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Q333
A UK local authority, which is governed by The Local Government Act 2003, want to make an investment of surplus funds in a non-approved investment.The level of the proceeds from the investment that have to be set aside as provision for credit liabilities (PCL) is ______%
Answer in the book:
The level of the proceeds from the investment that have to be set aside as provision for credit liabilities (PCL) is 75%.Doubt:
I am unable to understand this. Sir, please explain this with the help of a suitable example.Public sector organisations, like a UK local authority, are subject to investment rules to safeguard the public funds they are entrusted with. Eg a certain minimum proportion has to be invested in very safe ways. The remainder can be invested in more risky ways ie into non-approved funds.
I don’t think the syllabus requires any more knowledge that – certainly not the provisions of The Local Government Act 2003, a very piece of UK law. The Kaplan syllabus make no reference to this act and I think the question has got into the bank by mistake.
Ignore it!
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