Government Finance Statistics Manual 2014

44 Government Finance Statistics Manual 2014

administrative arrangements. Two kinds of rerouting

occur:

• In the fi rst kind of rerouting, a direct transaction be-
  tween unit A and unit C is recorded as taking place
  indirectly through a third unit B. For example, if gov-
  ernment employees are enrolled in a social security
  or retirement scheme, accounting records may show
  the government unit making contributions directly
  to the social security fund or retirement scheme on
  behalf of its employees. However, these contribu-
  tions are part of the compensation of employees and
  should be recorded as being paid to the employee.
  In such a case, it is necessary to reroute the pay-
  ments so that the government is seen as paying the
  employees, who then are deemed to make payments
  of the same amount to the social security or retire-
  ment scheme (see paragraph 6.19). As a result of the
  rerouting, these contributions are included as part of
  the labor cost of government. Rerouting may also be
  necessary when recording the distribution of profi ts
  of fi scal monopolies (see paragraph 5.68).


• In the second kind of rerouting, a transaction of
  one kind from unit A to unit B is recorded with a
  matching transaction of a diff erent kind from unit
  B to unit A. For example, when a nonresident spe-
  cial purpose entity (SPE) of government borrows
  abroad for fi scal purposes, transactions should be
  imputed in the accounts of both the government
  and the nonresident SPE as if the SPE has extended
  a loan to government and government has invested
  the corresponding amount in the SPE (see para-
  graphs 2.136–2.139). Th is rearrangement of the
  transactions refl ects government’s involvement in
  the nonresident SPE, which would otherwise not
  be captured in government accounts.

Partitioning

3.29 Partitioning records a transaction that is a

single transaction from the perspective of the parties

involved as two or more diff erently classifi ed transac-

tions. For example, when a general government unit

acquires an asset below or above its current market

price, the division of the actual transaction into an

exchange and a transfer is an example of partitioning

(see paragraph 3.11).

Reassignment.

3.30 Reassignment records a transaction arranged

by a third party on behalf of others as taking place directly

by the two principal parties involved. Reassignment is

required when one unit arranges for a transaction to be

carried out between two other units, generally in return

for a fee from one or both parties to the transaction. In

this case, one unit acts as an agent for another unit. In

such a case, the transaction is recorded exclusively in the

accounts of the two parties engaging in the transaction

and not in the accounts of the third party facilitating the

transaction. Th e accounts of the agent show only the fee

charged for the facilitation services rendered. For exam-

ple, reassignment may occur when one government unit

collects taxes and then transfers some or all of the taxes

to another government unit. In some arrangements of

this nature, the collecting unit retains a small portion of

the tax collected in return for its collection eff orts. Th e

amount retained is treated as the sale of a service by the

collecting unit, while the total amount of taxes collected

is shown as revenue for the benefi ciary government

unit. For guidelines on the reassignment or attribution

of taxes to collecting or benefi ciary governments, see

paragraphs 5.33–5.38.

Other Economic Flows.

3.31 Other economic fl ows are changes in the

volume or value of assets or liabilities that do not re-

sult from transactions. Th ese other economic fl ows

are not transactions because they do not meet one

or more of the characteristics of transactions. For

example, the institutional units involved may not

be acting by mutual agreement, as in the case of an

uncompensated seizure of assets, or changes due to

natural events, such as an earthquake or a fl ood. Al-

ternatively, the value of an asset expressed in foreign

currency may change as a result of exchange rate

changes, or the value of an asset may change due to

the passing of time.

3.32 Th ere are two major categories of other eco-

nomic fl ows, described as holding gains and losses, and

other changes in the volume of assets and liabilities.^8

Holding gains and losses

3.33 A holding gain or loss^9 is a change in the

monetary value of an asset or liability resulting from

changes in the level and structure of prices, exclud-

ing qualitative or quantitative changes in the asset

or liability. Holding gains and losses on assets and

(^8) References to changes in the valuation or volume of assets also
apply to liabilities.
(^9) Holding gains and losses are also referred to as revaluations in
the 2008 SNA and in generally accepted accounting standards.