and its outcome are highly unique in comparison to other studies. In the present
investigation, several ethical aspects have been followed by the scholar. Hence, for drafting report
in a valid and appropriate format, complete data has been written by the researcher in his/her own
words. This aspect shows that data is not copied from any source which is related to this topic. In
this way, report has been drafted by the scholar in a highly professional manner. Further, proper
referencing has been made by the scholar in relation to the sources from which data was
undertaken. Hence, all these aspects show that ethics have been followed by the researcher while
doing such kind of investigation. 3.9 Limitations of the study
There are several aspects which closely influence the significance of present study like:
 Due to lack of enough amount of financial resources, highly advanced technique for data
analysis has not been undertaken by the scholar. If researcher had sufficient financial
resources then he would become able to undertake effectual data analysis tools and
techniques. In this way, due to lack of resources, in-depth research has not been made by
the scholar.
 Time is another constraint which affects the effectiveness of study to a large extent. In the
strategic business arena, researcher can gain competitive edge over others when it presents
19

finding within suitable time frame. Due to this, highly in-depth investigation has not been
conducted by the researcher.
 Further, difficulty has also been faced by the scholar in collection of secondary data.
Moreover, most of the sites are inaccessible which have also created difficulty in front of
the researcher for data collection about sovereign wealth fund. Whereas, unavailability of
authenticate sites have also created problem in the collection of data. Moreover, sites which
have been protected from copyright offers highly reliable and sophisticated information.
Hence, due to this aspect, problems have been faced by the researcher for collection of past
and present information about sovereign wealth fund. In addition to this, researcher has
faced difficulty in finding articles which are based on the information of financial
disclosure of sovereign wealth fund.
3.10 Reliability and validity
With an aim to derive effectual results, complete secondary data has been gathered by the
scholar from authenticate sites. Further, recently published articles have been used by researcher to
derive appropriate output of the problem. During data collection, high level of emphasis has been
made by scholar on the matter which is highly associated with subject area. By taking into account
such aspect, data has been gathered by the scholar on GAAP and IFRS. Moreover, one can get
information about the appropriateness of sovereign wealth fund in relation to the disclosure of
information when they have better understanding about accounting rules and regulations. Hence, by
following all the above aspects, reliability and validity of information has been maintained by
scholar.
20

CHAPTER 4: DATA ANALYSIS
Data analysis is the most important part of dissertation which includes detail analysis of
collected information. The current study is based upon thematic analysis under which collected
information will be presented in the form of themes. Each theme is followed by detail analysis
through which meaningful outcome can be extracted. Further, research objectives and research
questions are considered for the purpose of drawing valid conclusion. At this juncture, stated
purpose of study is taken into account and accordingly analysis part has been completed. However,
study is based upon secondary data only where researcher focuses upon different sources for
appropriate analysis of all collected information.
Theme 1:Sovereign wealth fund aims to support government's strategic objectives
Sovereign wealth fund aims to support strategic objectives of Angola because it works in the
direction of growth and development of respective nation. For this purpose, three simple steps are
followed by fund under which at first annual surplus is received from oil reserves which is invested
for the purpose of generating long term return. The third step is of wealth generation for Angolans
by generating money. Currently, SWF is performing in an appropriate manner because during first
quarter of 2016 its total assets were worth $4.56 billion. It has selected certain investment classes
with equal focus upon some industries for investment. However, presently fund is facing issue
related to regional economic fluctuation which might affect its performance to a great extent. Here,
FSDEA planned to directly invest in Angola and other Sub Saharan African countries (Angolan
sovereign wealth fund releases Q1 results, 2016). It has undertaken private equity allocation also
which consists of 59% of total investment. Furthermore, portfolio of fund includes hedge funds,
bonds and shares which are valued at $1.84 billion. Similarly, FSDEA also secured concession of
total seven large scale farms from Ministry of Agriculture of Angola which consists of approximate
72000 hectares of agriculture farmland. This land is effective for production of rice, grains or oil
seeds.
Such kind of proposal opens opportunities for investors through which they can get long
term return. However, FSDEA considers high growth sectors such as health care, mining and hotel
as well as agriculture for ensuring higher growth of country. The planned investment of FSDEA in
healthcare and agriculture was $465 million in 2016. Apart from this, $407 million of its total
amount as $2.7 billion has been committed for direct investment in Sub Saharan Africa region and
Angola. However, forecasting or planned investment for 2020 is to allocate $3 billion for private
equity funds. Here, fund has single aim to create wealth of nation with investment on domestic and
international basis. It will be helpful for country, citizen of Angola and other business community.
21

7.5% of income of fund if invested in the social development and socially responsible projects in
the different areas such as health and energy, education and income generation. In future, company
will follow strategy diversification so that fixed rate of return can be obtained by corporation with
less insecurity.
Therefore, sovereign wealth fund is focusing upon different sector for consists development
and growth through which rural areas can be developed and living standard of people can be
enhanced or improved. In such manner, Sovereign Wealth fund is contributing towards growth of
Angola to a great extent.
Theme 2: Sovereign wealth fund undertakes accounting and reporting standards
The information collected from secondary information shows that SWF of Angola follows
accounting and reporting standard. It is effective for fund to regulate all related aspects in an
effectual manner. It follow different regulation and policies which in turn information will be
disseminated between all related parties (Rise of the African sovereign wealth fund, 2016). This
African wealth fund tend contribute towards well being of nation for generating long term return.
For this purpose, appropriate standards are followed through which all associated parties can get
benefits. Furthermore, SWF also appointed Deloitte as independent auditors for the financial
accounts of fund. However, it was prescribed by the bylaws of FSDEA so that accordingly
transparency can be maintained in all related areas of business. Not only this but risk management
division of fund is also strengthen so that return can be increased. Apart from this, appointment of
independent auditors make it possible to ensure accountability as well as development of fund. The
main reason behind requirement of independent audit is dedication of fund towards state and public
of Angola.
SWF follow the Generally Accepted Principles and Practices (GAPP) so that financial
statements can be prepared in an effectual manner. However, stricter fiscal framework tends to
affect the performance of fund because return can be affected. Owing to this, impact of such kind of
issues is also shown in the financial statement with the use of appropriate accounting policies and
procedures. Similarly, social charter was also established for the purpose of measuring impact of
social investment on fund. All these stated aspects has direct impact on financial statements of funds
which is communicated by use of accounting and reporting standards such as IFRS and GAPP. It
aids to give credit rating for fund because financial statement play important role to assess financial
position of particular fund. GAPP facilitates to support governance, investment options and
institutional framework. It tends to develop deep understanding of SWFs that how economic and
financial they are for the growth and development of nation. According to the principles of GAPP
22

SWF adopts certain investment strategies in accordance with policy objectives. Principles also
cover objectives, legal framework and coordination with macroeconomic policies. It shows that
owner and governing body will work separably as personal issues of owner cannot affect fund in
any manner. In such manner, risk investment decision which are free from political influences are
considered so that accordantly disciplined investment plan and practices are implemented.
Sovereign Wealth Fund prepares it financial statement by taking in to account generally
accepted principles so that performance of the same can be measures in term of rate of return and
effectiveness on nation. This fund focuses upon investment in different sectors. For this purpose, it
becomes crucial to record all important information regarding investment and return for that
accordingly government can support towards the growth of fund. However, fund is expecting to
adopt International Financial Reporting Standards in its financial statements and bookkeeping.
However, it has adopted the same in current time along with implementation of several other
appropriate accounting practices and policies. Apart from this, International Financial Reporting
Standard tend to ensure ethical conduct or operation of fund where investors can be free from risk.
Therefore, by using IFRS and GAPP soundness is ensured in the transaction of fund with
clearly defined purpose of policy. However, these policies are disclosed publicly and accordingly all
related financial statements are also presented to respective parties. Thus, use of such kind of
effective practices make it possible to communicate about direct domestic macroeconomic
implications associated with fund.
Theme 3:Sovereign wealth fund follow effective disclosure practices for publishing report
The collected secondary information reflects that sovereign wealth fund follow effective
disclosure practices for publishing report. This is because it works accordingly to the accounting
procedures such as IFRS and GAPP. For example, GAPP 4 principle shows that fund should follow
the funding and withdrawal rules which depicts that funding approach of SWF and its spending
operation is followed by clear and publicly disclosed policies, procedures as well as rules. As fund
performs every investment activity on behalf of government. Furthermore, according to
International Financial Reporting Standard, all important information of corporation will be
presented among stakeholders. It proves to be effective to ensure successful operation of business
with increased rate of return (Sovereign Wealth funds, 2016). Furthermore, relevant information
such as general approach to withdrawals from the SWF and spending on behalf of government is
also disclosed publicly. This aspect provide detail information to the parties who invested money in
the fund or those who are getting benefit out of the same.
Furthermore, fiscal and monetary policies are coordinated to ensure consistency with overall
23

economic policies. This is because operation of SWF tends to have signifiant impact on public
finances, balance of payment and balance sheet of sovereign wealth fund. It aids to communicate
detail information among public and government will also come to know about return of fund and
its contribution towards growth and development. However, fund clear define the policy purpose
among public so they can come to know about objective of SWF. Under this, objectives or aim or
targeted of fund are clearly described with clear stated policies. Not only this, but relationship
between SWF and other stated bodies such as development banks and central bank as well as state
owned corporation are also clarified among public as well as related parties. It reflects how
professional fund is managed and how it is contributing towards the growth of nation with support
of other parties.
SWFs has their own policies and procedures like some of the funds keep capital as well as
return whereas other tend to pay out annual dividend. However, it depends upon fiscal stabilization
so it is important for SWF to clear state arrangements in relation to general approach of spending
and funding. Therefore, sovereign wealth fund ensure to publish important information related to
dividend and achievement in accordance with time line. At the same time, important financial
statement such as balance sheet etc are also preferences to meet expectations of stakeholders.
Theme 4: Present performance of Sovereign wealth fund is better in comparison to the before times
From the secondary data it has been assessed that performance level of Sovereign wealth
fund has significantly improved as compared to the past years. In the present time, FSDEA plays an
important role in promoting the social and economic development. Now, Sovereign wealth fund
makes effort in identifying the securities which generate more wealth for the people of society. In
2015, Sovereign wealth fund was rated by SWFI and it found that institution has attained 8 rank out
of 10. Hence, by taking into account such aspect it can be said that Sovereign wealth fund is
performing its activities more efficiently in the present time rather than before years. Further,
growth and development aspect of SWF can also be seen in the form of tax which is paid by such
institution. Now, SWF accounts for the 80% of the country's tax revenue and 40% of GDP. Along
with this, now institution make focus on the adoption of diversification strategy with the motive to
earn high return at lower risk level.
From the gathered data, it has been determined that in the year of 2008-09 SWF failed to
attain the desired level of outcome or success. This aspect is supported from the literature review
aspect, in which Clark, Dixon and Monk (2013) said that at the time of financial crisis assets in
which firm invested money were not growing. In this time, financial analysts of SWF assumed that
value of the assets will significantly grow in the near future. Hence, due to the inappropriate
24

estimation regarding the assets and other securities SWF failed to achieve its aims and objectives.
Along with this, from 1997 to 2002 SWF failed to develop and maintain effectual fiscal discipline.
Furthermore, lack of transparency in the operations is another factor which had placed negative
impact on the performance aspect of Sovereign wealth fund. Hence, all these aspects clearly
presents that several issues faced by SWF in the past years in relation to the management of
performance.
However, now, SWF manages substantial investment portfolio by making in-depth
evaluation of the securities which are included in it. Moreover, suitable or optimum portfolio
reduces the risk of loss to the large extent. The reason behind this is individual security does not
place high level of impact on the whole portfolio. On the other hand, when whole fund is invested
by the institution in one security then any increase or decrease in the value closely affects the profit
margin of it. In this, now SWF has strengthened its policy framework to the large extent by making
sound portfolio. In such portfolio, securities of both public and private sectors are included by the
SWF with the aim to stabilize both risk and return aspect. Along with this, now such institution has
adopted international accounting standards and rules for maintaining as well as disclosing the
financial information. Moreover, financial statements which are prepared on the basis of GAAP and
IFRS provide SWF with the reliable framework for decision making. In this way, institution has
performed better in the recent years with the help of sound framework. Moreover, any institution
can develop strategic framework for the near future only when it has specific and appropriate
financial information. Further, from the period of crisis SWF has learnt several aspects which
directly makes improvement in the performance aspect. Hence, in the recent years institution has
employed sound policies and rules which is resulted into the enhancement in value of assets in
terms of billions. Hence, by taking into consideration all the above aspects it can be said that in the
present time Sovereign Wealth fund is performing more effectively and efficiently in against to the
past years.
Theme 5: Several issues are facing by Sovereign wealth fund in relation to the adoption of
accounting standard
It has been assessed from the secondary data analysis that there are several issues which are
facing by Sovereign wealth fund in relation to the adoption and implementation of accounting
standards. Moreover, to maintain sound accountability SWF has employed the rules and regulation
of GAAP & IFRS. However, still there are some challenges which are faced by Sovereign wealth
fund in relation to the adoption of accounting standards. Moreover, SWF need assurance of
international accounting standard board with the aim to ensure that standard setting process is free
25

from the undue influence and politicization maneuvers. In this way, IFRS adoption is highly time
consuming process.
Along with this, it also has been assessed that changing culture and system of regulation
creates problem in front of Sovereign wealth fund regarding the adoption of accounting rules and
regulations. Moreover, for this purpose, it is highly required for Angola to reform its regulatory,
legal and economic structure to maintain accountability. Due to this, Sovereign wealth fund has to
invest money for organizing the training session. The reason behind this is changing rules and
regulations of IFRS. In this regard, to provide information to the auditors, investors, accountants
and users of financial reports about the amended rules and regulations Sovereign wealth fund
conducts training session. This aspect imposes high level of cost in front of SWF and thereby
affects their profitability aspect.
In addition to this, effective communication between the investors or stakeholders and SWF
is highly required in relation to the changes which take place in IFRS. Moreover, in the absence of
effectual communication it is not possible for the users of financial statements to interpret and
understand the accounting information the right direction. Thus, in the situation of ineffective
communication there is the possibility that financial statement users will raise question in relation to
the performance aspect of SWF. Further, it also has been analyzed that the legal system of the
country must be in line with the new IFRS standards because they are directly associated with the
application of laws and tax issues. Moreover, in the absence of such alignment SWF would not be
able to maintain accountability and comparability aspect in the financial statements.
Besides this, enforcement and compliance issues are the major factors which directly
influence the accountability aspect of Sovereign wealth fund. Moreover, in IFRS varying level of
rules and regulations are prevailed. In this regard, company can maintain sound accountability only
when it follows all the rules and regulations of IFRS. Thus, it is also the main aspects which
creates problem in front of SWF. Weak institution and enforcement agencies is another major issue
which is highly associated with IFRS. Hence, still there are some deficiencies present in IFRS
which closely affects the accountability, comparability and reliability aspects of the information
disclosed by SWF.
26

CHAPTER 5: CONCLUSION AND RECOMMENDATIONS
Conclusion
From this dissertation it has been concluded that SWF has provided high level of support to
the government of Angola. Moreover, both the entities work for the achievement of similar
objectives such as growth and development of Angola region. Hence, it can be said that SWF plays
a vital role in making value addition in the money by investing fund in the varied securities such as
bonds, equities, real estate and other assets. In the present era, living standard of the people of
Angola region is significantly increased from the contribution made by Sovereign wealth fund. This
aspect clearly shows that several efforts were made by SWF for the improvement and development
of Angola region. From data analysis, it also been articulated that Sovereign wealth fund follows
Further, it can be stated that Sovereign wealth fund is the strongest financial player which
performs activities at global level. It can be seen in the thesis that SWF places high level of
emphasis on the promotion of growth, prosperity, social and economic development of Angola
region. For the attainment of such objective institution invests fund in varied projects such as
agriculture, mining, infrastructure and real estate. Besides this, it can be revealed from the
dissertation that SWF makes portfolio for getting the high return from the money invested by it.
Moreover, portfolios reduce the risk of high loss to the large extent because it includes large number
of securities on it.
It also has been articulated that now SWF institution considers both public and private sector
securities in the portfolio. Moreover, now private sector companies are growing with the very high
pace. Thus, there is high possibilities that value of assets and securities will also grow in the near
future which belongs from the private sector companies. Hence, by taking into consideration such
aspect portfolio has been developed by SWF to diversify the risk aspect to the significant level. By
taking into consideration such aspect it can be said that SWF has made its best possible efforts with
the aim to fulfil its goals and objectives in relation to the growth as well as development of Angola
region. It can be stated from the investigation that in the past years sovereign wealth fund has faced
several problems in terms of financials and others.
Besides this, It also can be concluded that at the time of financial crisis such as 2008 SWF
faced tough situation. Moreover, during this period institution failed to get enough amount of profit
which is planned by it. In the accounting year 2008, all the assets stopped to grow which were
estimated by the firm. It is one of the main cause due to which firm failed to get the desired level of
outcome or success in the recent past. On the contrary to it, in the recent times, SWF institution
prepares framework by taking into account the situation of failure faced by it in the past years.
27

Further, now institution develops strategies by considering the financial statements prepared by it
according to IFRS and GAAP. This in turn helps SWF in preparing highly realistic framework for
decision making. This is one of the main aspects which provide high level of assistance to
Sovereign wealth fund in performing in a better way.
Recommendations
 It is recommended to SWF to make focus on developing effectual plan which helps it in
persuading the users of financial statements about the amendments take place in IFRS. For
this purpose, Sovereign wealth fund needs to conduct workshop, seminar and conferences to
facilitate proper communication with the users of financial statements.
 Sovereign wealth fund should follow the updated generally aspected principles so that
changes can be implemented on right time. It facilitates to ensure smooth operation of fund
so that associated parties can be satisfied with increased rate of return. Furthermore, focus
should be laid on developed and developing sector.
 At the same time, diversification should be concentrated so that risk factors can be
minimized to significant level. It proves to be effective for investors to get higher return
because diverse areas tend to generate good amount of return. Apart from this, safe
investment can be made by selecting sectors like real estate, hotels and infrastructure which
generally move in the upward direction. It can be also be suggested for fund management to
define governance structure in an effectual manner so as to ensure independent operation on
behalf of government.
 Apart from this, risk bearing capacity should be aligned with investment mandate n order to
generate positive attitude among investors. Thus, professional management skills can be
imparted to workforces who are associated in sovereign wealth fund.
28

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