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Task Force on Harmonisation of Public Sector Accounting

Task Force on Harmonisation of Public Sector Accounting. Progress Report OECD Working Party on National Accounts (Paris, 13 October 2004). TFHPSA: raison d’être, objectives.

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Task Force on Harmonisation of Public Sector Accounting

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  1. Task Force on Harmonisation of Public Sector Accounting Progress Report OECD Working Party on National Accounts (Paris, 13 October 2004)

  2. TFHPSA: raison d’être, objectives • October 2003: creation in Paris (several international organisations: OECD, IMF, Eurostat, ECB, IFAC–Public 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

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