Ancillary units
UN STATISTICS DIVISION
Economic Statistics Branch
National Accounts Section
UNSD/NA/MR
1
Current SNA93: Definition of
ancillary units/activities
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A productive activity undertaken with the sole
purpose of producing one or more common type of
service for intermediate consumption within the same
enterprise is defined as an ancillary activity.
These are supporting activities undertaken within an
enterprise in order to create conditions within which
the principal or secondary activities can be carried
out.
Examples of ancillary activities are: headquarter
activity, keeping records, communication, purchasing
of materials and equipment, personnel management,
warehousing etc.
Current SNA93: Definition of
ancillary corporations
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Ancillary corporation is defined as a
subsidiary corporation, wholly owned by a
parent corporation, whose productive
activities are strictly confined to providing
services to the parent corporation or other
corporations owned by the same parent
company.
Most special purpose vehicles (SPVs) set up
to serve a parent corporation are ancillary
corporations according to the SNA principle.
Current SNA93 treatment of
ancillary units/activities
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Output of ancillary activity is not recognized by the SNA. Its
costs must be allocated to the main activities (i.e.
establishments) it serves.
Ancillary corporation is treated similar to an ancillary activity. Its
output is not recognized by the SNA, its costs must be
aggregated to main activities of the parent company it serves.
Practically allocation of ancillary costs to different activities
which it serves is rarely done. These costs are commonly
allocated to the principal establishment in an enterprise.
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This distorts the costs and value added of that establishment.
This also distorts the data on the region where that establishment
is located.
Problem with SNA93
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Output, value added of ancillary units are not
recognized at regional levels by the system, but are
added to the parent company which may be in
another region and therefore it is not possible to
compile properly regional GDP.
Ancillary activity is not classified according to its own
kind of activity but by the activity of the principal
activity it serves. New York City may be shown as
producing oil or automobiles simply because it has
headquarters of oil and automobile companies.
Difficult to get information for realistic assessment of
the contribution and the role of ancillary activities in
the economy.
Proposal change by Experts
Group on Industrial Statistics
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Ancillary units at well specified location and
with separate cost accounts should be treated
as producer units, i.e. establishments.
Ancillary units should be classified by their
own activities.
Output = Intermediate consumption +
compensation of employees + consumption
of fixed capital + imputed operating surplus
(if necessary).
Allocation of ancillary costs
Establishment 1 Establishment 2
Headquarter
IC1 = 100
IC2 = 30
IC(H)= 30
IVA1= 100
IVA2 = 70
Other part of
VA(H)=
15
Output 1 = 200 Output 2 = 100
Current SNA93 treatment
GDP = 80+60=140
Establishment 1
Establishment 2
Inputs of head quarter are
allocated
=IC1 + 20 = 120
Inputs of head quarter are
allocated
=IC2 + 10 = 40
VA1 = 80
VA2 = 60
Output 1 = 200
Output 2 = 100
New proposed treatment
keeps GDP the same
GDP = 70+55+15=140
Output of 3 is
imputed as IC
Value added
Output
Establishment
1
Establishment
2
Headquarter
3
IC1 =100
IC2 = 30
2/3 output 3
+ 30
1/3 output 3
+ 15
IC3 = 30
VA1 = 70
VA2 = 55
VA3 =15
Output 1 = 200
Output 2 = 100
Output 3
(imputed) =
45
Change in treatment of ancillary
units helps regional accounts
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Ancillary units such as headquarters, warehousing, etc. located
at locations different from the main establishment location will
be treated as establishments.
Given all establishments are used as statistical units for data
collection, then production data can be compiled for specific
location (or region).
To set up gross regional product (GRP) or value added, it is
necessary to do some adjustments at the national (or macro)
level as data are not available at regional levels:
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To allocate data of some national activities such as public
administration, army, security, national companies in banking,
insurance, telecommunication, postal services and transportation,
etc. to the region using some well-defined indicators.
To allocate fisim and insurance services to the regional economies.
To reconcile regional data using regional price indexes with national
data using weighted national price indexes.
Thank You