- SNA, 2008, paras. 2.27-2.30.
- SNA, 2008, paras. 2.33-2.35.
- SNA, 2008, para. 2.47.
The conceptual elements of ASNA
Institutional units and sectors
2.3 In 2008 SNA, the basic unit for which economic activity is recorded is the institutional unit. An institutional unit is an economic entity that is capable, in its’ own right, of owning assets, incurring liabilities and engaging in economic activities and transactions with other entities. In the Australian system, the legal entity unit is closest to the 2008 SNA concept of the institutional unit. However, in the ASNA, the unit used is the enterprise, which can be a single legal entity or a group of related legal entities that belong to the same institutional subsector. Four main types of institutional units are recognised in 2008 SNA and the ASNA: households, non-profit institutions, government units and corporations (including quasi-corporations).
2.4 Institutional units are grouped into institutional sectors according to their characteristics and institutional role. All households are allocated to the household sector. Corporations and quasi-corporations are allocated to the non-financial corporations sector or the financial corporations sector according to whether their predominant function is production of goods and non-financial services, or production of financial services. Government units are all allocated to the general government sector. The allocation of non-profit institutions depends on the nature of their operations. Those mainly engaged in market production are allocated to the relevant corporate sector. Those mainly engaged in non-market production are allocated to the general government sector if they are controlled and mainly financed by government; otherwise, they are allocated to the non-profit institutions serving households (NPISH) sector. In the ASNA, the NPISH sector is included in the household sector.
2.5 The various domestic sectors and subsectors include only resident institutional units. The concept of residency used in the ASNA is the same as the concept used in balance of payments statistics, and is based on the requirement that an institutional unit must have a centre of predominant economic interest in Australia's economic territory to be an Australian resident unit.
2.6 Further detail on institutional units and sectors is outlined in Chapter 4.
Transactions and other flows
2.7 Economic flows reflect the creation, transformation, exchange, transfer or extinction of economic value and involve changes in the volume, composition or value of assets and liabilities. In the national accounts, economic flows are divided between transactions and other flows. Transactions generally involve interactions by mutual agreement between institutional units, but also include certain events that occur within institutional units, such as consumption of fixed capital and some types of production for the unit's own use. Other economic flows are changes in the value or volume of assets and liabilities that arise from events other than transactions, such as mineral discoveries, catastrophic losses, depletion, write-offs, and growth of natural assets.
2.8 The 2008 SNA groups elementary transactions and other flows into a relatively small number of types according to their nature. They are:
- Transactions in goods and services (products) describe the origin (domestic output or imports) and use (intermediate consumption, final consumption, capital formation or exports) of goods and services. By definition, goods and services in the SNA are always a result of production, either domestically or abroad, in the current period or in a previous one. The term products is therefore a synonym for goods and services.
- Distributive transactions consist of transactions by which the value added generated by production is distributed to labour, capital and government and transactions involving the redistribution of income and wealth (taxes on income and wealth and other transfers). The SNA draws a distinction between current and capital transfers, with the latter deemed to redistribute saving or wealth rather than income.
- Transactions in financial instruments (or financial transactions) refer to the net acquisition of financial assets or the net incurrence of liabilities for each type of financial instrument. Such changes often occur as counterparts of non-financial transactions. They also occur as transactions involving only financial instruments. Transactions in contingent assets and liabilities are not considered transactions in the SNA.
- Other accumulation entries cover transactions and other economic flows not previously taken into account that change the quantity or value of assets and liabilities. They include acquisitions less disposals of non-produced non-financial assets, other economic flows of non-produced assets, such as discovery or depletion of mineral and energy resources or transfers of other natural resources to economic activities, the effects of non-economic phenomena such as natural disasters and political events (wars for example) and finally, they include holding gains or losses, due to changes in prices, and some minor items.²⁵
Assets and liabilities
2.9 The 2008 SNA (with the ASNA being consistent) states that:
- Assets and liabilities are the components of the balance sheets of the total economy and institutional sectors. In contrast to the accounts that show economic flows, a balance sheet shows the stocks of assets and liabilities held at one point in time by each unit or sector or the economy as a whole. Balance sheets are normally constructed at the start and end of an accounting period, but they can in principle be constructed at any point in time. However, stocks result from the accumulation of prior transactions and other flows, and they are modified by future transactions and other flows. Thus, stocks and flows are closely related.
- The coverage of assets is limited to those assets which are subject to ownership rights and from which economic benefits may be derived by their owners by holding them or using them in an economic activity as defined in the SNA. Consumer durables, human capital and those natural resources that are not capable of bringing economic benefits to their owners are outside the scope of assets in the SNA.
- The classification of assets distinguishes, at the first level, financial and non-financial (produced and non-produced) assets. Most non-financial assets generally serve two purposes. They are primarily objects, usable in economic activity and, at the same time, serve as stores of value. Financial assets are necessarily and primarily stores of value, although they may also fulfil other functions.²⁶
Products and producing units
2.10 Goods and services, also called products, are the result of production. They are exchanged and used for various purposes: as inputs in the production of other goods and services, as final consumption or for investment. Institutional units may produce a variety of products and therefore can be too heterogeneous in terms of their productive activity to provide useful information about industries. Hence 2008 SNA specifies the use of narrower units than institutional units for the purpose of providing statistics about production classified by industry.
2.11 The producing unit recommended in 2008 SNA is the kind-of-activity unit, which is a part of an institutional unit that engages in one productive activity. However, 2008 SNA also suggests that an alternative unit can be used, namely the establishment, which covers all productive activity at a single location.
2.12 In the ASNA, the producing unit is the type of activity unit (TAU), which is the largest unit within a business for which relevant accounts are kept, having regard for industry homogeneity. However, ASNA does not recognise an establishment unit as outlined in 2008 SNA.
2.13 In the ASNA, each TAU is classified to an industry that is defined in the ANZSIC06, which is based on the principles and classification structure set out in the United Nations' International Standard Industrial Classification of All Economic Activities (ISIC), Rev.4. ISIC is the industry classification that the 2008 SNA recommends for use in national accounts.
2.14 Further detail on products and producing units is outlined in Chapter 5.
Relationship with other conceptual frameworks
2.15 The national accounts are important for providing a framework for economic statistics. The accounts provide a conceptual framework for ensuring the consistency of the definitions and classifications used in different, but related, fields of statistics. It also acts as an accounting framework to ensure the numerical consistency of data drawn from different sources. Consistency between different statistical systems enhances the analytical usefulness of all the statistics involved. Therefore, the harmonisation of 2008 SNA and related statistical systems is a key feature of the system.
2.16 ASNA is also harmonised with other statistical systems: the balance of payments, government finance statistics, and monetary and financial statistics. Australia's balance of payments was updated and aligns with BPM6, which was updated simultaneously with the 2008 SNA. Australia's government finance statistics, which feed into the national accounts, align with the International Monetary Fund's revised GFSM released in 2014.
Rules of accounting
2.17 Fundamental to the national accounts is the measurement of economic activity within the economy, i.e. the recording of the transfer of products from one unit to another. 2008 SNA states:
… a distinction is made between legal ownership and economic ownership. The criterion for recording the transfer of products from one unit to another in the SNA is that the economic ownership of the product changes from the first unit to the second. The legal owner is the unit entitled in law to the benefits embodied in the value of the product. A legal owner may, though, contract with another unit for the latter to accept the risks and rewards of using the product in production in return for an agreed amount that has a smaller element of risk in it. Such an example is when a bank legally owns a plane but allows an airline to use it in return for an agreed sum. It is the airline that then must take all the decisions about how often to fly the plane, to where and at what cost to the passengers. The airline is then said to be the economic owner of the plane even though the bank remains the legal owner. In the accounts, it is the airline and not the bank that is shown as purchasing the plane. At the same time, a loan, equal in value to payments due to the bank for the duration of the agreement between them is imputed as being made by the bank to the airline.²⁷
2.18 The 2008 SNA and ASNA accounting rules cover the valuation, time of recording and grouping by aggregation, netting and consolidation of individual stocks and flows.
2.19 All entries in the national accounts should be recorded at the market price current at the time of recording. The appropriate value for exchanges of goods and services is generally the transaction price. Where no transaction price is available, reference is made to the market value of similar goods and services. When no market prices of equivalent goods and services are available, the goods and services are valued at cost. By convention, all non-market goods and services produced by government units and non-profit institutions are valued at cost. Some goods are valued by writing down (depreciating) the initial acquisition costs. Where none of the foregoing methods is feasible, use can be made of the present value of expected future returns. However, this method is not generally recommended.
2.20 2008 SNA recommends that all economic flows be recorded in the national accounts on an accrual basis (i.e. when economic value is created, transformed, exchanged, transferred or extinguished). Accrual recording ensures that economic events are recorded consistently and without distortion arising from leads and lags in accompanying cash flows. In general, use of accrual recording means that:
- flows involving change of ownership are recorded when ownership changes;
- services are recorded when provided;
- distributive transactions, which are those associated with the distribution of income to owners of the factors of production, are recorded as amounts payable accumulate;
- interest is recorded as it accumulates rather than when it falls due for payment;
- output is recorded as production takes place; and
- intermediate consumption is recorded when goods and services are used
2.21 For the most part a strict accrual basis of recording is applied in the ASNA, although special procedures are sometimes required to estimate certain flows on an accrual basis.
2.22 In the national accounts, data are recorded in aggregates (i.e. the sums of the values of stocks and flows of a given type such as total output) and balancing items (i.e. the differences between aggregates on each side of an account or between other balancing items such as saving). A degree of netting is employed in the national accounts in as much as transactions with opposite sign are often combined (e.g. acquisitions and disposals of financial assets are recorded as 'net acquisitions'). Consolidation refers to the elimination of transactions between units in the same sector or subsector from aggregates. In the ASNA, consolidation is generally confined to transactions within establishments, to transfers between institutional units within the general government and household sectors, and to transactions in used fixed assets within sectors. In contrast to 2008 SNA, property income flows within institutional sectors and sectoral (or subsectoral) transactions in financial instruments are consolidated in ASNA. Transactions between establishments of the same enterprise are generally not consolidated, however transactions in financial instruments and related income flows are fully consolidated.
2.23 National accounting is based on the principle of double entry as in business accounting. Each transaction must be recorded twice, once as a resource (i.e. income) and once as a use (i.e. expense). The total of transactions recorded as resources and as uses must be equal, thus permitting a check on the consistency of the accounts. Economic flows that are not transactions have their counterpart directly as changes in net worth. The recording of the consequences of an action as it affects all units and all sectors is based on a principle of quadruple entry accounting, because most transactions involve two institutional units. Correctly recording the four flows involved ensures full consistency in the accounts.
2.24 Further detail on accounting rules is available from Chapter 3.