GFS Relationship to National Accounts

The System of National Accounts 1993 (93SNA) constitutes a guide for the compilation of production, income, consumption, saving, capital accumulation, and finance of a national economy as a whole and of its separate sectors, including government sector. To measure these activities and reach overall totals for the economy, the SNA combines data for all sectors in a single basic format (accounting system). This format differs somewhat form GFS which focus on the measurement of government activities and is tailored to meet the need of information about government. However, many similarities exist between the two statistical systems.

A a revised manual on GFS was finalised in July 2001, which is closely harmonized with the 93SNA as the systems follow a similar accounting structure (not identical though) with integrated balance sheets, both systems apply the principle of accrual accounting, and classifications to some degree are harmonized (not always the case, as labels that are identical in the two systems can have different coverage). However, since GFS will continue to focus on government transactions in more details, while SNA is focusing on production, consumption and capital formation, as well as on giving a total picture of the nations economy, total harmonization was not the goal.

Similarities and differences between the 1986 version of GFS and Government sector in SNA;

	GFS 1986-Manual	93SNA
Coverage	General government including social security schemes, government employee pension fund invested with the employing government, as well as departmental enterprises, and excluding any monetary authority activities carried out by central government units.	Minor differences from the coverage in the GFS; 93SNA excludes government employee pension fund invested with the employing government (68SNA included this pension funds within government sector) and includes any monetary authority functions if carried out by central government.
Time of recording	Transactions are recorded when cash is paid or received, only transactions involving exchange of cash is included. Cash accounting	Transactions are recorded when obligations or claims arise – the point in time when value is created, transformed, exchanged, transferred or extinguished. Included are also non-monetary transactions. Accrual accounting
Double entry recording	No	Yes
Valuation principle	Transactions valued at the amount of cash involved; Market price Debt are valued at nominal, par, or face value; the amount the government is obligated to pay when the debt matures.	Market price. Debt (Assets and liabilities in general) are valued at current prices.
Consolidation	Yes, consolidates (eliminates) transactions between different parts of government.	No, do not consolidate transactions between different parts of government.
Gross/Net recording	Transactions are recorded on a gross basis. Exception; Net recording of departmental enterprises’ operating surplus/deficit	Transactions are recorded on a gross basis. Exception; Fees are not recorded, but are netted against government consumption (negative expenditure).
Distinction between current and capital/financial transactions	Yes, capital transactions are recorded as a separate sub-item, but are part of total revenue and total expenditure, and Lending minus repayments for policy purposes are recorded as a separate sub-item, but included in total expenditure.	Yes, capital and financial transactions are recorded in the capital or the financial account, while current transactions are recorded in one of the current accounts.
Surplus/Deficit	Overall Surplus/Deficit; Balance between total revenue and grants, and total expenditure and lending minus repayments for policy purposes.	Net lending/borrowing; Balance between resources (incomes), uses (outlays), and capital transactions (excluding the acquisition of financial assets, net).
Integrated balance sheets	No, only component recorded is debt.	Yes.

There are many similarities in the economic classification of revenues and expenditures, in GFS and SNA, but also some differences, e.g.; (i) while GFS classifies social security contributions as taxes, SNA does not, (ii) while GFS classifies all the profits of fiscal monopolies remitted to government as taxes, SNA considers only the profit above a ‘normal’ profit to be recorded as taxes (taxes on products), and (iii) while SNA classifies inheritance and gift taxes as capital transfers to government GFS records these taxes together with all other (current) taxes.

Since GFS in most countries are used as input in the national accounts, and differences in classification of transactions exits between GFS and (government sector accounts in) SNA, the GFS manual provides a ‘bridge table’. This table shows how, or where, each GFS category fits in into the SNA.

(Note; The bridge table in the GFS manual shows the link between the GFS categories and SNA categories according to the SNA manual from 1968 (68SNA), and not 93SNA.)