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5517.0 - Information Paper: Accruals-based Government Finance Statistics, 2000  
Latest ISSUE Released at 11:30 AM (CANBERRA TIME) 13/03/2000   
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Contents >> Chapter 4. Impact of changes


4.1. The move from cash based GFS to accrual GFS will have a significant impact on the statistical time series presented in ABS publications. This chapter describes how the change in accounting basis will affect the nature of published GFS time series. Firstly, it describes the broad methodology used to compile both cash based GFS and accrual GFS. Next, it outlines the differences between the two. Finally, this chapter describes how the change in methodology impacts on the GFS time series.

CASH BASED GFS

4.2. The cash based GFS was compiled on the basis of SNA (1968 edition) and the IMF’s A Manual on Government Finance Statistics (1986 edition). The 1986 IMF standard recommends that a cash basis of accounting should be adopted for the general government sector as, historically, most governments have recorded their public accounts on a cash basis. It also recommends that an accruals basis of accounting should be adopted for public non-financial corporations as these entities engage in market operations and their activities are best recorded on a commercial accounting basis. In consolidating the two sectors, information for public non-financial corporations should be adjusted to an approximate cash basis.

4.3. The broad methodology employed by the ABS to produce cash based GFS consisted of compiling:

      • general government data, including the Deficit/Surplus, on a cash basis;
      • public non-financial corporations data on an accrual basis, with the Deficit/Surplus on an approximate cash basis; and,
      • the Deficit/Surplus for the consolidated non-financial sector on an approximate cash basis.

4.4. A limited number of adjustments were made by the ABS to convert accrual data to an approximate cash basis in the process of compiling the consolidated information for the non-financial public sector. These adjustments mostly related to income transfers, direct taxes, subsidies and provisions.

4.5. The Deficit/Surplus was calculated by subtracting revenues and increase in provisions from outlays. Increase in provisions is an accrual item, representing internally generated funding, and as such was excluded from financing in the calculation of a Deficit/Surplus measure. However, because of poor data quality, adjustments for other accrual items such as changes in trade payables and receivables were not included in the calculation of this measure. Therefore, the accrual data was converted to an approximate cash basis rather than a strict cash basis. A Deficit/Surplus series compiled on this methodological basis is available for the period 1961–62 to 1997–98.


ACCRUAL GFS

4.6. In recent times, most governments have shifted from cash to accrual reporting which has enabled them to determine the real cost of their operations. This shift has supported the introduction of an accrual based system for GFS, with major non-cash items such as consumption of fixed capital and unfunded superannuation being included in the cost of government operations.

4.7. Under the revised GFS system, data for the general government, public non-financial corporations and public financial corporations sectors are compiled on an accruals basis within the framework of an operating statement and a balance sheet. Cash data for these sectors are also compiled from accompanying cash flow statements. Key economic measures derived in accrual GFS include the Net Operating Balance and Net Lending/Borrowing from the operating statement, Increase in Net Worth from the balance sheet and the Surplus/Deficit from the cash flow statement.

DIFFERENCES BETWEEN CASH BASED GFS AND ACCRUAL GFS

4.8. Table 4.1 summarises the main differences for each GFS sector between cash GFS and accrual GFS.

4.1. MAIN DIFFERENCES BETWEEN CASH BASED GFS AND ACCRUAL GFS
GFS sectorCash based GFSAccrual GFSMain differences

General governmentOutlays and revenues compiled on a cash basis. Revenues and expenses compiled on an accrual basis. Revenues and expenses compiled on an accrual basis.
Deficit(+)/surplus(–) compiled on a cash basis. Surplus(+)/deficit(–) compiled on a cash basis from the cash flow statement.Surplus(+)/deficit(–) compiled on a cash basis from the cash flow statement.
Partial balance sheet (selected financial assets and liabilities).
Full balance sheet. Full balance sheet.
Public non-financial corporationsOutlays and revenues compiled on an accrual basis. Revenues and expenses compiled on an accrual basis. Revenues and expenses compiled on an accrual basis.
Deficit(+)/surplus(–) compiled on an approximate cash basis. Surplus(+)/deficit(–) compiled on a cash basis from the cash flow statement. Surplus(+)/deficit(–) compiled on a cash basis from the cash flow statement.
Partial balance sheet (selected financial assets and liabilities).
Full balance sheet Full balance sheet
Public non-financial corporationsOutlays and revenues compiled on an accrual basis. Revenues and expenses compiled on an accrual basis. Revenues and expenses compiled on an accrual basis.
Deficit(+)/surplus(–) compiled on an approximate cash basis. Surplus(+)/deficit(–) compiled on a cash basis from the cash flow statement. Surplus(+)/deficit(–) compiled on a cash basis from the cash flow statement.
Partial balance sheet (selected financial assets and liabilities).Full balance sheet.Full balance sheet.


IMPACT ON STATISTICAL TIME SERIES

4.9. The move from cash based GFS to accrual GFS will have a significant impact on the statistical time series presented in ABS publications. Most significant is the introduction of an accrual GFS time series from 1998–99 with the key aggregates being the Net Operating Balance, Net Lending/Borrowing and Increase in Net Worth.

4.10. To provide users with some measure of continuity, a Surplus/Deficit series will be retained. However, users need to take into account the break in series. Cash data prior to 1998–99 are not directly comparable with data for 1998–99 onwards due to the different method of compilation and different data sources adopted by some jurisdictions. The ABS has not established a quantitative measure of this break in series because the existing data sources do not permit this.

4.11. It should be noted that a Net Debt series will still be available with no break due to the change in accounting basis. The method of compilation will remain the same as it was for the previous FALS series.





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