Economic Flows, Stock Positions, and Accounting Rules 65
quality of GFS compiled. However, where a dis-
crepancy cannot be resolved, decisions need to be
made about which unit or group of units has the
most reliable source data. Generally, the higher
level of government is considered to have more re-
liable records than the lower levels of government.- To create consistency with other macroeconomic
datasets, components of the data for the public
sector should be presented in such a way that they
show the data before consolidation and aft er con-
solidation. Th is will allow for the unconsolidated
data to be consistent with the data required in the
national accounts and other datasets that are pre-
sented before consolidation (see paragraph 3.168).
3.166 Consolidation does not aff ect balanc-
ing items. In other words, the balancing items that
are produced by simple aggregation are the same as
those produced by consolidation. Th is is a result of
the symmetry of the consolidation process, wherein
the two sides of the consolidation adjustment fall
within the same section of the analytical framework.
When consolidated data produce diff erent balancing
items from the unconsolidated data, recording errors
have been made. Th erefore, when intra- or intersec-
toral fl ows and stock positions to be consolidated
are not measured in the same amount by the units
or subsectors involved, a consolidation method must
be chosen that does not aff ect balancing items (see
paragraph 3.165).
Consolidation in other datasets
2008 System of National Accounts
3.167 Th e 2008 SNA recommends, as a matter of
principle, that statistics of institutional units should
not be consolidated in the national accounts, but that
consolidated accounts may be compiled for comple-
mentary presentations and analyses. Even then,
transactions appearing in diff erent accounts of the
national accounts are never consolidated. Th e diff er-
ence between the 2008 SNA and this Manual refl ects
the diff erent uses of the statistics. Th e GFS framework
is designed to produce statistics suitable for use in
the analysis of the net relations between government
and the rest of the economy. In particular, assessing
the overall impact of government operations on the
total economy or the sustainability of government op-
erations is more eff ective when the measure of gov-
ernment operations is a set of consolidated statistics
rather than unconsolidated statistics. Th e GFS frame-
work also is not intended to produce a measure of
production. Th e 2008 SNA, on the other hand, serves
a range of other uses, including a comprehensive mea-
sure of production and relations among all the sectors
of the economy.Financial statements
3.168 In fi nancial statements, compiled in accor-
dance with accounting standards, accounting entries
are oft en presented on a consolidated basis for the re-
porting entity and all of its controlled entities. Th is is
done without regard to whether the controlled entities
are general government units or public corporations,
as those terms are used in this Manual, or whether
the controlled entities are residents or nonresidents.
Th is use of consolidation attempts to portray the
operations and fi nancial position of a parent and its
subsidiaries as though the group of enterprises were a
single unit. For example, a fi nancial report for a state
government unit would include all public corpora-
tions controlled by that government unit but would
not include the statistics of any other state govern-
ments. In contrast, the consolidated statistics of the
state government subsector in the GFS framework
would include all state government units of the coun-
try, but would exclude all public corporations owned
or controlled by those state governments.