Presentation made by Timothy Irwin, consultant, at the 16th Annual OECD Accruals Symposium held at the OECD Conference Centre, Paris, on 21-22 March 2016.

2. Overview
1. Much progress has been made in producing balance sheets
2. But balance sheets are not always used for fiscal analysis
3. What would make them more relevant?
2

3. Most rich-country governments now publish accrual accounts
Availability of central government accounts in advanced economies
Not available in 2014 Available in 2014
Not available
in 2003
Belgium Cyprus Germany
Greece Ireland Italy
Luxembourg Netherlands
Norway Portugal
Singapore
Austria Denmark France
Hong Kong Israel
Japan Korea Switzerland
United Kingdom
Available in
2003
Australia Canada Spain
Iceland Finland
New Zealand Sweden
United States
3Source: “Dispelling Fiscal Illusions,” Public Money & Management, 2016

4. The reporting of statistical balance sheets is improving too
Reporting of selected items by 28 advanced economies
4Source: “Dispelling Fiscal Illusions,” Public Money & Management, 2016
2
1
2
7
11
5
7
15
22
26
Civil-service pensions
Nonfinancial assets
Financial derivatives
Accounts payable and
receivable
Shares and other equity
Reported in 2013 Reported in 2003

5. But the accounts are often little used in fiscal analysis
• The conclusions of the Cour des comptes’ review of the French experience
probably ring true in other countries:
– The principal objective has been achieved: information on government
assets and obligations has been “significantly improved”, contributing to
greater transparency of the state’s financial situation
– Yet the accrual accounts are “still today too little used, especially by
comparison with budgetary accounts and national accounts”.
– The view of the public finances afforded by the accounts is not
“emphasized by the government, analyzed by the parliament, or used
by investors or rating agencies”
5

6. Some do not seem written with the aim of aiding analysis
Four examples of the reporting of total assets on the balance sheet
6
Total assets as reported Precision in percent of GDP
1,337.3 Hundredths
989,150 Ten thousandths
55,844,000,020.45 Hundred millionths
623,138,436,020.67 Trillionths

7. Another problem is that accounts come too late or are only annual
Lag of annual accounts in months
7
12
12
10
9
8
7
6
5
5
5
5
5
3
3
3
3
3
United Kingdom
Japan
Spain
Austria
Hong Kong
Canada
Iceland
USA
Korea
Israel
France
Australia
Switzerland
Sweden
New Zealand
Finland
Denmark
Source: “Dispelling Fiscal Illusions,” Public Money & Management, 2016

8. A third is that they often lack relevant information
• No clear link to the budget or fiscal rules
• No clear links to economic concepts like general government
• Nothing on the sustainability of tax and spending policies
• Nothing on the effect of the economic cycle on the deficit or the effect of the
deficit on the economy
8

9. What would help
• Write the accounts as though you want them to be read
• Publish them monthly or quarterly with short lags
• Link them to budgets and fiscal rules: if the budget is cash-based and fiscal
rules rely on national accounts
– Reconcile accounting outturns with the budget and fiscal-rule measures
– Include forecasts of the balance sheet in the budget and in accounts
compare the actual with the forecast balance sheet
• Ensure coverage is at least central government as defined by statisticians; if
broader, report on central government as a segment
• Show a comprehensive balance sheet including present values of taxes and
spending alongside the standard balance sheet
• Discuss cyclical adjustment and feedback effects in narrative: fiscal policy is
a restructuring of the comprehensive balance sheet
9

10. Conclusions
• Don’t think accounting is only about the past: work out how to incorporate
future taxes and spending in reports
• Recognize in reporting that the government’s finances, unlike those of
nearly every other reporting entity, are affected by feedback through the rest
of the economy
• Nothing is impossible if you don’t have to do it yourself
• And the presentation of information needs to reflect its precision
• But if accounts are to be used in fiscal analysis, they must compete
successfully for readers’ attention
10