Abstract
Based on the relevant differences between Governmental Accounting (GA/microeconomic perspective) and National Accounting (NA/macroeconomic perspective) this paper examines the main adjustments made in Portugal to the General Government Sector data required to convert Governmental Accounts into National Accounts. It also assesses the impact of those adjustments on the Central Government deficit, the largest share in the Portuguese public deficit.Following mostly a qualitative research methodology, the empirical study is based on interviews to officials preparing NA and on several documental sources. The purpose is to validate the major data adjustments from GA into NA regarding Central Government, while, in addition, assessing their impact using data from April 2008 Excessive Deficit Procedure notification, covering the 2004-2007 period. The main findings indicate that differences concerning the accounting basis are the most relevant and that the subsequent adjustments have a considerable impact on the Portuguese Central Government deficit. This research points therefore to the need for more convergence between GA and NA, namely with respect to the transactions recognition criteria in order to use a common accounting basis, and for a complete and coherent reporting information system in GA.
Highlights
The existence of Governmental Accounting (GA) can be traced to centuries ago
Based on the relevant differences between Governmental Accounting (GA/microeconomic perspective) and National Accounting (NA/macroeconomic perspective) this paper examines the main adjustments made in Portugal to the General Government Sector data required to convert Governmental Accounts into National Accounts
The main issue that arises within the EU countries concerns whether the current Governmental Accounting systems are able to meet the requirements of the European System of National and Regional Accounts (ESA95), namely in what relates to the data provided by the General Government Sector (GGS), according to the definition of institutional sectors in ESA95 (§ 2.17)
Summary
The existence of Governmental Accounting (GA) can be traced to centuries ago. It was initially viewed as an important tool in the transition from an «absolute-power» model of government to new forms of shared power. The main issue that arises within the EU countries concerns whether the current Governmental Accounting systems are able to meet the requirements of the European System of National and Regional Accounts (ESA95), namely in what relates to the data provided by the General Government Sector (GGS), according to the definition of institutional sectors in ESA95 (§ 2.17) This is important inasmuch as it has been politically established within the EU Treaty regarding budgetary discipline, that the convergence criteria would be assessed using data from the member-States’ (harmonised) NA and not from GA, having the deficit limits been defined based only on the GGS (applying GA) and not on the whole economy (Jones and Lüder, 1996; Jones, 2000). Controversial introduction of accrual-based budgets, given that the source of data from GA for NA comes essentially from budgetary systems
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