Local government accounts in Denmark Accounting data from local governments units By Gitte Frej Knudsen Helene Gjermansen

Collection, processing, sources, accounting systems 1.Structure of local government in Denmark 2.Data delivery to Statistics Denmark 3.Structure of entries and sources 4.Data collection – time schedule 5.Data processing (primary data)  Debugging, validation and outside assistance 6.Responsibilities concerning primary data 7.Legality to collect final data and non final data  The standardized accounting system  Contract, gentleman's agreement 8.Problems with non final primary data Overview 2

1. Structure of local government - municipalities and regions 5 regions  (populations of 0,6 – 1,7 million) 98 municipalities  (populations of – ) 3

 Primary education  Child care  Care for the elderly  Granting and payment of cash assistance, pensions, and other social benefits  Care of mentally and physically disabled people  Job activation and employment projects  Supply of water, heat, electricity, removal of refuse, and purification of discharge water  The local road network  Libraries, local sports facilities, and other cultural activities 1. Structure of local government - responsibilities for the municipalities 4

1. Structure of local government - responsibilities for the regions 5 Hospitals and health insurance Infrastructure Environmental protection

 Municipalities:  Responsible for tasks close to the citizens  Democratically elected municipal board  Financed by taxes  Regions  Responsible for tasks requiring a larger population base  Democratically elected regional board  Financed by transfers from central government 1. Structure of local government - delegation of tasks 6

Public expenditure by sector (2012) 1. Structure of local government - public expenditure by subsector 7

2. Data delivery to Statistics Denmark 8 Database in KMD (61 municipalities) Database in Statistics Denmark Accounting systems in the municipalities (37 municipalities) Electronic report with detailed data from the individual municipality Accounting systems in the regions (5 regions) Electronic report with detailed data from the individual region Mailbox in Statistics Denmark מאגר נתונים מוניציפליים – 61 רשויותמאגר נתונים בלשכה הדנית לסטטיסטיקה מערכות החשבונות המוניציפליות – 37רשויות מערכות החשבונות האזוריות– 5 אזורים דיווח אלקטרוני עם נתונים מפורטים לכל רשות נתונה דיווח אלקטרוני עם נתונים מפורטים לכל אזור נתון תיבת דוא"ל בלשכה הדנית לסטטיסטיקה

 The accounting system is standardized by the Ministry for Economic Affairs and the Interior.  The committee for the standard accounting system has the following institutions represented:  Ministry for Economic Affairs and the Interior  Ministry of Finance  Nationwide organization for the municipalities (KL)  Nationwide organization for the regions (Danish Regions)  Statistics Denmark  Accountants  The committee is used for information, decisions and informal talks 2. Data delivery to Statistics Denmark 9

Data sources:  Municipality and region detailed accounts.  A standardized accounting system  Electronic transfers Entry line: MMMFFFFFKNGGGTTXXXXXXXXX (24 digits) 3. Structure of entries and sources 10 Digits 1-3: Municipality number Digits 4-8: Function (eg. schools, elder care, health care) Digit 9: Kind of transaction (current account, financial acc.) Digit 10: Not used for statistical purposes Digits 11-13: Group (further details about function) Digits 14-15: Type of transaction Digits 16-24: Amount (+ expenditure, – revenue) ⁻ סמל הרשות ⁻ פונקציה (ביה"ס, בריאות, קשישים וכ') ⁻ סוג פעולה (חשבונות שוטפים, פיננסים) ⁻ לא בשימוש סטטיסטי ⁻ קבוצה (פירוט לגבי ה-"פונקציה") ⁻ סייוג הפעולה ⁻סכום ( + הוצאה, - הכנסה)

Etc.  Municipality number 147: Frederiksberg (part of Copenhagen region)  Function number 32201: Primary schools  Kind of transaction number 1: Current transfers  Group number 999: No further details about function  Type of transaction is number 10: Wages  Amount in 1000 DKK 3. Structure of entries and sources Example: Input data from a municipality 11 ⁻ סמל הרשות – 147 – פרידריקסברג (באזור קופנהגן) ⁻ פונקציה – בתי ספר יסודיים ⁻ סוג פעולה – 1- העברות שוטפות ⁻ מספר קבוצה – אין נתונים נוספים על הפונקציה ⁻ סייוג הפעולה – 10 - משכורות ⁻סכום (כת"ד, אלפים) –

4. Data collection – time schedule 12 Time of data collection, (year t) - מועד איסוף נתונים Type of data - סוג הנתונים Publication of accounts/budgets - פרסום חשבונות/תקציבים Publication in the national accounts - פרסום בח' לאומיים February, year (t+1)Provisional accounts חשבונות ביניים March, year (t+1) April, year (t+1)Final accounts and balance sheets חשב' סופיים ומאזנים May, year (t+1)June, year (t+1) November, year (t-1)Budgets תקציבים January, year (t)March, year (t) April, year (t)Quarterly accounts (1st quarter) רבעוני - May, year (t)June, year (t) (partly May) July, year (t)Quarterly accounts (2nd quarter) August, year (t)September, year (t) (partly August) October, year (t)Quarterly accounts (3rd quarter) November, year (t)December, year (t) (partly November) January, year (t+1)Quarterly accounts (4th quarter) February, year (t+1)March, year (t+1) (partly February)

 Pooling of data – one database with all primary accounting data  Debugging by comparing data to the standard accounting system  Debugging by comparing data to budgets, previous accounts or quarterly data  Contacting the individual municipality or region if:  There are larger errors that must be corrected  Delayed delivery of data  Using accounts that does not exist in the standardized accounting system 5. Data processing (primary data) – debugging 13

 All corrections are made through a SAS-program – no manual corrections in the database  Everything is documented  Easy to roll back the database if needed, or ‘re- correct’ errors if a municipality or region wants something changed later  Easy to see changes in previous datasets in case of similar (or identical) errors in later delivered datasets 5. Data processing (primary data) – corrections in the system 14

 Corrections after publication of annual data happen only in case of larger errors in data, or errors that significantly influence central government reimbursement  Quarterly accounts are not final accounts, but only a view of the situation around 10 days after the end of the quarter. Corrections happen if new data is received, but will generally not be changed until the next publication in the following quarter. 5. Data processing (primary data) – corrections in the system 15

 Outside assistance in regards to data validation of the annual budgets and accounts (not quarterly data)  Ministry for Economic Affairs and the Interior  Ministry of Finance  Nationwide organization for the municipalities (KL)  Nationwide organization for the regions (Danish Regions)  Preliminary results only. The final accounts are not shared until the publication date  Assistance only. No influence on decisions or results 5. Data processing (primary data) – validation and outside assistance 16

Advantages:  Agreement about the results of the accounts and budgets at the time of publication  The four institutions have more knowledge of the current situation in the municipalities and regions – better and faster validation Disadvantages  Political interests and the desire to have numbers early  Potential leak of data – one contact person in each institution who is responsible. 5. Data processing (primary data) – validation and outside assistance 17

 Data collection: Statistics Denmark  Debugging: Statistics Denmark  Validation: Statistics Denmark, with assistance from (annual data only):  Ministry for Economic Affairs and the Interior  Ministry of Finance  Nationwide organization for the municipalities (KL)  Nationwide organization for the regions (Danish Regions)  Final decisions about data: Statistics Denmark  Publication: Statistics Denmark 6. Responsibilities (primary data) 18 איסוף נתונים: איתור באגים: אימות: עם סיוע (לגבי נתונים שנתיים) מ- : קבלת החלטות סופית לגבי הנתונים: פרסום:

Legal demands:  Final accounts and balance sheets  Budgets The Local Government Act: “The Ministry for Economic Affairs and the Interior prescribe the form of budget and account for the municipalities and regions”. In practice: The standardized accounting system for municipalities and regions:  Standard accounts numbers and bookkeeping rules.  Standard form and procedural requirements for budgets and final accounts.  Time schedule for delivery of budgets and final accounts to Statistics Denmark. 7. Legality to collect final data 19

Non-legal demands:  Quarterly accounting data  Provisional accounts for the year  Used for the GFS of the year in March (t+1) and for the forth quarter in March (t+1) No legality by law – but contract and gentleman's agreement. Quarterly data: Contract between The Ministry for Economic Affairs/Interior and Statistics Denmark:  Statistics Denmark collect the quarterly accounting data from the accounting systems. Delivery of accounting data for every single municipality and region.  The ministry using the data only for budgetary control.  The primary financial accounting data is published by Statistics Denmark on aggregated level.  Statistics Denmark is responsible for the statistical results calculated from the accounting data to the Quarterly Government Finance Statistic. 7. Legality to collect non final data 20

Provisional accounts for the year A gentleman's agreement between the municipalities/regions and Statistics Denmark:  Statistics Denmark only uses the aggregated data in the communication with ministries and other interested parties.  No publishing of detailed primary data.  The detailed accounting data are only used for statistical purposes.  Statistics Denmark is responsible for the statistical results calculated from the accounting data. 7. Legality to collect non final data 21

Problems with non final quarterly accounting data and provisional accounts for the year according to statistical purposes:  The data are not final.  Not all transactions are accrued.  The accounts are not balanced or checked by an auditor.  Some times data is not complete (there are not accounting data from all municipalities and regions).  Big revisions between provisional accounting data and final accounting data.  Explaining the big revision to the users of the statistics  The data is flagged as preliminary in the publication. 8. Problems with non final primary data 22

Using non final quarterly accounting data and provisional accounts for the year:  Statistics Denmark estimate macro adjustments according to the accrual principle  Macro adjustments to main categories in national accounts (based on experience on macro level from previous years).  If some data is missing and it is not possible to get information from the municipality/region then Statistics Denmark add some macro corrections based on accounting data from previous years.  For some entries in the national accounts other data sources is used (for example taxes).  Supplementary accounting period in (t+1) 8. Problems with non final primary data 23