Consolidation Methods

1
Consolidation Methods

• WPFS 6-7 October 2003
• Item 5
• By Michèle Chavoix-Mannato
• STD/NAES

2
Purpose of the document

• To present the current situation of the FA
  database
• To highlight some lack or deficiencies
• To insist on the importance of having as much
  information as possible
• To set some recommendations to help OECD to get
  pertinent and comparable data

3
Some definitions

• Aggregation
• Simple sum of values at each level of the
  hierarchy
• - by sector (ex. S1 S11 S12 S13 S14
  S15)
• - by instrument (ex. F2 F21 F22 F29)
• Consolidation
• Elimination of transactions
• - between institutional units of the same
  sub-sector
• - between institutional units of the same sector

4
SNA recommendations

• Financial flows and stocks must not in principle
  be consolidated
• to avoid a wrong interpretation of certain
  information
• to preserve the rule of additionality of data
• However, consolidation by elimination of all
  intra-sectoral transfers is useful for some
  analyses
• to retain only transactions between sectors or
  sub- sectors
• to better know the financial position of the
  macro- economic players

5
Consolidated tables in the FA Database NON
EUROPEAN COUNTRIES
6
Consolidated tables in the FA Database EUROPEAN
COUNTRIES
7
FIRST RECOMMENDATION

• ?
• Tables for financial accounts and balance sheet
  accounts should be sent to OECD by all countries
  both non-consolidated and consolidated.

8
Eurostats Consolidation Rules

• ? Consolidation rules apply at
• ? Sector level
• ? Sub-sector level
• ? The sum of financial transactions over the
  consolidated sub-sectors accounts does not equal
  the financial transactions for the consolidated
  sector accounts
• ? The balancing items add across the sectors and
  equal the sector total they are identical with
  the non-consolidated balancing items.

9
SECOND RECOMMENDATION

• ?
• It is proposed to extend the principles
  established by Eurostat to all OECD countries

10
Some problems linked to the consolidation process

• Differences between national methods
• No consolidation for some sectors
• No consolidation for some instruments
• Difficulties to check the consistency and the
  quality of the data

11
Proposals for improvements

• To better inform users of differences and
  similarities in national methods
• To reduce disparities and allow greater
  comparability

12
The Secretariat needs

• The exact meaning of the concept of consolidation
  used by countries
• The exact method applied at various levels of the
  hierarchy
• The limitations relating to some sectors or
  transactions

13
THIRD RECOMMENDATION

• ?
• Countries are requested to provide the OECD with
  precise information on the methods currently used
  in their country, along the line of the model in
  the document submitted by France (in annex 2).

14
Delegates are requested to

• Give their opinion on the three recommendations
  proposed by OECD
• Send the required information on the methods used
  
• by 31 December 2003
• Submit any further amendment to the
  recommendations
• by 31 March 2004
• Transmit both non-consolidated and consolidated
  data to OCDE
• The Secretariat will
• Introduce these rules into the 2004 questionnaire

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thanks you for your attention and for our future
fruitful co-operation

• The NAES
• Financial Statistics Unit