Government Finance Statistics: Description of the Four Financial Statements

The core of the GFS analytic framework is a set of four financial statements. These are (1) the Statement of Government Operations; (2) the Statement of Other Economic Flows; and (3) the Balance Sheet. In addition, the framework includes a Statement of Sources and Uses of Cash to provide key information on liquidity. Each of these statements is described below:

  1. The Statement of Government Operations summarizes all transactions and derives important analytic balances from this information. Revenue minus expense equals the net operating balance, which is a summary measure of the effect of the government’s transactions on net worth. The subsequent deduction of the net acquisition of nonfinancial assets from the net operating balance produces a balance called net lending/borrowing, which measures the extent to which government either provides financial resources to the other sectors of the economy and the rest of the world (net lending) or uses financial resources generated by the other sectors (net borrowing). Net lending/borrowing is also equal to the government financing requirement derived as the net of transactions in financial assets and liabilities. It is a measure of the financial impact of government activity on the rest of the economy.
  2. The Statement of Other Economic Flows presents information on changes in net worth that arise from flows other than transactions. These flows are classified as either changes in the value (revaluations, or holding gains or losses) or the volume of assets and liabilities. The balancing item of this statement is the change in net worth resulting from other economic flows.
  3. The Balance Sheet presents the stocks of assets, liabilities, and net worth at the end of the accounting period. The government’s net worth is defined as the difference between total assets and total liabilities. Another balancing item that can be derived from the Balance Sheet is net financial worth, which is defined as total financial assets minus total liabilities.
  4. The Statement of Sources and Uses of Cash shows the amounts of cash generated and used in current operations, transactions in nonfinancial assets, and transactions involving financial assets and liabilities, excluding cash itself. The balancing item, net change in the stock of cash, is the sum of the net cash received from these three sources of cash flows.

At this time, the CSNA-mapped quarterly GFS (Government Finance Statistics) data includes estimates of the Statement of Government Operations and the Balance Sheet. The Canadian System of National Accounts does not publish a revaluation and other changes in assets account and therefore a mapping to the GFS Statement of Other Economic Flows could not be developed. Data for the Statement of Sources and Uses of Cash will be developed at a later date.

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