1. Consolidation Methods
WPFS 6-7 October 2003
Item 5
By Michèle Chavoix-Mannato
STD/NAES

2. Purpose of the document
To present the current situation of the FA database
To highlight some lack or deficiencies
To insist on the importance of having as much information as possible
To set some recommendations to help OECD to get pertinent and comparable data

3. Some definitions Aggregation Consolidation
Simple sum of values at each level of the hierarchy
- by sector (ex. S1 = S11 + S12 + S13 + S14 + S15)
- by instrument (ex. F2 = F21 + F22 + F29)
Consolidation
Elimination of transactions
- between institutional units of the same sub-sector
- between institutional units of the same sector

4. SNA recommendations
Financial flows and stocks must not in principle be consolidated:
to avoid a wrong interpretation of certain information
to preserve the rule of additionality of data
However, consolidation by elimination of all intra- sectoral transfers is useful for some analyses:
to retain only transactions between sectors or sub- sectors
to better know the financial position of the macro- economic players

5. Consolidated tables in the FA Database NON EUROPEAN COUNTRIES

6. Consolidated tables in the FA Database EUROPEAN COUNTRIES

7. FIRST RECOMMENDATION 
Tables for financial accounts and balance sheet accounts should be sent to OECD by all countries both non-consolidated and consolidated.

8. Eurostat’s Consolidation Rules
 Consolidation rules apply at:
 Sector level
 Sub-sector level
 The sum of financial transactions over the consolidated sub-sectors accounts does not equal the financial transactions for the consolidated sector accounts
 The balancing items add across the sectors and equal the sector total; they are identical with the non-consolidated balancing items.

9. SECOND RECOMMENDATION
It is proposed to extend the principles established by Eurostat to all OECD countries

10. Some problems linked to the consolidation process
Differences between national methods
No consolidation for some sectors
No consolidation for some instruments
Difficulties to check the consistency and the quality of the data

11. Proposals for improvements
To better inform users of differences and similarities in national methods
To reduce disparities and allow greater comparability

12. The Secretariat needs
The exact meaning of the concept of consolidation used by countries
The exact method applied at various levels of the hierarchy
The limitations relating to some sectors or transactions

13.  THIRD RECOMMENDATION
Countries are requested to provide the OECD with precise information on the methods currently used in their country, along the line of the model in the document submitted by France (in annex 2).

14. Delegates are requested to:
Give their opinion on the three recommendations proposed by OECD
Send the required information on the methods used
by 31 December 2003
Submit any further amendment to the recommendations
by 31 March 2004
Transmit both non-consolidated and consolidated data to OCDE
The Secretariat will
Introduce these rules into the 2004 questionnaire

15. thanks you for your attention and for our future fruitful co-operation
The NAES
Financial Statistics Unit
thanks you for your attention and for our future fruitful co-operation