This section aims at presenting the current knowledge on links between business accounting and official statistics, in order to:

• assess the impact of the adoption of the International Accounting Standards (IAS), 

• be prepared to the related risks of loss of comparability and breaks in series, 

• seize the opportunities offered by the harmonisation of accounting rules in the EU.

Most of EU official statistics are collected by Member States, mainly through the National Statistical Institutes and Central Banks. Therefore the links between business accounting and official statistics vary across countries and statistical domains.

This introduction gives a brief overview of the conclusions of the studies (available to date)  on the impact of the IAS on different types of official statistics.  The following sections of this web site chapter focus on these studies themselves.  The statistics concerned are :

1. Structural Business Statistics (SBS)

2. National and Financial Accounts : European System of National and Regional Accounts (ESA95)

3. Money and Banking Statistics (MBS)

4. Balance of Payments/International Investment Position Statistics (BOP/IIP)

1. IAS and Structural Business Statistics (SBS)

1.1. Comparison IAS/IFRS -SBS Regulation

A comprehensive study was completed at Eurostat in February 2004 to come to a detailed comparison of the Commission Regulation (EC) 2701/98 on SBS  and the Commission Regulation (EC 1725/2003) on IAS .  The main objective of this study was to provide a systematic comparison between the definitions in IAS/IFRS and definitions of relevant statistical characteristics as specified in annexes 1 to 4 (Industry, Construction, Services and Trade) of the SBS- regulation.   Annexes 5 to 7, specific for insurance services, pension fund and credit institution characteristics, have not been included, as financial reporting standards IAS 32 (Financial Instruments: Disclosure and Presentation) and IAS 39 (Financial Instruments: Recognition and Measurement) had not taken their definitive form at the time.

The study concluded that :

•  24 of the 60 relevant SBS-characteristics are also recorded under IAS/IFRS
• 18 relevant characteristics are not recorded under IAS/IFRS as such, but could either be calculated because their components are recorded or are likely to be disclosed in financial statements as common accounting practice  
• 18 relevant characteristics are not recorded under IAS/IFRS.

The results were validated by SBS statisticians who added that of the characteristics not recorded under IAS/IFRS  were not recorded either under the GAAP of certain countries.  Furthermore, the SBS Regulation remains in place after 2005 so the characteristics will need to be reported by European enterprises even if they can not retrieve them from their IAS/IFRS reports.  The only danger of certain variables disappearing arises when companies would exert pressure to reduce their reporting burden and to align reportig under IAS/IFRS and SBS.
 

1.2. Comparison 4th Accounting Directive - SBS Regulation

The main results of a technical comparison study of the SBS Regulation and the 4th Accounting Directive were :

• terminology of the SBS regulation has been aligned as much as possible with terminology of the 4th Accounting Directive;
• where possible the SBS regulation contains links to company accounts;
• key statistical variables can be related to the balance sheet and to the profit and loss account where it is easier to do for the latter than for the former;
• the profit and loss account broken down by the nature of activities allows the computation key concepts such as value added and production value;
•  the profit and loss account broken down by function of activities is much less statistically usable.

2. IAS and National and Financial Accounts (ESA95)

National and Financial Accounts are statistics aggregated per country and collected i.a. on the basis of individual financial accounts of enterprises.  The extension (or non-extension) by the Member States of the application of IAS to enterprises not covered by the IAS Regulation is therefore a determining factor for the continuity and quality of these statistcs.

The main conclusions of the technical comparison study by Eurostat are :

• the introduction of IAS will create a discontinuity in elementary statistical sources to be compensated later by a greater degree of harmonisation of statistical information;
• there will also be an impact on the methodologies of transformation and aggregation;
• the impact on Financial accounts is rather difficult to assess as it is highly dependent on the definitive versions of IAS 32 and 39 which are under review;
• as book values move closer to market values (via the concept of 'fair value') they will be easier to compare internationally.

3. IAS and Money and Banking Statistics

Money and Banking statistics (MBS) are statistics concerning financial institutions and financial markets.   Banking statistics are produced on the basis of the financial reports of the Monetary Financial Institutions (MFIs).  Monetary statistics are very closely linked to the Banking statistics, but they are more general in nature (e.g. monetary aggregates calculated in accordance with harmonised definitions applicable to all EMU countries).

MBS offer sectoral information (e.g. credit institutions' loans to households, capital adequacy etc..) as well as information on market developments in the money and capital markets (interest rates, yield curves, government and other bonds etc..)

The main conclusions of the technical comparison study by the European Central Bank are :

• the IAS do not (yet) represent a stable accounting environment as two important standards (IAS 32 and 39) for the financial sector are under review;
• the differentiated approach of Member States to extend the application of IAS to individual accounts will increase inconsistencies of reporting by financial institutions within countries;
• the adoption of IAS will necessitate changing the key regulation ECB Regulation 2001/13 amended by ECB Regulation 2002/4 on the balance sheets of financial institutions;
• concerning the valuation of traded loans MBS (nominal value)  and IAS (fair value) differ considerably ; the extension of the fair value principle to non-traded loans and deposits would increase the differences;
• the implementation of the fair value principle is likely to cause a one-off increase balance sheet totals and greater volatility in equity afterwards;
• it is unclear whether the scope of IAS covers unincorporated collective investment undertakings;
• for monetary policy purposes, the analysis of medium to long term inflationary effects of current monetary and credit developments is likely to be complicated by the extension of the fair value principle to non traded instruments (as proposed in the amendments to IAS39); 
• the harmonised and more consistent valuation for securities is welcomed for MBS, however the prospect of the adoption of the fair value principle to non marketable instruments causes concern (see above).

4. IAS and Balance of Payments/International Investment Position Statistics (BOP/IIP)

These statistics reflect a country's transactions with the rest of the world. This is equivalent to the transactions between residents of a country and non-residents.

The balance of payments is divided up into the current account, investment and other capital transactions. The transactions recorded, involve goods, services, transfers, loans granted or received, market securities, foreign exchange etc.

The international investment position is a statistical statement, compiled at a specified date such as year end, of:

• the value and composition of the stock of an economy's financial assets or the economy's claims on the rest of the world
•  the value and composition of the stock of an economy's liabilities to the rest of the world.

The main conclusions of the technical comparison study by the European Central Bank are :

• it is expected that the importance of financial accounts from major financial and non-financial enterprises as a source for BOP/IIP statistics will grow ; it is therefore desirable to make the links between accounting and statistical standards as close as possible;

• the IAS broadly comply with the Balance of Payments Manual (BPM5) and the wider macro-economic statistical framework System of National Accounts (SNA93) ; a further harmonisation of data collection is therefore possible even yielding additional information;

• the implementation of the IAS may serve as a catalyst for a current ERP-project for harmonised BOP/IIP reporting for multinationals;

• the quality of Foreign Direct Investment data will improve as IAS 1 imposes a detailed 'changes in equity' statement;

• the practical implementation of the IAS will vary across Member States in scope and in timing hence causing a danger of disruptions in series.