Task Force on Harmonisation of Public Sector Accounting

1
Task Force on Harmonisation of Public Sector
Accounting

• Progress Report
• OECD Working Party on National Accounts (Paris,
  13 October 2004)

2
TFHPSA raison dêtre, objectives

• October 2003 creation in Paris (several
  international organisations OECD, IMF, Eurostat,
  ECB, IFACPublic sector committe)
• Harmonisation and convergence between
• - Accounting standards (IAS and IPSAS)
• and statistical manuals (SNA and GFS) WG1
• - Statistical frameworks and guidelines, in the
  context of SNA review for 2008 (SNA and GFS, ESA
  manual on deficit and debt -EMGDD) WG2
• Towards a chapter on GG accounts in the SNA

3
TFHPSA the start

• February 2004 1st meeting, in Paris (28
  participants)
• - Working group 1 Matrix of comparison of
  standards (IPSAS, GFS, ESA, EMGDD)
• - Working group 2 5 priority issues and 5
  working teams
• . Tax revenue and tax credits
• . Public/private/government sector delineation
• . Transactions with public corporations
• . Privatisation, restructuring agencies, SPVs
• . Contingent assets / government guarantees

4
The TFHPSA today

• 22-24 September 2004 2nd meeting, in Washington
  DC (40 participants)
• - enlargement of the TFHPSA basis more
  countries and international organisations
• - deeper into the issues and narrowing the focus
• - modifying the time frame for discussions due
  to
• . some issues may require conceptual changes
• . consider other inputs other bodies and
  recent set-up of the Eurostat task force (for
  ESA review)

5
Public accounting standards WG1

• The PSC, a body of IFAC, has produced 20 IPSAS
  (standard setting activity)
• Main focus of IPSAS on the consolidated public
  sector (not GG), based on the notion of control
• Working group 1 has agreed on a matrix of
  comparison of standards (accounting and
  statistics)
• Some convergence PSC agrees to recommend
  disclosure of GG statistics, takes on board the
  distinction between transactions and other flows

6
WG2 Tax revenue and tax credits

• Definition of tax revenue only a minor change to
  the core definition. More developments to
  distinguish with purchase of services, fees,
  leases etc.
• Implementation of accruals time of recording and
  amounts to be recorded need more guidance
• Tax credits nothing at present in the SNA.
• Need to borrow guidance from OECD, GFS

7
Government / public / private sector

• Notion of control  the capacity to govern the
  policy objectives of a unit 
• Economically significant prices
  (market/non-market distinction) can the ESA
  threshold (50 test) be taken over in the SNA?
  Reluctance outside Europe
• Cases of NPIs to be classified in GG
• The notion of  ancillary units 

8
Transactions between government and public
corporations

• The lack of guidance in the SNA (for capital
  injections, super-dividends, debt assumptions
  etc.) means inconsistency and possible irrelevant
  balancing items
• 3 recommendations
• R0 to bring only minor changes to the letter of
  the SNA (dropping reference to  transfers 
  etc.)
• R1 to take on board the EMGDD provisions on
  these issues
• R2 to apply the treatment recommended for
  foreign direct investment and reinvested earnings
  (D43) to accrue the profit or loss of the public
  corporation in the government account

9
Restructuring agencies and SPVs

• General issue of privatisation
• Complicated cases and issues securitisation,
  restructuring agencies, SPVs
• Case of SPVs
• - mostly financial institutions, classified in
  sub-sector S.123 or S.122
• - but may be ancillary units

10
Government guarantees

• Changes in the international context IPSAS19,
  public accounts in some countries (Sweden, UK,
  USA)
• Growing consensus most of guarantees produce
  economic and financial effects, and should be
  recorded as transactions, and in the balance
  sheet of GG
• Related issue the recording of provisions
• The case of export credit insurance

11
TFHPSA the next steps

• No proposal for decision at this stage
• December 2004 Progress report to the Advisory
  Expert Group (AEG for SNA review)
• February-March 2005 TFHPSA meeting in Paris
• October 2005 TFHPSA meeting in Washington
• November 2005 AEG meeting (decision on TFHPSA
  papers and proposals)
• February 2006 final TFHPSA meeting
• Output new chapter in SNA for Government sector