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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.
4.4. 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.
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.
4.8. Table 4.1 summarises the main differences for each GFS sector between cash GFS and accrual GFS.
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.