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 October 2003: creation in Paris (several international organisations: OECD, IMF, Eurostat, ECB, IFAC–Public sector committe) October 2003: creation in Paris (several international organisations: OECD, IMF, Eurostat, ECB, IFAC–Public sector committe) Harmonisation and convergence between: 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

TFHPSA: the start February 2004: 1st meeting, in Paris (28 participants) 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

The TFHPSA today September 2004: 2nd meeting, in Washington DC (40 participants) 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)

Public accounting standards: WG1 The PSC, a body of IFAC, has produced 20 IPSAS (standard setting activity) 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 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) 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… Some convergence: PSC agrees to recommend disclosure of GG statistics, takes on board the distinction between transactions and other flows…

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. 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 Implementation of accruals: time of recording and amounts to be recorded need more guidance Tax credits: nothing at present in the SNA. Tax credits: nothing at present in the SNA. Need to borrow guidance from OECD, GFS

Government / public / private sector Notion of control: « the capacity to govern the policy objectives of a unit » 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… 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 Cases of NPIs to be classified in GG The notion of « ancillary units » The notion of « ancillary units »

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

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

Government guarantees Changes in the international context: IPSAS19, public accounts in some countries (Sweden, UK, USA) 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 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 Related issue: the recording of provisions The case of export credit insurance The case of export credit insurance

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