European System Of Accounts Research Articles

Structural Aspects of the European Union Economy

1. Introduction The transmission of National Accounts to Eurostat, in the field of Supply, Use and Input-Output tables, for each Member State of the European Union was established as compulsory by the European System of Accounts (ESA95). The national Supply and Use tables (SUT) are annually required and the Symmetric Input-Output tables (SIOT) at every five years. The standardized format of reporting has 64 industries (NACE rev.2) and 64 products (CPA 2008). The European Supply and Use tables and the Input-Output table, for each year, are obtained by aggregating the Supply and Use tables, at basic prices, of all EU Member States. The European Input-Output tables in NACE Rev.2 were first released for 2008, in October 2012. Eurostat established the transmission deadline for the data of every year, for EU States, at three years after the end of the reference year. European System of Accounts 2010, a development of the ESA 2008, introduced an extension of the consolidated tables for environment; the environmental inputoutput tables by industries and private households considering certain types of air emissions (Technical Documentation on the European consolidated tables for years 2010 and 2011, July 2014, European Commission, http://epp.eurostat.ec.europa.eu). The European transmission of National Accounts according with ESA 2010 became mandatory for the year 2010. By the end of 2014, Member States of European Union should send the Supply, Use and Input-Output tables (ESA 2010), for the years 2010 and 2011. 2. Methodological Aspects about Aggregation of National Input-Output Tables at EU Level Each EU member state transmits to Eurostat the Supply and Use tables in basic prices and purchaser prices. Problems of aggregation process are related to lack of the same basic prices for indicators of the Supply and Use tables reported to Eurostat by the EU member states. Another difficult aspect is that of transforming the indicators from Use tables in purchaser prices to basic prices and also the lack of public sources of data. The Use table must separate the import use and the domestic use part. The total uses at basic prices have to be split into domestic and imports intermediate and uses of final demand. The imports and exports of each country must be separated from domestic supply and use. The recorded data of imports and exports are not separated for each member state. The usual data sources are the external trade data and the balance of payments data. The Import Use table has separated the intra-EU import use table and an extra-EU import use table. By aggregation at EU economy level there are considered all domestic use tables, intra-EU import use, and extra-EU import use tables. The sum of intra-EU import uses with the intra-EU export supply totals should be equal from the theoretical point of view, but in practice there are differences caused by the valuation methods and the reports of different countries. After checking and neglecting the intra-EU import use and intra-EU export supply, the data is rebalanced and the differences are considered to extra-EU level, as the rest of world. The flows of trade sector must be corrected because the intra-EU trade is considered to be at EU level as EU internal inter-sectoral flows (Thalassinos and Pociovalisteanu, 2009, Pociovalisteanu et al. 2009). The consolidated EU Supply and Use Table (SUT) for EU-27 was obtained by aggregating domestic SUT of each EU country and intra-EU import use and export supply tables. The exports in the aggregate table are recorded in basic prices and the imports are valued in cost-insurance-freight prices. When merging the intra-EU import table and the domestic intermediate table of each country, they have to be in the same prices. The difference in valuation appears when the domestic table and the intra-EU exports in basic prices are balancing the intra-EU import table in c. …

Changes in the treatment of pension liabilities in the national accounts

The article describes the changes solutions in the recognition of acquired pension rights in the framework of social security in national accounts. The principles applicable to September 2014 and the new guidelines contained in the System of National Accounts (SNA 2008) and the European System of Accounts (ESA 2010) are discussed. The author indicats differences between the systems and presents European solutions. Arguments are given that determined the non-inclusion of unfunded pension liabilities of public pension systems to statistics produced for the purposes of the excessive deficit procedure.

Empirical Comparative Analysis of Household Sector Liabilities and Assets in the Context of Financial Crisis

ABSTRACT. This paper presents the characteristics and trends in household debt and assets in Poland and selected European countries (Germany, Ireland, Spain, Greece, Lithuania) over the period of 2005-2012. The empirical analysis presented in this paper aims to support the thesis that although the changes in the level and structure of household debt in those countries were not the primary source of the crisis, they had some impact on its course, and the financial crisis influenced the direction of these changes. Data are taken from the ESA, mainly the Eurostat Database. The analysis is carried out on the basis of a simple measure which is the relation of liabilities (by types of household debt) to assets compared with the relation of savings to the household assets.JEL Classification: G01, E21, E22Keywords: national accounts, saving, accumulation, financial crisis.(ProQuest: ... denotes formulae omitted.)IntroductionIn the literature concerning the financial crisis that began in 2007 on the U.S. market of riskier loans granted to persons (households) with a low credit rating, much attention is paid to the analysis of changes in financial market, as well as in the whole economy, both those which were the cause of the crisis and those which were its consequence. In most analyses, issues relating to institutional sectors are not considered, particularly for the household sector, whose specific debt in the United States was the direct impulse for the crisis. Lending / borrowing of the sector in European countries with respect to individual segments of financial markets underwent significant changes during their collapse and recovery. This paper presents the characteristics and trends in household debt and assets for the years 2005-2012 in Poland and selected European countries. The analysis was carried out mainly on the basis of the ESA data (European System of Accounts..., 1996). The empirical analysis presented in this paper aims to support the thesis that in Poland, like in other European countries, changes in the level and structure of household debt had influence on the course of the crisis, although they were not its primary source, and that the financial crisis undoubtedly influenced the direction of these changes.The structure of the paper is the following. The first section is a brief description of the financial crisis in Poland, Spain, Greece, Ireland, Germany and Lithuania - its origins, phases and effects on the financial markets. It also includes remarks on the whole economy. The second section presents the characteristics of the ESA, especially the financial account as a source of data (mainly Eurostat Database) used for comparative empirical analysis of changes of financial instruments for the selected countries presented in the third section. The assets and liabilities of households divided into the basic instruments of the financial market in the selected countries are analysed. The choice of the countries listed above was dictated by the specific course of the crisis, its determinants and effects in these countries. In section four, the financing of households' wealth with saving and acquisition of liabilities in specified instruments of financial market is widely analysed. Some comments concern the USA as well. This analysis is carried out on the basis of a simple measure, which is the relation of liabilities (by types of household debt, mainly long-term loans) to assets compared with the relation of savings to the wealth of households. A brief summary contains conclusions with reference to the assumed thesis.1. Financial crisis - main data characteristicsThe globalization of the world economy substantially strengthened the linkages among countries. There is not only the increase in the role of trade links, direct investment and the flow of human capital, but the most important was the increase in capital flows and financial markets relations between countries. …

Intangible capital and productivity at the firm level: a panel data assessment

The econometric literature on measuring returns on intangible capital is vast, but we still know little about the effects on productivity of different types of intellectual capital (R&D and patents) and customer capital (trademarks and advertising). The aim of this paper is to estimate the marginal productivity of different types of intangibles by relying on the theoretical framework of the production function, which we apply to a large panel of Italian companies. To this end, the European accounting system makes it possible to compare the impact on productivity of intangibles measured from expenditures (as usual in Anglo-American studies) with the impact of intangible assets reported by companies in their balance sheets (a measure which is available in the Italian context, for example, but less common in the literature). Our results contribute two main findings to the literature. First, among the intangible components, the highest marginal productivity is that of intellectual capital, customer capital and intangible assets. Second, the use of accounting information on intangible investments is crucial to find high effects of intangible assets on productivity, while intangibles measured from expenses seem to play a more limited role. Preliminary results obtained from sub-samples mimicking the presence of spillovers deliver higher effects of intellectual capital on productivity, suggesting that intangibles’ social value is larger than the part we can estimate with individual firm data.

A DRAWBACK IN TURKISH BUDGET CLASSIFICATION: WHERE HAVE PUBLIC INVESTMENTS GONE?

In 2006, Turkish fiscal structure has changed its budgeting and budget classification system from a program based and accordingly classified hybrid one (between Program Budgeting and Planning-Programming-Budgeting systems) to a strategically planned, performance based and analytically classified multi-year budgeting system that was structured in line with European System of Accounts (ESA) and Government Finance Statistics (GFS) which have been shaped by neoliberal praxis. What’s wrong with this new classification is that public investment expenditures cannot be clearly distinguished from other outlays. Pursuant to “non-investor minimal state” approach of the neoliberal thought, the idea of “public investment” is the missing point of new classification system. Here, I make three alternative technical recommendations to fix this drawback.

Changes in EC Directives and Impact on Presentation of Financial Statements in the Czech Republic

The EC 4th Directive has been in force since 1978, at least till 2001 without fundamental changes. Nearly the same history concerns the EC 7th Directive, firstly issued in 1983. Then new requirements, such as new disclosures and valuation rules, including provisions on fair value accounting, have been added. Less attention has been paid to considering whether existing requirements could be simplified or removed. Research studies confirm that amendments have tended to ignore the comparability and usefulness of the financial statements, increased reporting requirements and the number of Member State options. All these facts have ultimately, in the long run, led to increased complexity and regulatory burden for all companies. European Commission proposed to simplify the 4th and 7th Council Directives as regards financial information obligations and to reduce administrative burdens, in particular for SMEs. This article investigates impact of new Directives' financial reporting requirements on presentation of financial statements of companies those use local regulatory rules, which should comply with the Directive of June 26, 2013 repealing the 1978 and 1983 Directives and their subsequent amendments, in the Czech Republic. Conclusion from this article might be useful for practice as for the potential future changes in presentation of financial statements or researchers who find out similarities or differences between European accounting systems.

Belgian Public Accounting: Evolution and Compliance with IPSAS

The Belgian public accounting system is continuously evolving, but efforts must still be made to comply with international standards. Public accounting has been modified several times since the law of 15 May 1846 on state accounting. At first, public accounting only consisted of budgetary accounting, but it then evolved and now consists of two parts: budgetary accounting and double-entry general accounting based on transactions and inspired by the one used by the private sector. So, the law of 15th March 1991 on the reform of accrual state accounting and the provincial accounting (Loi du 15 mars 1991 portant reforme de la comptabilite generale de l’Etat et de la comptabilite provinciale, M.B. 22 mai 1991) as well as the law of 22nd May 2003 on the organization of the budget and the accounting of the federal state (Loi du 22 mai 2003 portant organisation du budget et de la comptabilite de l’Etat federal, M.B. 3 juillet 2003) made it possible to introduce such an accounting system. This system has the advantage of providing more information about the financial and economic situation of public entities and of being more accurate, which enables us to estimate, among other things, public property and public debt. Some external factors induced the reform of 2003. Firstly, we can mention the evolution of the Belgian state organization. Communities and regions are now expected to respect general principles, for instance in terms of accounting disclosure. Secondly, the organizational structure of the federal administration has beenmodified by the Copernicus reform (« Copernicus-Au centre de l’avenir: La reforme de l’Administration federale belge », 1er septembre 2004), which constitutes an opportunity to implement accrual accounting in all federal departments. Thirdly, at the same time as this national evolution, there has also been a modernization of accounting at the international level through the introduction of the International Public Sector Accounting Standards (IPSAS) and at the European level through the implementation of the European System of Accounts (ESA). These national and international reforms tomodernize accounting tally with the concept of Int Adv Econ Res (2013) 19:79–81 DOI 10.1007/s11294-012-9386-8

How is the IFRS for SME accepted in the European context? An analysis of the homogeneity among European countries, users and preparers in the European commission questionnaire

In this paper we analyze the answers to the “Questionnaire on the public consultation of the IFRS for SMEs”, promoted by the European Commission. Our aim is to evaluate the homogeneity among respondents, according to the different perspectives of analysis between both users, preparers and also in European Countries. Results show a substantial diversity among respondents. In particular, preparers demonstrate a strong opposition to the IFRS for SMEs, while users are more favorable. Concerning Country classification, German-speaking Countries and Latin Countries show much less appreciation for that standard with respect to Anglo−Nordic Countries. Relevant consequences for European public policy issues and for accounting studies on differential reporting arise from this result, concerning respectively the role of European accounting system and the acceptance of “user primacy” principle.

Regional input-output models and the treatment of imports in the European System of Accounts (ESA)

Input-output models are useful tools for regional science owing to their ability to capture many of the distinguishing features of a regional economy. Since input-output tables are hard to find at the regional level, many researchers adopt nonsurvey techniques to derive regional input-output tables (RIOTs). Numerous methods have been suggested and this has spawned a stream of literature comparing the relative performance of these methods. The present paper contributes to that literature by examining a largely neglected problem of nonsurvey techniques: the allocation of imports. In the European System of Accounts (ESA), there are two ways of allocating imports: inside the interindustry transactions matrix or outside. In the former case, they are allocated as imports in the sector that produces similar goods (indirect allocation). In the latter case, imported products are allocated to the sector that uses them (direct allocation). This paper shows that the choice of a nonsurvey method should depend on the way in which imports are allocated. If the nonsurvey method is not properly chosen, the results of the procedure may be misleading and implausible. The paper concludes that LQ methods are better suited for regionalising input-output tables with directly allocated imports, whereas commodity-balance methods like CHARM are better suited for regionalising input-output tables with indirectly allocated imports.

Public-Private Partnerships in the Context of the European System of Accounts (ESA95)

This paper makes an analysis of the European System of Accounts (ESA95) financial treatment of Public-Private Partnerships (PPP). PPP are complex operations that allow incumbents to create infrastructures while hiding debt, with an eye on the next elections. However, the sad part of the story is that PPP are more expensive than traditional contracts in the long run. We think that PPP are not always the best solution. Governments should allocate the risk to the party that is the “least cost avoider”, i.e., the party best suited to control and/or bear the risk. Without this approach, the public sector runs the risk of using PPP with the aim to achieve inadequate goals, for example to achieve a short-term improvement of public accounts, and at the same time, worsening the long-term financial picture.

THE SUBSTANCE OF ACCOUNTING FOR PUBLIC-PRIVATE PARTNERSHIPS

This article evaluates Public-Private Partnerships (PPP) accounting practice and the related financial accounting and reporting requirements. Governments across the world are seeking to access private finance to improve public infrastructure. Accounting for PPPs has encountered many difficulties, one of which is the practice by which PPPs are not accounted for as fixed assets on the balance sheet of either the public sector client or the private sector operator. Accounting for PPPs has grown in importance at a time of transition from national Generally Accepted Accounting Practice (GAAP) to International Financial Reporting Standards (IFRS). Under UK GAAP, both client and operator accounting adopt the reasoning – familiar from leasing standards – of the allocation of risks and rewards between the parties to determine the party which should recognize the fixed asset on its balance sheet. The gap in IFRS with regard to operator accounting has been filled by the interpretation IFRIC 12 on service concession agreements: this moves the reasoning from risks and rewards to control, familiar from consolidation standards. The UK Treasury and the International Public Sector Accounting Standards Board (IPSASB) have required/proposed the adoption of the mirror-image treatment of IFRIC 12. In most, but not all, cases, control will be assessed to rest with the client, which will recognize property, plant and equipment, and not with the operator, which will recognize either a financial asset or an intangible asset on the basis of an assessment of which party bears the majority of risks and rewards. Under both UK GAAP and IFRS, accounting policy choices are strongly influenced by, for the client, governmental control frameworks, and for the operator, by the implications for the profile of distributable profits and for taxation. An important public policy issue is that the national accounts, which for European Union member states must comply with European System of Accounts 1995, will remain on a risks and rewards basis. It is these numbers that will be used in assessments of macro-fiscal policy and fiscal risks, notwithstanding that the Eurostat version of risks and rewards is even more open to manipulation than were the national financial reporting standards.

Impact of IFRS on Deferred Taxes Methodology in the Czech Republic and comparison with IFRS for SMEs

Investigating impact of IFRS on the accounting regulatory system in the Czech Republic, there should be highlighted that IFRS were introduced into the regulatory system gradually as a separate regulatory system for determined group of accounting entities, on the other hand IFRS have had influence on the development of the local accounting rules during last decade. It was awaited by practitioners and academics too, that the process of deferred taxes reform will be finalized by issuing the Decree on accounting for business entities and by the Czech Accounting Standard on deferred taxes. But the reform as for deferred taxes was realized only partially and wasn't adopted a holistic approach of IFRS implementation into local national accounting regulatory system. Based on the criticism of partial implementation of IAS 12 into local accounting rules, this article is focused on comparability of Czech accounting rules for deferred taxes with IFRS for SME. Conclusion from this investigation might become fundamentals for similar European accounting systems to the Czech Republic.

The effects of the new 1995 ESA methodologies of estimation on the structural analysis of Italian consumption

This study deals with the importance of the correct definition and identification of the consumption variable to obtain a good description of consumer behaviour, and shows how the new definitions of consumption introduced by the 1995 European System of Accounts (ESA) provide a better descriptive capability of the classic multiequational models of consumption compared with the definition and concept of the 1979 ESA. The models used are the Rotterdam Model, the Linear Expenditure System, and the Almost Ideal Demand System. Cointegration techniques have been applied to estimate Almost Ideal Demand System parameters. Data on Italian final consumption expenditure of households have been used.

Construction of Regional Input-Output Tables Using Nonsurvey Methods

Regional input-output tables are usually not constructed from survey data but are estimated using nonsurvey regionalization methods, which saves time and money. However, traditional regionalization methods ignore cross-hauling (the simultaneous exporting and importing of one and the same type of product). This flaw results in an underestimation of trade and an overestimation of regional output multipliers. This article presents a new approach based on an estimate of product heterogeneity, which addresses the problem of cross-hauling and is applicable to European System of Accounts tables with indirectly allocated imports. Its application is illustrated by the estimation of a regional input-output table for North Rhine—Westphalia, one of Germany's federal states. The results are compared to the traditional commodity balance approach, indicating that the new method suffers far less from the underestimation of trade and the overestimation of multipliers.

The Evolution of Public Accounting in Romania in the Post-Communist Period

Since we can safely say about Romania that it had to go through a long process of transformation until the European Union member state stage, we can also state that the Romanian public accounting system has suffered multiple changes in order to match the level of the European accounting system, based, especially, on the accruals basis of accounting, supported by the International Public Sector Accounting Standards (IPSAS). This transition hasn't been easy because we identify at least three periods of time in the evolution of the public accounting system after 1989, the year of the Romanian Revolution identified with the end of communism and the beginning of the capitalist era: as a starting point we have the public accounting system specific to the communist period, at least in what concerns the theoretical and legislative substantiation, which we cannot say that it ended in 1989 but which has continued until 2001; the interval 2002-2005 which marked the beginning of the public accounting transition from the cash basis system towards the accrual basis system; the interval 2006-present which acknowledges the accruals basis of accounting system as an accounting organizational system. The purpose of this paper is to analyze this evolution, segmented on the three defining intervals in order to get acquainted with what the public accounting system has been, how it has transformed itself, what modifications it has undergone, and what level it attained today.

Globalisation and the effect on national accounts: Practical examples

Globalization makes an accurate description of the national economy increasingly difficult. Two parallel processes characterise Dutch firms: on the one hand developing into companies with activities abroad and on the other hand being affiliated to foreign multinational companies. Many of these companies are considered 'complex companies' since their operations have led to major inconsistencies among several source statistics of the National Accounts of Statistics Netherlands. The interpretation of the source statistics related to multinational enterprises is problematic. In National Accounts consistency of data is of prime importance. The System of National Accounts (SNA) and the European System of Accounts (ESA) provide guidelines and definitions to measure the domestic economy and the links between an economy and the rest of the world. However, in many cases SNA and ESA do not offer a solution to the problems created by multinational enterprises. Statistics Netherlands is devising tailor-made solutions to solve these problems.

Accrual Budgeting: Accounting Treatment of Key Public Sector Items and Implications for Fiscal Policy

Budgeting in accrual terms is one of the most controversial issues in public sector accounting. In this paper, we analyze the accounting treatment of problematic elements of the financial statements when introducing accrual budgeting, and discuss the effects of the analyzed accounting alternatives on fiscal policy. We focus on three pioneer countries in the implementation of accrual budgeting and accounting: the United Kingdom, Sweden, and New Zealand. The accounting standards of the International Public Sector Accounting Standards Board, the European System of Accounts, and the Government Finance Statistics Manual of the International Monetary Fund are taken as benchmarks.

Les normes comptables comme institution du capitalisme. Une analyse du passage aux normes IFRS en Europe à partir de 2005

Accounting standards as an institution of capitalism. An analysis of the transition to IFRS in Europe from 2005. In 2002, the European Union changed direction from its past efforts to harmonise European accounting systems and turned instead to a subcontractor, requiring listed European companies to adopt accounting standards drawn up by a private London-based organisation, the IASB (International Accounting Standards Board), which had until then had no public mandate. This decision was all the more significant because the EU has no institutional means of control over the IASB, although it was the first geographical group to decide to impose these standards on its businesses. IASB standards are rooted in the anglo-saxon tradition of standardisation for the financial markets, and the view of the enterprise they promote diverges from the accounting traditions of continental European capitalism. This article shows how the new standards are transforming the concept of enterprise, and examines the span of factors that brought about what is a major institutional change for European capitalism

A global robustness measure for input–output projections from ESA and SNA tables

Input–output (interindustry) data are in wide use in empirical research and constitute an integral part of the European System of Accounts (ESA) and of the System of National Accounts (SNA). In a strict sense, however, these data are merely estimates of the true economic relationships. Therefore, we suggest a measure of robustness of input–output projections with respect to errors or changes in the underlying Leontief matrix. Our measure is based on the mathematical theory of norms and characterizes a complete Leontief matrix. Thereby, no assumptions are required on the distribution of the matrix elements. We discuss alternative numerical-computing algorithms and provide useful bounds and approximation formulas. The paper concludes with a large set of empirical sample applications.

Empirical evidence of the effect of European accounting differences on the stock market valuation of earnings and book value

Recently, a new dimension has been added to research in accounting harmonization by studying the effects of accounting practices and regulations on share price and return movements. Although there is an agreement of mutual recognition in the European stock markets of financial statements adapted to the directives, the differences between the European countries are still great. The objective of this study is to investigate the value relevance of alternative accounting measures (earnings and book value) constructed under different accounting systems in Europe. We investigate the differences in accounting practices through the relationship between earnings and book value, and the stock market value of the firm. The aim of the study is to answer the following three questions: (1) Are there systematic differences in value relevance between earnings and book value across the different European accounting systems? (2) Do book value and earnings convey different information to stock valuation? (3) Are accounting numbers more value relevant in those countries traditionally orientated to market investors? The sample consists of listed firms from eight European countries (Belgium, France, Germany, Italy, The Netherlands, Switzerland, Spain and the UK). The results obtained could be helpful for the decisions of institutional regulatory bodies since we find evidence of significant differences in the stock market valuation of accounting data not explained by the composition of the sample or macroeconomic factors, but mainly by the differences in reporting philosophies across Europe.