LOF, State as shareholder and IFRS: towards integrated public financial governance

Introduction

In Morocco, public financial governance is no longer limited to the state budget. A significant portion of investment and the implementation of public policies relies on public institutions and enterprises (PIEs). The state therefore acts as strategist, regulator, financier, investor, and shareholder. This multifaceted role strengthens its capacity for action but can also fragment objectives, data, and accountability mechanisms.

The texts do not explicitly establish a single framework linking the Organic Law on Finance (LOF), the State Shareholding Policy (PAE), and IFRS. However, one possible interpretation of these reforms is to distinguish three complementary levels: the LOF for budgetary discipline, the PAE for the strategic management of the public portfolio, and IFRS for consolidated financial reporting. This analytical framework allows us to examine the conditions for more coherent governance of public performance, assets, and risks.

1. The LOF: distinguishing the current framework from the reform project

The current Organic Law No. 130-13 (LOF n° 130-13) established multi-year programming, program-based budgeting, performance projects and reports, and a general accounting system for the State based on the recognition of rights and obligations. It thus complemented the logic of authorizing appropriations with a requirement for results, transparency, and knowledge of the State's assets.¹.

The draft reform of the Organic Law on Finance (LOF) aims to further this trend. If adopted as announced, it should notably extend certain financial, budgetary, accounting, and performance rules to non-profit public institutions, strengthen the framework for the balance sheet and debt, enhance the medium-term budgetary framework, and increase parliamentary oversight. These guidelines, however, remain those of a draft.².

This potential development falls under macro-budgetary management. It must be distinguished from the IFRS consolidation conducted by the ANGSPE. The State's general accounting remains governed by the Organic Law on Finance (LOF) and its implementing regulations; the consolidated accounts of the State as a shareholder serve a separate purpose, focused on the investments and state-owned enterprises (SOEs) included in the consolidation scope.

2. The PAE: structuring the role of the State as a shareholder

Framework Law No. 50-21, Law No. 82-20 establishing the ANGSPE (National Agency for the Management of Public Enterprises), and Decree No. 2-24-1090 approving the PAE (Public Action Plan) have institutionalized the role of the State as a shareholder. This role is distinct from that of the State as an investor, which utilizes a broader range of instruments, and from that of the State as a regulator or responsible for a sectoral policy. This clarification aims to reduce conflicts of objectives and to make the reasons for public ownership more explicit.^{3 4}.

The fifteen pillars of the performance action plan focus in particular on shareholder objectives, the viability of business models, dynamic portfolio management, dividend policy, debt, public service obligations, complementarity with the private sector, and the professionalization of governance bodies. Expected performance cannot therefore be solely financial: it must incorporate service quality, socio-economic impact, territorial coverage, and risk management.

3. IFRS: an information infrastructure for the State as shareholder

Article 5 of Law No. 82-20⁴ expressly instructs the ANGSPE to prepare consolidated financial statements⁸ of the State as shareholder, providing a true and fair view of the assets and liabilities of state-owned enterprises, their financial position, and their results. The Agency's publications specify that the IFRS project undertaken also includes a consolidated presentation of cash flows (IAS 7).⁹. It is therefore necessary to distinguish between the legal content of the mission and the broader deliverables resulting from the IFRS project implemented by the ANGSPE.

This project concerns state-owned enterprises (SOEs) within the scope of the ANGSPE (National Agency for the Management of State-Owned Enterprises) and entities included in the consolidation scope of the State as a shareholder. It does not, in itself, establish a general obligation for all SOEs to prepare their financial statements in accordance with IFRS. Depending on their specific circumstances, entities must instead produce information, adjustments, and financial statements that meet the requirements of IFRS consolidation.

IFRS provides a financial information infrastructure useful for the economic and asset management of a portfolio, which must be supplemented by operational, social, territorial, and environmental indicators. They can improve comparability, risk assessment, and, subject to data quality and each entity's specific situation, contribute to strengthening investor confidence. This effect remains potential and does not automatically result from simply using the framework.⁶.

4. The chartered accountant: providing support without replacing the responsible bodies

Preparing public enterprises within the ANGSPE consolidation scope to produce financial information compliant with IFRS requirements goes beyond simple accounting conversion. It involves analyzing contracts, assets, commitments, estimates, information systems, and closing processes. However, the responsibility for accounting choices, estimates, internal control, and the finalization of financial statements remains with the management and governing bodies of the public enterprise.

In a support role, the chartered accountant can conduct a preparatory assessment, identify discrepancies between accounting standards, analyze available options and their implications, assist the public entity in preparing opening balance sheets and consolidation packages, and then adapt processes, data, and tools. Their role is to inform the decisions of the relevant bodies, not to replace them. They also contribute to team training, the documentation of estimates, and the establishment of a reliable audit trail.^{6 7}.

An audit or certification engagement must be clearly separated from consulting services. When the same professional or network is likely to be involved in both areas, the rules of independence, applicable incompatibilities, and the risk of self-review must be assessed before the work is accepted, along with the necessary safeguards.

This transformation is already underway within several public entities. Since the launch of the consolidation project for the State as a shareholder, AuditCloud Maroc has notably assisted certain public institutions and companies in preparing their first financial information in accordance with IFRS, including opening balance sheets, adjustments and the statements of account required for consolidation.

5. An integrated joint to be built

As a suggestion, the convergence of these mechanisms could be supported by an integrated annual public performance framework. This framework would bring together, for each strategic public enterprise, public policy objectives, budget allocations, public service obligations, financial trajectory, non-financial indicators, and key risks. Such a framework is not a mechanism provided for in current legislation; it is a proposed tool for coordination aimed at improving decision-making and accountability.

Consider the example of a public utility company (PUC) obligated to provide a service at a regulated tariff in areas where its cost is high. If this public service obligation is insufficiently contractualized or funded, its accounts may show a structural loss. IFRS reporting allows us to measure the effects of this loss on results, assets, and liabilities, but it cannot, on its own, determine whether the loss stems from inefficiency or a public policy choice. Integrated governance therefore requires quantifying the net cost of the obligation, setting service objectives, organizing compensation, and monitoring the results.

Conclusion

Morocco now has a solid foundation for strengthening the coherence of its public financial governance. The current Organic Law on Finance (LOF) organizes budgetary discipline and the State's general accounting; its reform project aims to broaden its scope. The Public Accounting Policy (PAE) provides an official doctrine for managing the public portfolio, while IFRS consolidation provides economic and asset-related information on the scope of the State as a shareholder. The proposed convergence is not an established legal framework, but a coordination mechanism. Its success will depend on data quality, the formalization of public missions through contracts, the complementarity of indicators, and a clear distribution of responsibilities among public enterprises, the National Agency for Public Finance (ANGSPE), government departments, and professionals.

Institutional and normative references

1. Kingdom of Morocco, Organic Law No. 130-13 relating to the Finance Law, promulgated by Dahir No. 1-15-62 of 14 Ramadan 1436 (July 1, 2015), Official Bulletin No. 6380 of July 30, 2015. Available at: lof.finances.gov.ma.
2. Ministry of Economy and Finance, Draft reform of the Organic Law relating to the Finance Law, Budget Directorate, consultation and presentation documents available on the official LOF portal. Available at: lof.finances.gov.ma.
3. Kingdom of Morocco, Framework Law No. 50-21 relating to the reform of public establishments and enterprises, promulgated by Dahir No. 1-21-78 of 14 Joumada I 1443 (December 19, 2021), Official Bulletin No. 7046 of December 20, 2021.
4. Kingdom of Morocco, Law No. 82-20 establishing the National Agency for the Strategic Management of State Holdings and for Monitoring the Performance of Public Institutions and Enterprises, promulgated by Dahir No. 1-21-18 of 5 Joumada II 1442 (January 19, 2021), Official Bulletin No. 6958 of February 18, 2021.
5. Kingdom of Morocco, Decree No. 2-24-1090 establishing the procedures for carrying out the missions of the National Agency for Strategic Management of State Holdings, Official Bulletin.
6. IFRS Foundation, IFRS Accounting Standards, London. Available at: ifrs.org.
7. National Agency for Strategic Management of State Holdings (ANGSPE), 2023 Annual Report, Rabat, 2024; ; 2024 Annual Report, Rabat, 2025; as well as institutional publications relating to the financial consolidation project of the State as shareholder, available on the Agency's website. Available at: angspe.ma.
8. Ministry of Economy and Finance, Official portal of the Organic Law relating to the Finance Law (LOF). Available at: lof.finances.gov.ma.
9. IFRS Foundation, IAS 7 – Statement of Cash Flows, IFRS Accounting Standards. Available at: IAS 7 – Statement of Cash Flows.

Published by AuditCloud Morocco.

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