Overview of country consultation on
recommendations of the AEG
UN STATISTICS DIVISION
Economic Statistics Branch
National Accounts Section
Non-performing loans
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Loans should continue to be recorded at nominal value for both
creditors and debtors.
In addition, memorandum items should be shown at market value;
these should be mandatory for at least financial institutions and
government as creditors.
More clarification is required in respect of:
(i) the definition of which loans are non-performing; (ii) the exact
nature of the memorandum items (iii) a worked example of the
accounts showing the memorandum items; (iv) harmonization of terms
used in various manuals; (v) the implications for the recording of
FISIM; and (vi) whether similar treatment should be extended to other
financial instruments (in particular trade credits).
Agrees: 44
Disagrees: 3
Further clarification: 1
Originals and copies
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(a) Copies generated for issue under licenses to use represent new
production, (b) When they display the characteristics of fixed assets,
copies issued under license to use should be recorded as gross fixed
capital formation. (c) When a license to reproduce is issued under
terms similar to an operational lease, the payments made are treated
as payments for services, and (d) When the holder of an original
divests itself of part or all of the responsibility to issue and service
copies under licenses to use by means of a license to reproduce, this
constitutes the sale of the corresponding part of the asset.
Having two possible treatments for licenses to reproduce could affect
the classification of assets and the borderline between goods and
services in trade figures. This should be brought to the attention of
BOPCOM, and (e) Canberra II Group to recommend in which cases
when payments for a license to use are made over several years
represent the acquisition of an asset rather than a series of payments
for services and the consequence for recording other transactions.
Agrees: 36
Disagrees: 1
Further clarification: 1
Databases
In the present SNA recommendation that “large” databases should be
treated as fixed capital- the word “large” should be dropped. The AEG
tentatively agreed that:
 all databases were candidates for treatment as fixed capital but
requested the Canberra II group (i) to provide a definition of “database”
and a definition showing exactly which databases should be included (or
excluded) in fixed capital; (ii) to consider the distinction between creation
and maintenance and the implication for the inclusion in fixed capital; and
(iii) to add precision to the nature of employees to be included in the
recommended means of valuing own account databases; and
 the AEG agreed to include a single category in the classification of assets
for “software and databases” with a subsequent disaggregation into
“software” and “databases“.
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Agrees: 39
Disagrees: Further clarification: 1
Cost of ownership transfers - II
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Costs of ownership transfer on disposal of an asset should be written
off over the period the asset is held.
Installation and de-installation costs should be included in costs of
ownership transfer if separately invoiced, and in the purchaser’s price
of the asset otherwise.
Terminal costs should be recorded as capital formation when they occur
but the whole cost should be written off as consumption of fixed capital
over the life of the asset, analogous to costs of ownership transfer on
disposal.
When this recommendation on terminal costs cannot be followed for
lack of adequate data, these costs should still be recorded as GFCF but
written off as CFC in the year of acquisition.
Agrees: 38
Disagrees: 3
Further clarification: -
Government owned assets
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There was strong support in principle for including a return to capital,
viewed as an opportunity cost, in the measurement of non-market
output.
In terms of the range of assets which could be covered, most
participants favored including those assets in the generation of
government output similar to those assets used in market production.
A smaller number favored including roads and other infrastructure
assets. Progressively fewer favored including assets such as city parks
serving the community at large and land.
It was agreed that these range of positions of the AEG should be sent
to all countries seeking reactions on both conceptual and practical
grounds.
Agrees: 20
Reservations: 12
Disagrees: 14
Mineral exploration
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Change the item “mineral exploration” to “mineral exploration and evaluation” and to draw
on the IASB coverage of this item to specify the SNA item,
The description of the valuation of this item should be clarified to make clear that it is
market production to be valued either at market prices, if purchased, or as the sum of costs
plus mark-up, if produced on own-account,
Maintain a distinction between mineral exploration and evaluation as a produced asset and
the mineral deposit as non-produced assets,
The preferred valuation for mineral deposits, market price, is seldom available. In default,
the deposit should be valued as the present value of future receipts of resource rent; and
In principle, payments by the extractor to the owner of the deposit are property income.
However, when the owner is government and the payments are described as taxes,
adhering to this principle introduces a discrepancy between taxes in the SNA and in
government accounts. This needs further consideration.
The question of attribution of the ownership of a deposit extracted by a unit not the legal
owner is deferred to a future meeting when leases and licenses will be discussed more
generally.
Agrees: 35
Reservations: 1
Not clear: 1
Further clarification: 3
Land improvements
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GFCF of land improvements should be treated like other GFCF and
result in a produced asset appearing separately in the balance sheet;
The non-produced component of land should be valued at its present
unimproved value;
Here the value of land cannot be partitioned into an improved and
unimproved part, adopt recommendations for land and associated
structures as in para. 13.57 for balance sheets and para. 7.131 for rent
and rentals;
Costs of ownership transfer on land should be recorded as fixed assets
and included with land improvements;
The boundary between land improvements and structures should be
re-examined with a view to moving some items such as major dykes,
seawalls, etc. to structures; and
The terms “Land Improvements” and “Unimproved Land” are to be
reconsidered by the Canberra Group-II.
Agrees: 36
Reservations: 1
Disagrees: 3
Holding companies, SPEs, trusts
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An SPE incorporated in an economic territory other than any of
its owners should be treated as a separate institutional unit and
resident in its country of incorporation.
The AEG requested some indicative guidelines on the
identification of SPEs across manuals, although an
internationally standard definition of SPE is not available in light
of the national diversity.
This issue should be coordinated with TFHPSA.
Agrees: 36
Not clear: 2
Further clarification: 4
Multiterritory enterprises
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The treatment of multi-territory enterprises in BPM5 should be
extended to all kinds of activities, when formal separation is not
possible.
Units operating in zones of joint sovereignty or jurisdiction should be
split between these in ways that still need to be specified.
The broader question of multinational enterprises should be addressed
by a task force, taking account of IASB recommendations and work in
hand for the next ISI meeting.
Agrees: 37
Further clarification: 4
Recognition of branches
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Physical presence is not required for a branch to be recognized;
Being subject to income tax laws should replace paying income tax as
an indicator of the existence of a branch; and
All criteria should be considered as indicators for a separate branch but
not all criteria have to be met. Even if the entity does not have a full
set of accounts, if it engages in production, it should be treated as a
branch.
Agrees: 36
Change of economic ownership
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as term
The AEG agreed to the proposed change in terminology by
inserting the word “economic” but requested detailed
clarification on the meaning of “economic ownership”.
The implications for possible shared ownership of assets and the
time at which change in ownership occurs (e.g., signing a
contract) still need to be explored.
Agrees: 28
Further clarification: 3
Application of accrual principles
to debt arrears
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Time of recording and treatment of arrears should be harmonized in
the various macro-economic statistics.
No transactions should be imputed when a liability goes into arrears
(i.e., the debt continues to be recorded in the original instrument).
If the original contract provided for a change in the characteristics of a
financial instrument when it goes into arrears, this change should be
recorded as a reclassification in the other change in volume of assets
account.
If the contract is renegotiated, the consequences are to be recorded as
new transactions.
It was suggested that consideration of these issues should be included
in the paper concerning non-performing loans which the IMF has
agreed to prepare.
Agrees: 44
Predominant centre of economic interest
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Harmonization of the definition of residence between BPM and SNA is
essential; harmonization with other statistical systems (for instance,
demographic, immigration and tourism statistics) is desirable but not to
the point of compromising the integrity of the system. Where this is not
possible, the different definitions need to be documented.
The AEG agreed to adopt “predominant centre of economic interest” as
a term.
The AEG favored the one-year criterion rather than discretionary
criteria, with the existing exceptions of students and patients and with
clarifications of the situation of ships’ crews.
The AEG supported the supplementary presentation on non-permanent
workers proposed in the BPM Annotated Outline.
Agrees: 47
Disagrees: 1
Thank You