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New international guidelines in economic accounting.

IN FEBRUARY 1993, the Statistical Commission of the United Nations unanimously endorsed a revised System of National Accounts (SNA). The Commission recommended the revised SNA as a guide to national statistical offices for their economic accounts and as a standard for the international reporting of economic accounting estimates. The Commission emphasized that the revised SNA, as an integrated system, can also be used as a framework for organizing statistical systems.

The Commission's unanimous action brought a successful conclusion to a decade-long revision that was sponsored by the International Monetary Fund, the Organisation for Economic Co-operation and Development, the Statistical Office of the European Communities, the United Nations, and the World Bank. These organizations, operating through an InterSecretariat Working Group, coordinated efforts not only among the member organizations, but also among experts around the world representing both producers and users of economic accounts. The Bureau of Economic Analysis actively participated in this revision and plans to move toward the SNA.

The SNA: A comprehensive and integrated framework

The SNA aims to record all the stocks and flows that are defined as part of an economy. The first SNA was adopted in 1953 in response to a need for establishing international standards for national income accounting; it drew on the work of a number of countries--notably Canada, the United Kingdom, and the United States. In 1968, the SNA was substantially extended to include input-output accounts, flow of funds accounts, and balance sheets.

With this extension, the SNA provided a comprehensive framework: It included measures of production, income, saving and investment, and wealth; it encompassed both domestic and foreign activities; it linked financial and nonfinancial transactions; and it provided for both current- and constant-price measures. Further, the SNA was an integrated system--that is, the accounts used consistent definitions, classifications, and accounting conventions. (See Carol S. Carson and Jeanette Honsa, "The United Nations System of National Accounts: An Introduction," Survey of Current Business 70 (June 1990): 20-30.)

Goals of the SNA revision

The revised SNA builds on the solid foundation of the 1968 SNA. The revision updates the SNA, clarifies and simplifies it, and harmonizes it more completely with other sets of international statistical standards.

Economies have evolved, so the revised SNA updates the concepts and accounts used to analyze them. Notably, the revised SNA devotes more attention to the role of services in the economy. For example, it describes the production of storage services and recognizes that services, as well as goods, may be produced over more than one accounting period. Further, the revised SNA establishes criteria for the delineation of the financial corporate sector and for the treatment of financial instruments in light of the many innovations in this field.

The revised SNA iS meant to be applicable to economies that are increasingly complex or are changing in other ways, but it simplifies the work of the economic accountant. First, it allows for, and describes in detail, the conditions and institutional arrangements that may exist in developed and developing countries and in newly emerging market economies. Second, it provides the rationale for the treatments applied to such arrangements, so that economic accountants can, by extension, decide on treatments for similar conditions and institutional arrangements that may develop in the future.

In addition to this general approach, the revised SNA clarifies a number of specific issues by identifying principles, thus reducing the seeming complexity of such a comprehensive system. For example, one chapter identifies the rules of economic accounting used by the SNA, such as the principles of valuation, time of recording, and grouping by aggregation, netting, and grossing.

A successful effort was made to harmonize the SNA more completely with other international statistical standards. For example, the revised SNA is almost completely harmonized with guidelines in the fifth edition of the International Monetary Fund's Balance of Payments Manual Harmonization makes efficient use of statistical resources both in countries and in international organizations, and it increases the analytical power of the statistics available.

Features of the revised SNA

As the product of a broad and open international consultative process, the revised SNA benefits from a substantial investment of intellectual capital and represents a considerable body of experience in economic accounting. It is firmly conceptual in orientation, representing a goal for economic accounting. As a result, it is applicable to all countries. This single framework can be applied to market economies in developed and developing countries alike, including formerly centrally planned economies. This conceptual orientation facilitates the understanding of the system's components, but practical "how-to" guidance will have to be given in supplemental manuals.

The revised SNA also emphasizes flexibility, thus recognizing both the need to facilitate international comparisons and the need to encourage the SNA's use in economies that differ widely. For example, the revised SNA demonstrates how countries can use the system's classifications of sectors or its sequence of accounts at varying levels of detail according to their particular needs and abilities.

Finally, the revised SNA incorporates satellite accounts to augment its flexibility. Satellite accounts can be used to present concepts that differ from those in the central framework, add relevant information (such as monetary and physical data) to that found in the central framework, or arrange information from the central framework differently. In addition, satellite accounts provide a laboratory for developing and testing emerging extensions of economic accounting, such as environmental accounting. Indeed, one section of the revised SNA is intended as a guide to countries wishing to design satellite accounts that are responsive to policy and analysis focused on environmentally sound and sustainable growth and development.
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Title Annotation:System of National Accounts revised
Publication:Survey of Current Business
Date:Feb 1, 1993
Words:926
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