Outline of the control approach GNIC/332

Content of the presentation Purpose and structure of the document Focus on new or modified elements of the GNI OR verification framework Preliminary timetable for the GNI OR verification cycle

Purpose of the document to give an outline of the GNI OR verification process; to put together all elements and principles inherent to the verification process; to give references to the specific documents dealing with individual aspects of verification; to give more detailed information on those elements that are not dealt with in other GNIC documents.

Structure of the document Brief information on the legal framework Brief information on the annual verification of the data transmitted with the GNIQs and QRs Multiannual verification of sources and methods for GNI – individual elements and principles Preliminary timetable for the GNI OR verification cycle

Multiannual cycle – individual elements and principles GNI Inventories and Process Tables Risk assessment Use of expertise of other units in Eurostat Desk checks Cross country analyses of transversal issues GNI information visits, including direct verifications Mission reports and action points Reservations Principles (transparency, cost-effectiveness)

Multiannual cycle – what's new? GNI Inventories Slightly modified structure Contents defined in more detail More numerical evidence Stronger links with the Process Tables Coverage of most of the GIAQ questions Chapter 1 will be published separately and can be used for purposes other than the GNI verification

Multiannual cycle – what's new? Formalised risk assessment Aim: to assess the risks associated with the compilation of GNI OR in MS in order to: structure the GNI verification process in terms of the use of the available verification tools in the individual MS (part 1); define the list of high-risk transversal issues to be verified in all MS (part 1); identify those areas of GNI compilation in individual MS that should be considered for direct verification (part 2).

Multiannual cycle – what's new? Formalised consultations with other units in Eurostat utilisation of domain specific expertise formalise existing cooperation structures and incorporate them into a new structured approach two step approach areas having a key impact on the GDP/GNI have been identified and consulted

Areas with major impact on GNI 1) Balance of Payments Non-financial National Accounts (Main aggregates and Sector accounts) 3) Government Finance Statistics 4) International Trade in Goods Statistics 5) International Trade in Services Statistics 6) Foreign Direct Investment Statistics 7) Foreign Affiliates Statistics 8) Business Registers 9) Structural Business Statistics 10) Labour Force Survey 11) Household Budget Survey 12) Economic Accounts for Agriculture

Consultation: 2-Step-Approach Step 1: Identification of risky countries General subjective assessment of the risks in the respective domains (including the level of compliance) with relevant domain specific requirements using existing information and the colleagues’ knowledge about their constituency Step 2: Identification of particular risks More detailed interviews aiming at the identification of important and relevant shortcomings in sources and of major cases of non-compliance in individual Member States

Step 1: risky countries grouping of Member States into categories: low, medium or high risk Identification of particularly risky countries input for step 1 of GNI Risk assessment finalised mid-March

Step 2: Identification of particular risks interview of approximately 2hrs domain specific questions for each area re-use of already existing information (quality reports or assessments, non-compliance information, statistical working papers or recommendations) 2nd step will be one of the many elements that feed into the second stage of the risk assessment analysis for the GNI verification process ongoing

Follow up and future steps specifying questions for the GNI information visits; discussing the measures applied in national accounts to rectify the deficiencies in the source statistics; direct verification etc. If no appropriate measures are implemented by national accountants in the MS in order to rectify the identified deficiencies in the sources, GNI reservations may be placed No request to MS to rectify the source

Timetable Action Timing DM Meeting 10th February 2016 Kick-off meeting with involved units End - February 2016 Consultation: (Step 1) 8 March 2016 More detailed interviews (Step 2) April - June 2016 Inclusion of the outcome of the first step in the GNI risk assessment End - March 2016   Presentation at the GNI Committee meeting (incorporation of the results into the GNI verification process) 21st -22nd April 2016 Inclusion of the outcome of the second step in the GNI risk assessment From June 2016 DM Meeting (progress report) End-September 2016

Multiannual cycle – what's new? Desk checks One desk officer is responsible for 2-3 countries and one or more transversal issues Some parts of Inventory will not be subject to detailed checks with GIAQ for the low and medium risk countries

Multiannual cycle – what's new? Cross country analyses of transversal issues Exhaustiveness; Balancing of GDP; Dwelling services; FISIM; Cross-check of statistical and administrative data sources; Balance of Payments; Euro banknotes (for the Euro zone MS); Research and Development; and Weapon systems in government.

Multiannual cycle – what's new? GNI information visits, including direct verifications There will be more direct verifications of the GNI Inventories Choosing areas for direct verification is linked to the risk assessment

Multiannual cycle – what's new? Mission reports and action points New typology of action points: A: possible improvement of methodology required; B: submission of new information, clarification or correction of already existing information in the GNI Inventory; C: points to be implemented by Eurostat. Some action points can be transformed into reservations directly after the mission

Multiannual cycle – what's new? Reservations Reservations can be placed earlier in the verification process Enhanced transparency in GNIC: progress reports on reservations of each MS; technical opinions on lifting reservations made available

Multiannual cycle – what's new? Principles Cost-effectiveness: risk assessment; materiality threshold Transparency: overall results of risk assessment; functioning of the materiality threshold; progress reports on reservations and transversal issues; technical opinions on lifting reservations

Preliminary timetable   Stage of the GNI OR verification Time 1 Submission of GNI Inventories and Process Tables by end March 2016 2 Risk assessment 2.1 Part 1 March – mid-April 2016 (including first step of consultations with the units dealing with the sources for national accounts in Eurostat) March 2016 2.2 Part 2 upon completion of the analysis of GNI Inventories with GIAQ for a given MS (see point 3.1); by October 2017 at the latest, (including second step of consultations with the units dealing with the sources for national accounts in Eurostat) April - June 2016 3 Desk checks Depending on the composition of the pool of MS assigned to individual desk officers:

3.1 Completing GIAQ April 2016 - September 2016 (for some of the high risk countries or medium risk countries) April 2016 - March 2017 (for the remaining high risk countries and some of the medium and low risk countries) April 2016 – September 2017 (for the remaining medium and low risk countries) 3.2 Cross-country analyses of transversal issues April 2016 – December 2019 4 GNI information visits on GNI Inventories, including direct verifications Following the sequence of GIAQ completion: 4.1 First round of missions October 2016 – March 2017 (for some of the high risk countries or medium risk countries)   October 2016 – September 2017 (for the remaining high risk countries and some of the medium and low risk countries) October 2016 – March 2018 (for the remaining medium and low risk countries) 4.2 Consecutive rounds of missions (where appropriate) April 2017 – December 2019

5 Placing reservations   5.1 Transforming outstanding FISIM into specific reservations April 2016 5.2 Transaction-specific reservations possibly from October 2016 till December 2019 5.3 Transversal reservations upon finalisation of the cross-country analyses, but not later than December 2019 5.4 New process-specific reservations September each year for the year n-4 until September 2019 5.5 Transforming process-specific reservations into transaction-specific reservations or transversal reservations by end 2019 6 Addressing reservations According to agreed deadlines; the maximum deadline: the GNIQ/QR of the year +2 after the year of placing; 2021 at the latest 7 Lifting reservations possibly one year after the addressing in the GNIQ/QR, i.e. 2022 at the latest

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