Selective application of the accrual principle in the construction of government finance statistics: EU evidence

The authors studied the ‘translation’ of government accounting working balances into fiscal balances in the EU. Non-accrual-based working balances were found to represent the most frequent primary source of data that national statistical institutions use to calculate and report fiscal balances in Excessive Deficit Procedure notification tables. Compared to accrual-based working balances, non-accrual-based working balances impose significant adjustments on current revenues and expenses to obtain fiscal balances, yet they lead to limited adjustments to several long-term transactions. The authors argue that this result originates from the selective application of the accrual principle in the construction of Government Finance Statistics.