The Integrated Approach to Economic Statistics “The Canadian Approach” Friends of the Chair Group on Integrated Economic Statistics Marie Brodeur, Michel Girard Bern, Switzerland June, 2007 Statistics Canada Statistique Canada

Overview of the presentation 1.Historical Context 2.UES Background 3.Integrated Approach Principles 4.Survey Characteristics 4.Business Register 6.Sampling 7.Enterprise Financial Program 8.Use of Tax Data/Chart of Accounts 9.Data Processing 10.Management of the UES 11.Future Directions Statistics Canada Statistique Canada

1. Historical Context  Before 1986, various production accounts were not synchronized and developed independently of IE accounts  1986: From 3 GDP measures to a unique one  Beginning of the reconciliation period  1997 Historical Revision  Further integration of concepts + SNA 1993  Implementation of NAICS/Harmonization of classifications  Make uniform definition public sector  First real step towards integration  Program to Improve Provincial Economic Statistics (PIPES)  Fiscal programs Statistics Canada Statistique Canada

Fiscal Programmes  Tendency to use SNA statistics because of their coherence  From survey data and government statistics – Financial Management System to,  To production accounts, IE accounts  Higher quality and coherence of regional statistics  HST allocation  Equalization  Eventually First Nation Sales Tax  Coherence (structure) - consistency (frequency) Statistics Canada Statistique Canada

2. UES Background  Major project to improve provincial statistics (1996)  Occasion to improve consistency, coherence, breadth and depth of business survey data  More detailed Industry & Commodity data  Creation of Enterprise Statistics Division (ESD)  Gradual Expansion of Surveys; Covers 65% of GDP Statistics Canada Statistique Canada

3. Integrated Approach Principles  Use of Single, Unduplicated Frame -- the BR  Common Sample Design Methodology  Maximum Use of Tax Data  Reduction of Response Burden  Integrated Questionnaire simple language; harmonized concepts / common variables Statistics Canada Statistique Canada

3. Integrated Approach Principles (continued)  Centralized Data Collection  Enterprise Portfolio Managers  Common Generic Processing Systems and Methods  Centralized Warehouse for processing and analytical purposes Statistics Canada Statistique Canada

4. Survey Characteristics  Separate Enterprise & Establishment Surveys  64 Establishment Surveys  Over 55,000 collection entities representing about 68,000 establishments (17K replaced by tax for RY 2007)  Centralized Collection -- $3.5 million budget  Smallest businesses estimated through tax data Statistics Canada Statistique Canada

5. Business Register (BR)  BR covers all sectors  All economic units producing goods and services in Canada  Incorporated and unincorporated businesses  Complex and simple enterprises  Structure for Reference Year 2007  Legal  Operational  Updated with Administrative Data Statistics Canada Statistique Canada

Types of Administrative (Tax) Data From the Canadian Revenue Agency (CRA)  Agreement between CRA and STC  T1 (unincorporated businesses)  T2 (incorporated businesses)  T4 (pay slips)  GST (goods and service tax)  PD7 (payroll deduction accounts) Statistics Canada Statistique Canada

BR Structure  Business Accounting  Investment centre  Profit centre  Cost centre  Revenue centre  Statistical Structure  Enterprise  Company  Establishment  Location Statistics Canada Statistique Canada

Deliniation of the statistical units  Statistical structure: Conversion of operating structure  Pros:  Creates standardized structures that support sampling  Provides the basis for complete and unduplicated reporting  Cons:  Creates many units that are identical to the units recorded in the operating structure  Creates units and structures that do not correspond to the real world organizational components  Do not treat each enterprise the same way  Add complexity to the data collection process  Coherence analysis is more difficult to perform Use the operating structure instead of the statistical structure starting with RY 2007 Recommandations Statistics Canada Statistique Canada

ABC Ltd Profit centre Profit centre Investment centre   Using the operating structure

Cost Centre ABC Ltd Profit centre Profit centre Profit centre Profit centre   Using the operating structure Cost Centre

5. Sampling  Stratified Random Sample  Industry (NAICS 4)  Province  Size  1 Take-all stratum  2 Take-some strata (50% of units replaced by tax)  Take-none strata (under thresholds) 6. Sampling Statistics Canada Statistique Canada

Stratification in One Look Take-some 2 Cell Must take units Exclusion Thresholds: To reduce response burden on small enterprises Sampling revenue Take-all Take-some 1 Take-none

T2 T1 Take- None: Sample of e-filers T2 Take-None: Census of General Index of Financial Information (GIFI) ROYCE-MARANDA THRESHOLDS Main sample to be surveyed Not eligible for tax : questionnaire Tax replaced Characteristic survey (some Services surveys) or questionnaire (all other divisions) T1 Main sample to be surveyed RY2007 Methodology: Tax Replacement

 Monitor the size, the financial structure and position of the corporate sector  Business Register  Survey of complex enterprises over $250 millions in revenues or assets  Consolidated Balance Sheets and Income Statements, corporate taxation  Use of Tax data 7. Enterprise Financial Program Statistics Canada Statistique Canada

Enterprise Content  QFSS: Quarterly Survey of Financial Statements  BS, income statements, change in financial position, financing position, rate of return and other financial ratios  Corporate profits and CCA  Sector accounts  AFTS: Annual Financial and Taxation Survey  QSFS + Public Accounts (GBE) + Tax Data Statistics Canada Statistique Canada

8. Use of Tax data  Objective is to substitute 50% of simple establishments.  Direct Data Replacement for annual surveys using  T1(unincorporated)  T2 (incorporated)  Facilitated by the Chart of Accounts (COA).  Result  Almost 65% of units replaced by tax data  Impact of 27% in the total estimate Statistics Canada Statistique Canada

DISSEMINATION COLLECTION Chart of Accounts Sales Operating revenue Cost of sales Gross profit Expenses EBIT Outputs Inputs Value added Shipments Operating Surplus GDP LINK, BRIDGE, CONCORDANCE

Expected Benefits of a Chart of Accounts  Standardization in business data collection  Higher survey response  Increase in quality of data  Comparison of data from various sources  Increase efficiency in using administrative data Statistics Canada Statistique Canada

Links to Chart of Accounts CHART OF ACCOUNT Establishment Legal entity Enterprise

UES: Use of Tax Data  Validation (comparison)  Verify dubious collected data against the equivalent tax data record  Imputation  One of the methods used for non-response  Estimation  Below take-none  Direct Data Replacement  Some annual surveys 100% tax (Taxi & Limousines, Survey of Mapping)  Update Business Register  Allocation of survey data (use tax revenues, salaries and expenses) Statistics Canada Statistique Canada

 Develop centralized systems  Move away from stand-alone  Single point of access for security  Integrated Questionnaire Metadata System  Edit and imputation  Allocation and Estimation  Data Warehouse 9. Centralized Processing Systems and Databases Statistics Canada Statistique Canada

Centralized Collection Mailout (38K CEs) Pre-Contact (17K Businesses) Edit / Verification (BLAISE) Receipt (75% target) Delinquent Follow-Up Capture / Imaging “Clean” Records Score Function

Enterprise Portfolio Managers  Top 350 enterprises in Canada  Status  Platinum, Gold, Silver, Bronze  Personal visits  Enterprise Profiling  Coordination of mail-out and collection  Enterprise/ Establishment coherence  Holistic Response Management  Strategic Response Unit  Escalation Process / Statistics Act Statistics Canada Statistique Canada

Post-Collection Processing Pre-Grooming Allocation / Estimation Edit & Imputation “Clean” Records Central Data Store Subject Matter Review & Correction Tool Tax Data USTART

10. Management of the UES  ESD provides functional support and coordination  A series of committees is charged with process clarification & decision making Project Management Team Operations Management Committee Frame Operations Sampling Tax Data Operations Content / Collection Processing Operations

11. Future Directions  Business Register Redesign for RY2007  North American Product classification System  Service inputs  Data Integration Project  Make a more efficient use of tax data  “Holistic Response Management” strategy  Welcome new surveys Statistics Canada Statistique Canada