5514.0.55.001 - Australian System of Government Finance Statistics: Concepts, Sources and Methods, 2003  
Previous ISSUE Released at 11:30 AM (CANBERRA TIME) 10/10/2003   
   Page tools: Print Print Page Print all pages in this productPrint All RSS Feed RSS Bookmark and Share Search this Product  

INTRODUCTION

7.3. The IMF GFS standard is described in Appendix 2 and the system of national accounts (SNA93) with which the IMF system is harmonised in Appendix 1. As noted in chapter 1, the current IMF system is a revised version of the initial (1986) cash-based system and was published in December 2001. Australia’s GFS system follows the conceptual basis of the revised IMF standard but includes minor variations in the way the statistics are presented. The system can nevertheless be used by the ABS to provide the IMF with international government finance statistics that are in full accordance with the revised IMF standard.


SCOPE

7.4. The IMF manual provides detailed guidance for compilation of data for the general government sector, whereas Australia’s GFS system covers the entire public sector. The IMF manual describes the components of the public sector and notes that analysts may wish to compile statistics for the public sector and/or its components, but does not provide very detailed sector-specific guidance on such compilations. Australia has opted to compile statistics for the widest possible coverage of government operations recommended by the IMF.

7.5. The 1986 IMF standard related mainly to general government, but additional guidance was provided on compilation of statistics for the non-financial public sector (i.e. the combination of general government and public non-financial corporations). The previous ABS system, which was based on the 1986 standard, initially covered the non-financial public sector and was later extended to cover the public sector by the introduction of public financial corporations to the analysis. The principles that applied to non-financial corporations were readily extended to public financial corporations.

7.6. In the absence of a detailed IMF standard for the public sector the ABS has used (with essential adaptations) the IMF’s revised general government standard, taking into account the principles underlying SNA93 and those previously applied in compilation of data for the non-financial public sector. The specific requirements of users, including the ASNA, have also influenced the design. The discussion in this chapter is necessarily restricted to comparison of the revised IMF standard with Australia’s GFS system as it relates to the general government sector.

7.7. The IMF standard provides for compilation of statistics about ‘quasi-fiscal activities’ (QFAs) and ‘non-government activities’ (NGAs) to supplement statistics for the general government sector. QFAs are government-type functions carried out by units outside the general government sector (e.g. policy-motivated loans or advances made by public financial corporations). NGAs are non-government activities carried out by units of the general government sector. The compilation of statistics on QFAs and NGAs is intended to enable derivation of data relating to all government activities and excluding all non-government activities (i.e. ‘government’ defined on a functional rather than a unit basis). Data for QFAs and NGAs are not compiled in Australia because they are not considered of sufficient importance here to warrant such compilation. In any case, because Australia’s GFS system covers the whole of the public sector, it effectively covers most QFAs (i.e. those performed by public corporations) that might occur. Furthermore, most potential NGAs have been included in quasi-corporations (see paragraph 7.9), which are treated as public corporations outside of the general government sector.


UNITS AND UNITS CLASSIFICATIONS

7.8. The basic unit in the IMF GFS standard is the institutional unit, which is defined in the same way as the unit of the same name in SNA93 (i.e. as an entity capable, in its own right, of owning assets, incurring liabilities and engaging in economic activities and in transactions with other units). As noted in chapter 2, the enterprise unit used in Australia’s GFS system is effectively equivalent to the institutional unit. Although an enterprise can consist of a group of related legal entities, grouping of legal entities generally does not occur in the general government sector.

7.9. The concept of quasi corporations which is applied in SNA93 is also applied in the IMF GFS standard. Application of the concept effectively reduces the scope of the general government sector by excluding government market entities that operate like corporations. In Australia’s GFS system , the same concept is applied, resulting in the classification of the quasi-corporations as non-financial or financial corporations rather than as government units.

7.10. The IMF manual recommends that government finance statistics be presented for subsectors of the general government sector. A maximum of four subsectors is recommended: central government, state government, local government, social security funds. With the exception of social security funds, which do not exist in Australia, the subsectors coincide with Australia’s level of government classification. Social security funds are institutional units which provide social benefits to the entire community, or large sections of it, through a social insurance scheme which generally involves compulsory contributions by participants. The IMF standard does not include the concepts of jurisdictions and of multi-jurisdictional units that are applied in Australia and therefore does not have a concept of national government, which is the combination of the central government and multi-jurisdictional units.

7.11. As previously noted, the IMF standard is restricted to the general government sector. The definition of the general government sector that is applied in the IMF standard is the same as in SNA93. The same definition is also applied in Australia's GFS system.


FLOWS, STOCKS AND ACCOUNTING RULES

7.12. The IMF standard includes the same definitions of economic stocks and flows, and of transactions and other economic flows, as are applied in SNA93. Australia’s GFS system applies identical concepts. The double-entry accounting model followed in the IMF standard is also applied in the Australian system. The IMF recommends full consolidation of flows and stock holdings between units contributing to the same aggregates, which is the practice followed in Australia's GFS system.

7.13. The Australian system employs an accrual basis of recording that is defined in much the same way as the accrual system employed in the IMF standard. The IMF standard provides guidelines on accrual recording of specific types of transactions, including taxes, grants, dividends, transactions in non-financial assets, inventories and financial assets. In Australia’s GFS system, the accrual practices adopted in government accounting systems are the starting point of recording GFS on an accrual basis. These practices may depart from the IMF guidelines in matters of detail but generally follow the principles underlying the IMF guidelines. The ABS adjusts the accounting data where material departures from the IMF principles come to notice.

7.14. In accordance with SNA93, the IMF standard states that, in general, all flows and stocks should be valued at market prices. The standard provides guidelines on how market values of flows and stocks might be estimated if not directly available from accounting records. In Australia’s GFS system, for practical reasons, valuations recorded in government accounts are generally accepted without any attempt to convert non-market values to market values. Market values are recorded for most transactions, but for many types of stocks the recorded values are not market values. As a result, recording of revaluations is effectively delayed until reviews of asset and liability values are undertaken.

7.15. Contingencies are defined by the IMF as conditions that may affect the financial performance or position of the government depending on the occurrence or non-occurrence of future events specified in the contingency contract. A government guarantee of a loan is quoted as an example. The IMF standard requires that contingencies be excluded from recorded stocks and flows, but states that important contingencies should be reported in memorandum items. Contingencies, as defined by the IMF, are excluded from recorded stocks and flows but, to date, the ABS has not adopted the IMF recommendation that important contingencies should be reported in memorandum items.


ANALYTICAL FRAMEWORK

7.16. Given the pace at which accrual accounting was being adopted by Australian governments, the ABS had to develop its revised GFS framework ahead of the IMF, using SNA93 and the 1986 version of the IMF manual as references. The ABS GFS framework is the same as the IMF framework in all conceptual respects, but differs slightly in terms of structure, presentation and level of classificatory detail. It incorporates the recommended integration of economic stocks and flows that is achieved by application of the following identity:

(1) Value of opening stocks

plus

(2) Value of transactions

plus

(3) Value of revaluations and other economic flows

equals

(4) Closing value of stocks.

7.17. The financial statements recommended in the IMF standard and the corresponding statements in Australia’s GFS system are set out in table 7.1 below.

7.1. COMPARISON OF FINANCIAL STATEMENTS IN IMF STANDARD AND AUSTRALIA’S GFS SYSTEM
IMF Standard StatementCorresponding Statement in Australia's GFS System

Government operations tableOperating statement
Statement of sources and use of cashCash flow statement
Statement of other economic flowsStatement of stocks and flows (part)
Balance sheetBalance sheet


7.18. The statements in the IMF and Australian GFS systems cover the same economic flows and stocks and there are only the minor differences in terminology and arrangement of the statements evident in table 7.1 The Australian system includes a statement of stocks and flows that is not included in the IMF system and includes, among other things, the information that is recorded in the IMF statement of other economic flows, which is therefore not required in the Australian system. There are also differences between the degrees of detail presented in the statements in the two systems. In the following tables, items in the various IMF GFS statements are listed in the left-hand column and items in Australia’s GFS system that correspond to the listed IMF items are listed in the right-hand column, irrespective of the Australian GFS statement from whence they come.


IMF GOVERNMENT OPERATIONS TABLE

7.19. Of the basic elements included in the IMF government operations table (i.e. revenue, expense, transactions in non-financial assets, transactions in financial assets and liabilities) the Australian operating statement covers all except transactions in financial assets and liabilities. In the Australian system, details of transactions in financial assets and liabilities are included in the statement of stocks and flows. The broad items covered in the IMF government operations table and the corresponding items in the Australian system are shown in table 7.2.

7.2. COMPARISON OF ITEMS IN IMF GOVERNMENT OPERATIONS TABLE AND AUSTRALIA’S GFS SYSTEM
Items in IMF Government Operations TableCorresponding item in Australia's GFS System

TRANSACTIONS AFFECTING N ET WORTH
RevenueGFS Revenues
TaxesTaxation revenue
Social contributions}
GrantsCurrent grants and subsidies, sales of goods and services, interest income, other revenue
Other revenue
ExpenseGFS Expenses
Compensation of employeesEmployee expenses
Use of goods and servicesOther operating expenses (part)
InterestOther interest expenses
SubsidiesSubsidy expense
GrantsCurrent grant expenses, other current, transfers, capital grants
Social benefits}Other property expenses, other operating expenses (part)
Other expenses
Gross operating balanceNot recorded as such, but can be derived
Consumption of fixed capitalDepreciation
Net operating balanceGFS net operating balance
TRANSACTIONS IN CAPITAL ASSETS
Net acquisition of capital assetsNet acquisition of non-financial assets
Fixed assetsGross fixed capital formation less depreciation
Change in inventoriesChange in inventories
Valuables}Other movements in non-financial assets
Non-produced assets
Net lending/borrowingGFS net lending(+)/borrowing(-)
TRANSACTIONS IN FINANCIAL ASSETS AND LIABILITIES
Net acquisition of financial assets on a non-market basisAdvances paid
Policy balanceNot recorded as such, but can be derived
Net acquisition of financial assets for liquidity management purposesTotal net result of transactions in financial assets less advance paid
Net incurrence of liabilitiesTotal net result of transactions in liabilities
DomesticNot recorded separately
AbroadNot recorded separately


7.20. The table does not show an expense item that is included in the Australia’s GFS system but has no equivalent in the IMF system. The item, ‘nominal superannuation interest expenses’ arises because actuarially determined changes to unfunded superannuation liabilities are split into an interest component as well as compensation of employees. The IMF standard does not call for estimation of nominal interest on unfunded superannuation liabilities.

7.21. In the Australian system, for reasons given in paragraph 2.154 and repeated in paragraph 7.62, the accounting measure of depreciation is used, whereas the IMF system uses the national accounting measure of consumption of fixed capital. While the two items are the same in concept, differences in the values recorded for them arise because of measurement differences.

7.22. The gross operating balance in the IMF system is equal to total revenue less all expenses other than consumption of fixed capital. It is not recorded in the Australian system, but can be derived as the GFS net operating balance plus depreciation.

7.23. The policy balance is not recorded as such in the Australian system, but can be derived as net lending(+)/borrowing(-) less advances paid.


IMF STATEMENT OF SOURCES AND USE OF CASH

7.24. Table 7.3 lists the items in the IMF statement of sources and uses of cash and shows the items in the Australian system that correspond to the IMF items. All of the Australian GFS items which correspond to items in the IMF statement of sources and uses of cash are recorded in the Australian GFS cash flow statement.

7.3. COMPARISON OF ITEMS IN IMF STATEMENT OF SOURCES AND USE OF CASH AND AUSTRALIA’S GFS SYSTEM
Items in IMF Statement of Sources and Use of CashCorresponding items in Australia's GFS System

REVENUE AND EXPENSE TRANSACTIONS
RevenueCash receipts from operating activities
ExpenseCash payments for operating activities
Net cash received from current operationsNet cash flows from operating activities
TRANSACTIONS IN CAPITAL ASSETSNet cash flows from investments in non-financial assets
Disposals of capital assetsSales of non-financial assets
Acquisitions of capital assetsPurchases of new non-financial assets, purchases of second-hand non-financial assets
Net cash received from transactions in capital assetsNot derived
TRANSACTIONS IN FINANCIAL ASSETS AND LIABILITIES
Disposals of financial assets and liabilities on a non-market basis}Net cash flows from investments in financial assets for policy purposes
Acquisition of financial assets on a non-market basis
Incurrences of liabilities and disposals of financial assets for liquidity management}Net cash flows from investments in financial assets for liquidity purposes, net cash flows from financing activities
Liquidations of liabilities and acquisition of financial assets for liquidity management
Net cash from financing transactionsNot derived
Net change in cash balanceNet increase/decrease in cash held
SELECTED CASH-ACCRUAL RECONCILIATION ITEMS
Change in taxes receivableIncrease in receivables and investments (part)
Change in unpaid tax refunds}Increase in payables and borrowings
Change in accounts payable, including with respect to transactions in capital assets
In kind revenue and expense transactions}Assets acquired below fair value, assets donated, increase in other non-cash items
In kind transactions in capital assets


7.25. Table 7.3 indicates that Australia’s GFS system covers essentially the same categories that are included in the IMF statement of sources and use of cash, but many of the items are arranged, named and classified differently

7.26. Not reflected in this table is the fact that the Australian system disaggregates cash receipts and payments relating to operating activities as follows:
  • Cash receipts from operating activities:

    Taxes received;

    Receipts from the sale of goods and services;

    Grants and subsidies received;

    Other receipts.
  • Cash payments for operating activities:

    Payments for goods and services;

    Grants and subsidies paid;

    Interest paid;

    Other payments.

7.27. In the Australian system, the term ‘financing’ is used to denote cash receipts from liabilities incurred, whereas in the IMF system ‘financing’ refers to all transactions in financial assets and liabilities.

7.28. In the Australian GFS system, a reconciliation is made between cash and accrual items at the input level, but the reconciliation items are not included in the cash flow statement as in the IMF system.


IMF STATEMENT OF OTHER ECONOMIC FLOWS

7.29. As previously noted, the IMF system includes a statement of other economic flows which is not required in the Australian system because the items are recorded in the columns for revaluations and other changes in the volume of assets in the Australian statement of stocks and flows. The Australian GFS items corresponding to items in the IMF statement of other economic flows are shown in table 7.4.

7.4. COMPARISON OF ITEMS IN IMF STATEMENT OF OTHER ECONOMIC FLOWS AND AUSTRALIA’S GFS SYSTEM
ITEMS in IMF Statement of Other Economic FlowsCorresponding items in Australia's GFS System

Change in net worth from other economic flowsChanges in net worth from revaluations and other changes
Changes in capital assetsChanges in non-financial assets
RevaluationsRevaluations
Other changes in volumeOther changes
Changes in financial assetsChanges in financial assets
RevaluationsRevaluations
Other changes in volumeOther changes
Changes in liabilitiesChanges in liabilities
RevaluationsRevaluations
Other changes in volumeOther changes


7.30. As can be seen from table 7.4, all of the items in the IMF statement of other economic flows have a corresponding item in Australia’s GFS system, although some of the items are named a little differently. In both systems, information in each of the asset categories and the liabilities category can be further disaggregated according to types of assets and liabilities.


IMF BALANCE SHEET

7.31. Items in the balance sheet of the IMF GFS system are listed in table 7.5 together with corresponding items from Australia’s GFS system, all of which come from the balance sheet and the statement of stocks and flows.

7.5. ITEMS IN IMF BALANCE SHEET AND CORRESPONDING ITEMS IN AUSTRALIA’S GFS SYSTEM
Items in the IMF Balance SheetCorresponding items in Australia's GFS System

Capital assetsNon-financial assets
Fixed assetsLand and other fixed assets
Inventories}
ValuablesOther non-financial assets
Non-produced assets
Financial assetsFinancial assets
Acquired by non-market means}Advances paid
Equities
Central bank
Other financial corporations
Non-financial corporations
Financial assets other than equities
Acquired for liquidity management}Cash and deposits, investments loans and placements, other non-equity assets, equity.
Central bank
Other financial corporations
All other units
LiabilitiesLiabilities
Domestic}Deposits held, advances received, borrowing, unfunded superannuation liability, other employee entitlements and provisions, other non-equity liabilities.
Central bank
Other financial corporations
All other units
Foreign
General government
All other units
Net financial worthNet financial worth
Net worthNet worth


7.32. As evident from table 7.5, the main difference between Australia’s GFS system balance sheet and the IMF balance sheet is the classification of financial assets and liabilities. The Australian system uses only a classification based on financial instruments, whereas the IMF system uses a classification that is based on the nature of the debtors (in the case of financial assets) and creditors (in the case of liabilities). The IMF system also provides for an alternative classification of financial assets and liabilities by type of financial instrument. In Australia, data for such classifications of financial assets and liabilities of the public sector are more readily available from the ASNA financial account, which is the source currently used for reporting to the IMF on stocks and flows of financial assets and liabilities so-classified.

7.33. Among the financial instruments in the Australian system are two which have no equivalent in the IMF system. These are the liabilities entitled ‘unfunded superannuation liability’ and ’other employee entitlements and provisions’. The IMF manual and SNA93 (see SNA93, paragraph 13.88) do not treat these obligations to pay future benefits as liabilities because there is not a pool of assets accumulated from which to pay the benefits. Both manuals recommend that estimates of the liabilities should be reported in memorandum items, rather than recorded in the balance sheet. However, in Australia, such obligations are deemed to be liabilities and information on the value of the liabilities is readily available in public sector accounts. Accordingly, the liabilities are included in the balance sheet in Australia’s GFS system and the ASNA.


Previous PageNext Page