The annual Government Finance Statistics (GFS) program is a principal data source for the estimation of the government sector on a System of National Accounts (SNA) basis. However, there are key differences between these two programs in how they compile their government sector estimates. This note highlights some of the notable differences between SNA and GFS methodologies, concepts, and coverage.
Within the SNA, there are two primary programs that release data on the government sector: the Income and Expenditure Accounts (IEA) and the Financial and Wealth Accounts (FWA). Estimates within the IEA include revenues and expenditures within the GDP and current and capital accounts. The FWA starts with the capital account from IEA and tracks the financial flows for the government sector through the financial account and other change in assets account, ending with positions in the balance sheet for assets and liabilities.
The sequence of accounts within the SNA are fully consistent (within and across sectors) and balanced, and include transactions with residents and non-residents (outside Canada). As such, some of the differences noted below are to maintain the consistency within the sequence. The GFS is also a consistent set of accounts but with a narrower focus on the accounting consistency within government sectors.
Key differences between the SNA and the GFS
Fiscal year versus calendar year
Generally, the GFS data are on a fiscal year (i.e., March 31st year-end), whereas the SNA is on a calendar year (i.e., December 31st year-end). As a result, the fiscal year data from the GFS must be 'calendarized' to be incorporated into the SNA. For Federal government, the receipt of quarterly data facilitates integration, while in other instances, only annual fiscal data is available.
Accrual accounting
The GFS is based on fiscal year accrual accounting. When this data is integrated into the quarterly accounts, the accrual adjustments must be distributed to better reflect quarterly economic activity on a calendar basis. This is primarily an issue for the provincial/territorial administration subsector.
Year-end adjustments
In the GFS program, reporting data from government entities can include fiscal year-end adjustments. These year-end adjustments can perturb the estimates of economic growth in the SNA accounts, so these adjustments must first be spread through the four quarters of the fiscal year to align to fiscal year annual totals and then the calendarization process is applied as mentioned above.
Intergovernmental transfers
The SNA primarily uses counterparty information for transactions, that is, recording the amounts paid by a government entity as the receipts of that counterparty sector, whether it is government or non-government. This ensures internal bi-directional consistency for these flows. The GFS program articulates distinctly what is reported by the government making the transfer and the government receiving the transfer. For the GFS, when two sides of a transfer do not match between payer and recipient, an adjustment is made to 'Other revenues' and 'Other expenditures' so that the total balances of net lending/borrowing are consistent, but the transfers to and from will not necessarily align.
Estimation of capital investment, consumption of fixed capital, and stock of fixed capital
Conceptual differences and timeliness sometimes preclude the use of GFS source data for the estimate of capital investment within the SNA. In general, for federal government capital investment, the SNA is aligned with the GFS source data. For other government sectors, the capital investment estimate within the IEA is from the Annual Capital and Repair Expenditures Survey and may be adjusted with the GFS source data. This capital investment subsequently flows into the Stock and Consumption of Fixed Capital program (SCFC) and the FWA. The final GFS estimates also incorporate this capital investment data. Similarly, the SCFC provides estimates of the consumption of fixed capital (CFC) and stocks of fixed capital assets that are subsequently incorporated into the IEA, FWA and GFS, where applicable. Altogether, this ensures full consistency within the sequence.
The capital stock and CFC (also known as depreciation) within the SCFC is an economic measure of available capital in use in production processes and the associated economic depreciation of this capital. It is developed using the flow of capital investment from the IEA and is estimated on a replacement cost basis using a geometric depreciation method and specific service lives by asset. As a result, it differs from the asset and deprecation values that would be provided according to public sector and business accounting principles
Compensation of employees for government sector
Within the SNA, the compensation of employees for the general government and government sub-sectors is estimated using a similar methodology to the market sector, that is using administrative data, specifically T4 information from Canada Revenue Agency. This administrative data is supplemented with additional data from the Survey of Employment, Payroll and Hours, Pension Plans in Canada, and from Employment and Social Development Canada. This ensures full consistency within the SNA. The GFS uses wages as reported in the government source data, which may differ from the SNA given the different sources.
Treatment of corporate income tax
In the IEA, the treatment of corporate incomes taxes aligns to the corporations' accrual perspective. This means that corporate reporting on income taxes paid are used to replace the GFS-based corporate income tax receipts of government, which may reflect more of a cash-basis perspective. This ensures consistency between both payers and recipients. The GFS replaces federal corporate income tax receipts with this corporate data but not the receipts of provincial and territorial governments. In both programs, GFS data is used for Quebec and Alberta to aid in the allocation of total provincial and territorial corporate income tax receipts.
Financial services
In the IEA, there are certain financial services that must be measured implicitly to derive an output. For example, the margin between what deposit-taking institutions earn on their loan assets versus what they pay on their deposit liabilities is considered an output of these entities. To ensure that this output aligns to all uses such as final demand, there are adjustments made to impute these expenditures by sector, including government. The GFS does not explicitly incorporate these expenses.
Indigenous general governments
In the IEA and FWA, Indigenous general governments is a distinct sub-sector of general governments. The GFS does not currently articulate this sector.
Bond liabilities
Within the FWA, data on government bond liabilities are taken from Canada's securities statistics program instead of the GFS as the data is timelier, and this practice maintains consistency within the sequence of the accounts for both issuer and debtor perspectives.
Consolidation
The FWA presents the general government sectors on an unconsolidated basis; this means that the debt securities and loan assets of one level of government corresponding to the liabilities of another government sector are shown gross. The GFS presents information on both a consolidated and unconsolidated basis (i.e., a statement of operations and balance sheet). A specific example of consolidation involves the social security fund sector's holdings of government debt. The GFS may consolidate these holdings and remove both asset and liability at the level of general government sector, whereas these will be shown gross in the FWA. However, the FWA publishes from-whom-to-whom estimates that allow users to produce consolidated estimates as needed.
Gross versus net loans
In the FWA, loans are presented on a gross basis versus net of allowances (or expected credit losses) while in the GFS, loans are presented net of allowances.
Pension entitlement estimates
In the FWA, pension entitlements are measured using pension plan and pension fund information to measure the accrued entitlement benefit. These estimates differ from GFS, which uses pension entitlements as presented according to public sector accounting standards.
Seasonal adjustment
This is unique to the quarterly IEA in which the government estimates are seasonally adjusted, whereas the quarterly FWA are presented on a non-seasonally adjusted basis.
Published information on the government sector
Income and expenditure accounts, quarterly
Taxes less subsidies, government final expenditure, government capital investment, current and capital accounts for general government and sub-sectors
- Gross domestic product, income-based, quarterly
- Gross domestic product, expenditure-based, Canada, quarterly
- Current and capital accounts - General governments, Canada, quarterly
- General governments final consumption expenditure, Canada, quarterly
- Revenue, expenditure and budgetary balance - Provincial administration, education and health
Financial and wealth accounts, quarterly
Government assets and liabilities, non-financial and financial, government net worth, for general government and sub-sectors
- Financial indicators of general government sector, national balance sheet accounts
- General government gross debt, quarterly
- Financial Flow Accounts
- National Balance Sheet Accounts
- Other Changes in Assets Account
Provincial-territorial Economic Accounts, annual
Government revenue, expenditure, and budgetary balance, by region
- Gross domestic product, income-based, provincial and territorial, annual
- Gross domestic product, expenditure-based, provincial and territorial, annual
- Revenue, expenditure and budgetary balance - General governments, provincial and territorial economic accounts
Government Finance Statistics, quarterly
GFS quarterly data are derived by mapping the quarterly SNA data to GFS standards and conventions
- Statement of government operations and balance sheet, government finance statistics, quarterly
- Statement of government operations and balance sheet, government finance statistics, annual
Consolidated Canadian Government Finance Statistics, annual
Government and sub-sector revenues, expenditures and financial transactions
- Canadian government finance statistics for the federal government
- Canadian government finance statistics for the provincial and territorial governments
- Canadian government finance statistics for health and social service institutions
- Canadian government finance statistics for colleges and universities
- Canadian government finance statistics for municipalities and other local public administrations
- Canadian government finance statistics for Canada and Quebec pension plans
- Canadian government finance statistics for government business enterprises, by industry
- Canadian government finance statistics (CGFS), statement of operations and balance sheet for consolidated governments