284 Government Finance Statistics Manual 2014
- Government provides directly to the house-
holds goods and services purchased from market
producers. - Market entities provide goods and services di-
rectly to households, with the government pro-
viding reimbursement either directly to the
provider or to the household for expenses in-
curred. Although households are reimbursed in
cash for eligible purchases of goods and services,
the transaction should be recorded as social as-
sistance benefi ts in kind.^8
A2.28 A distinction should be made between so-
cial assistance benefi ts and certain other expense cat-
egories incurred by government—notably: - When a government unit produces the goods
and services provided to households as social as-
sistance benefi ts, they are not recorded as social
benefi ts but rather by type of expense incurred in
producing these goods and services: compensa-
tion of employees (21), use of goods and services
(22), and consumption of fi xed capital (23).^9 - If a government unit reimburses corporations for
the cost of goods and services provided to tar-
geted social assistance benefi ciaries, the transfers
are recorded as social assistance benefi ts in kind.
Th ese transfers to corporations should be distin-
guished from subsidies (25), which are transfers
to enterprises intended to reduce prices or in-
crease the provision of goods and services for the
general population. - Social assistance benefi ts do not include transfers
payable in response to events or circumstances
that are not normally covered by social insurance
schemes (see paragraph A2.10).
A2.29 Typically, social assistance benefi ts will be
recorded on an accrual basis as an expense when all
eligibility criteria have been met and the benefi ts be-
come payable. Although some benefi ts, such as dis-
ability or maternity payments, may be payable over
several reporting periods, no liability for the future
(^8) Th e economic substance of the transactions is recorded as if the
government purchased the goods and distributed them to the
benefi ciaries. Th e intermediate step of acquisition and disposal of
inventories of goods is netted out in the calculation of change in
inventories.
(^9) Th is treatment diff ers from the treatment in the 2008 SNA. See
Appendix 7, Box A7.1, for an explanation of the diff erence in the
treatment of goods produced by government and transferred in
kind.
payments of social assistance benefi ts should be re-
corded on the balance sheet of government. Other ac-
counts payable will be recognized only in cases where
a benefi t accrued but remained unpaid at the end of a
reporting period.^10 However, to increase transparency
and allow an analysis of the sustainability of social
assistance policies, an estimate of the present value
of social assistance benefi ts that have already been
earned, according to the existing laws and regulations,
but are payable in the future, could be calculated in a
manner similar to the liabilities of an employment-
related insurance scheme.
Social Insurance Schemes
A2.30 Social insurance schemes provide social
protection and require formal participation by the
benefi ciaries, evidenced by the payment of contri-
butions (actual or imputed). Th ese schemes are or-
ganized in such a way that a third party, usually an
employer or the government, encourages or obliges
individuals to participate in a scheme that provides
benefi ts for a number of identifi ed circumstances,
including pensions in retirement. Social insurance
schemes have much in common with direct insur-
ance (see paragraph A4.68) and may be run by in-
surance corporations. Th e payment of contributions
(corresponding to premiums in the case of direct
insurance) and benefi ts (corresponding to claims in
the case of direct insurance) is recorded according
to the nature of the scheme. Participation is usually
linked to employment, and contributions are pay-
able either by the participants, an employer, or both.
Th erefore, a social insurance scheme is an insurance
scheme for which the following two conditions are
satisfi ed:
- Th e benefi ts receivable are conditional on par-
ticipation in the scheme and constitute social
benefi ts.
(^10) For example, assume person A has met the eligibility criteria
for unemployment payments in period t1, and is entitled to
receive benefi ts for six periods. Because of administrative delays,
no benefi t payment was made in the fi rst period—therefore, an
other account payable at the end of that period, equal to the value
of payment for one period only, should be recorded. Similarly, if
another payment is not made in the second period, the account
payable will increase with the value of benefi ts for another one
month. Th e full amount of benefi ts to be receivable over the six
periods should not be recognized as an upfront payable, but
rather be accrued continuously over the period of eligibility.