54 Government Finance Statistics Manual 2014
Time of recording other economic fl ows.
3.98 Other changes in the volume of assets are usu-
ally discrete events that occur or accrue at particular
moments or within fairly short periods of time (see
paragraphs 10.46–10.47). For example, the destruc-
tion of an asset by fi re happens at a specifi c time, and
the impact of a natural disaster can be allocated to a
specifi c period.
3.99 Changes in prices oft en have a more con-
tinuous character, particularly in respect of assets for
which active markets exist. In practice, holding gains
or losses will be computed between two points in
time. Th e starting point will be the moment at which:- Th e reporting period begins
- Ownership is acquired from other units (through
purchase or a transaction in kind) - An asset is produced.
Th e end point in time will be the moment at which: - Th e reporting period ends
- Ownership of an asset is relinquished (through a
sale or a transaction in kind) - An asset is consumed in the production process.
3.100 Holding gains and losses are not calculated
over a period beginning the moment two units agree
to a mutual exchange of assets. Instead, the calcu-
lation of the holding gains and losses starts when
economic ownership of the assets is acquired. Th e
signing of the contract fi xes the market price for
the transaction. A unit can incur holding gains and
losses only on the assets or liabilities over which it
has economic ownership. Th is implies that during the
period between the signing of a contract and the date
on which the fi rst party delivers, the second party
cannot incur any price risks on this contract; the sec-
ond party neither owns the assets to be delivered nor
owns a claim on the fi rst party to be recorded in the
fi nancial accounts.^19
3.101 Other changes in volume, including reclas-
sifi cations, are recorded as these changes occur. An
integrated stock-fl ow framework requires that both
(^19) For example, a sales contract to the value of 100 is agreed on
day 1, when the market price of the transaction is 100, for delivery
on day 5. On day 5, the price of the item prevailing on the market
is 102—the buyer records a transaction of 100 and immediately
revalues the item.
the removal of an existing asset or liability from the
original category and its inclusion in the new category
are recorded at the same time.
3.102 Reclassifi cations should be recorded when
the change in the nature of the asset, liability, or en-
tity occurs. Although one might be tempted to stock-
pile major reclassifi cations for a number of years and
enter them as one block at the end of this period, this
procedure does not conform to the accrual principles
of GFS, which aim for correct estimates at all times.
Keeping records of reclassifi cations makes it possible
to reconstruct supplementary time series based on the
situation before the reclassifi cation, if needed.
Using the cash basis of recording in the Statement of Sources and Uses of Cash
3.103 GFS includes a Statement of Sources and Uses
of Cash. For this statement, statistics on monetary
fl ows should be based on transactions as close to the
payment/receipt stage as possible. Th ese statistics,
based on cash payments/receipts, measure in aggre-
gate the government’s impact on the liquidity condi-
tions in the economy (see paragraph 3.67). Although
these cash-based data lack an integration of fl ows
with stock positions, they are complementary to the
accrual data and form an integral part of the complete
GFS framework.
3.104 For expense and the acquisition of nonfi -
nancial assets, data at the stage of payment by cash
disbursed, or checks or warrants issued, represent
the most desirable basis on which to record the cash-
based data.^20 For revenue, data representing the tax
payments received by government, net of refunds paid
out during the period covered should be reported.
Th ese data will include taxes paid aft er the original as-
sessment, taxes paid or refunds deducted from taxes
aft er subsequent assessments, and taxes paid or re-
funds deducted aft er any subsequent reopening of the
accounts. In the reporting of tax revenue, the use of
payment basis data is oft en the fi rst best estimate for
a cash statement.
3.105 In the case of government borrowing, the
cash basis of recording will report borrowing when
funds are received by government, or when lenders(^20) Cash accounting that allows back-dated transactions (known as
complementary periods), may distort actual cash fl ows. Record-
ing of cash transactions in such a manner should be disclosed.