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Electronic Discussion on Consolidation - OECD Databases - SNA

Electronic Discussion on Consolidation - OECD Databases - SNA. Presentation to the OECD Working Party on Financial Statistics Patrick O’Hagan System of national Accounts, Statistics Canada October 9 , 2006. Background. OECD WPFS 2005 Meeting Background papers on Consolidation

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Electronic Discussion on Consolidation - OECD Databases - SNA

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  1. Electronic Discussion on Consolidation- OECD Databases- SNA Presentation to the OECD Working Party on Financial StatisticsPatrick O’HaganSystem of national Accounts, Statistics CanadaOctober 9, 2006

  2. Background • OECD WPFS 2005 Meeting • Background papers on Consolidation • Discussants’ comments • Discussion summary notes

  3. Consolidation in OECD FA and BSA Databases

  4. 1. That the current WPFS initiatives with respect to understanding consolidation practices in OECD countries continue • SUPPORTED. In particular, that the development of comprehensive methodological notes should have high priority (general view of the WPFS) • EDG also provided a clear indication that consolidation issues in the OECD databases went beyond the need for documentation • General consensus that more work is required

  5. 2. That the discussion on intra-sector consolidation be extended to include the treatment of complex enterprises • SUPPORTED. Clear recognition of the difficult issues surrounding complex enterprises and intra-sector consolidation • Noted by discussants that FA and BSA source data are collected for domestic groups of companies (legal entities), or noted data problems with consolidated corporations’ source data. • View that the treatment of complex enterprises should figure into our understanding and documentation of consolidated/non-consolidated data

  6. 3. That efforts be extended incorporate the requirements of related datasets ... useful to develop a better understanding of policy/analytic needs • SUPPORTED. Consolidation is a cross-cutting issue, on which more work needed to be undertaken • Emphasis on user needs (relevance) when it comes to data in OECD databases. Sense that (outside of government and depository corporations) there was little demand for consolidated data in their respective user communities. • Concern over the relationships among the OECD databases and related databases elsewhere. Re-designed IMF-MFS are SNA93 based, but is it not always clear that the financial data are comparable … problematic for users • Noted that the IMF-FSI program is also focused on consolidated data, but from different perspectives than the OECD databases

  7. 4a) That the current OECD requirement for both unconsolidated and consolidated FA and BSA data be re-considered by the WPFS • SUPPORTED. Most countries produce one set of FA and BSA • Concerns over what can be produced vs what is being requested in OECD (other) financial accounts’ databases • Sense that countries can neither present fully unconsolidated or fully consolidated data – that financial data, by its nature often reflects a mixture of consolidation, especially at the sub-sector level. … brings into question the analytical usefulness (relevance) and accuracy • Concerns that statisticians are coming under increasing pressure to deliver data for purposes other than the original uses of FA and BSA • Feasibility: Burden on the respondent OECD countries; constraints countries face in modifying their statistical systems

  8. 4b) Return to a one database submission, consistent with the published data of most countries. Sub-sectors as is; sectors unconsolidated, with consolidated sectors submitted as supplementary information • SUPPORTED. Generally felt that the main OECD databases should be SNA93 based (that is, unconsolidated). Submissions linked to the core countries’ financial accounts. Supporting metadata essential to international comparisons • Strong support for providing consolidated sector data for 2 key sectors: Government and depository corporations. In both of these cases, there is a clear user demand, and sufficient detail • Sense that a certain degree of estimation would be acceptable in producing consolidated data • Suggestion: That OECD databases could be expanded to include counter-party information, where it exists

  9. 5. That the WPFS plan to make a substantial contribution to the next round of revisions to SNA, where aspects of income (including consolidation and complex enterprises) will be a major review item • SUPPORTED

  10. Consolidation in SNA

  11. 1. That the SNA93 principle that in general the accounts of the system are not consolidated stand … underlines the primary roles of the FA and BSA in the overall core SNA • SUPPORTED. Recognition that financial accounts (and, more generally, national accounts) are based on user needs, and the user communities in the respective countries have not requested consolidated data • Some of the recent increased demands for consolidated data from international agencies seem go beyond macro-economic analysis as articulated in the SNA … sense that the SNA cannot be all things

  12. 2. To emphasize in SNA that, for certain types of analysis (e.g., government sector deficit/debt), consolidated sector accounts may be more appropriate • SUPPORTED. Contention that there was a significant macroeconomic demand for both consolidated and unconsolidated government sector data … strengthen the link of the core accounts with the new SNA government-public sector chapter (GFSM) • There was also support for a degree of consolidation in the financial corporations’ sector, in particular for depository corporations, where the need is also evident • Less support for a consolidated financial sector. Feedback on this paper from ISWGNA: indicated that there seems to be a need for such data and that the SNA emphasize this specific need.

  13. 3. That SNA general position against netting of financial instruments be retained … however, some degree of netting as an extension/approximation to consolidation • SUPPORTED

  14. 4. That consolidation be clarified with respect to complex corporations … proposed the current definition of institutional unit be broadened to also be represented by a consolidation of related legal entity corporations • Acceptance of the points made in the paper that SNA93 did not really deal with the issue of consolidation thoroughly … no discussion of complex corporations • Reluctance it to necessarily modify the definition of corporate institutional sector units to cover associated groups of legal entities. • Sense that this was a difficult issue, and one that could be held over until the next round of SNA revisions. Feedback on this paper from ISWGNA: With respect to broadening the definition of an institutional unit to include groupings of related corporate legal entities … that the definition of an institutional unit has been discussed in the past and decided not to change it.

  15. 5. That further debate on consolidated enterprises could be deferred to the next round of revisions to SNA, where aspects of income will be a major review item • Supported. Complex corporations figure prominently in income-side issues. The list could include, among other things, surplus, dividends, re-invested earnings, asset valuation and income, etc. • Sense that the WPFS could play a major role in articulating and discussing such issues

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