National Accounts

Capturing the actual wealth of nations

Defining a common grammar to discuss the actual wealth of nations is an old debate. And it has never been solved. The first initiative to establish shared reporting standards was launched by the International Monetary Funds (IMF) in 1986 under the name of A Manual on Government Finance Statistics (known as GFSM 1986). Since then, the process was improved and led to several revisions (GFSM 2001 and 2014). Simultaneously, a reporting backbone emerged and divides into four parts:

  • The Statement of Government Operations
  • The Statement of Other Economic Flows
  • The Balance Sheet
  • The Statement of Sources and Uses of Cash[1]

The GFSM approach offers many advantages. It is a comprehensive process that allows comparison between and within countries. It is a robust integrated framework. And last, but not least, it is compatible with other macro-statistics international accounting standards.

In that framework, Beyond Ratings aims at improving the quality of reporting in the nations balance sheets through the valuation of natural capital. It translates into a more accurate definition of what the International Public Sector Accounting Standards (IPSAS[2]) call the “non-financial non-produced assets”. Our team dedicate a significant amount of its time on Research & Development on valuation methodologies, from the initial studies from the World Bank (WAVES) to our own cutting-edge approach.

Our methodology also shed lights, through our scorecard products, on the physical constraints that energy resources and climate issues impose on national economic structures and therefore on national accounts. It then relates to sovereign and private debts sustainability.

[1] The Statement of Sources and Uses of Cash records cash inflows and outflows using a classification similar to that of the Statement of Operations, but with a focus on the net change in cash flows arising from transactions during the reporting period.

[2] The International Public Sector Accounting Standards (IPSAS) are a set of accrual-based and cash-based accounting standards for public sector entities. They were created and developed by the IPSAS Board, under the scope of the International Federation of Accountants (IFAC) so as to improve the quality and transparency of financial reporting on a national and infra-national scale. The OECD was the first international entity to implement the IPSAS in 2000 and was followed by many countries. Today, about 100 countries have adopted or are in the process of adopting these standards.