Directorate for national accounts ESA 2010 GNI Inventory - Italy - 2016

Overview of the system of national accounts
(chapter 1 of the esa 2010 gni inventory)

Italy

reference year 2011

following the agreed recommendations as laid down
in document GNIC/280 rev. 2 EN - "ESA2010 GNI Inventory Guide".

VERSION JULY 2016

Italian National Institute of Statistics
Department for statistical production
Directorate for National Accounts

Italy

GROSS NATIONAL INCOME INVENTORY

(ESA 2010)

July 2016

Contact

Gian Paolo Oneto

Italian National Institute of Statistics

Department for statistical production

Directorate for National Accounts

Phone + 39 (06) 46733152

E-mail:

Table of Contents

Chapter 1 overview of the system of accounts 4

1.1 Introduction 4

1.2 The revisions policy and the timetable for revising and finalising the estimates; major revisions since the last version of the GNI Inventory 10

1.3 Outline of the production approach 12

1.4 Outline of the income approach 15

1.5 Outline of the expenditure approach 17

1.6 The balancing or integration procedure, and main approaches to validation 20

1.7 Overview of the allowances for exhaustiveness 21

1.8 The transition from GDP to GNI 23

1.9 Main classifications used 24

1.10 Main data sources used 25

Chapter 1

overview of the system of accounts

1.1  Introduction

The system of national accounts measures through a well-defined accounting framework the whole set of economic activities of a country, defined by its specific geographical territory, for a period coinciding with the calendar year.

The estimates of the national accounts are produced in accordance with the provisions of the European System of National and Regional Accounts Manual (ESA 2010), which represents the application at European level of the System of National Accounts (SNA 2008) of the United Nations. The application of ESA 2010 is defined in Regulation (EU) 549/2013 establishing principles and methodologies to be applied in the construction of the accounts and the detail and timing of data to be made available. The transition to the new ESA from the 1995 version has been set at European level in September 2014 and has taken place in Italy according to the established schedule.

The system is organized in an ordered set of accounts describing the performance of the economy, how the income is formed, distributed and used, how savings are accumulated, what the forms of financing of the activities are and what is the position of the country with respect to the rest of the world.

To compile the estimates, data derived from a large set of Istat surveys are used, as well as information drawn from external sources, both public and private and in particular from administrative files.

In order to progressively improve the quality of the estimates and in order to take into account new and more robust information sources, the estimates are subject to both ordinary revisions (bi-annual) and major revisions, as far as possible coordinated at EU level.

The annual estimates of GDP at current prices are obtained calculating independent measure on the production and on the expenditure side and reconciling them in the framework of Supply and Use Tables (SUT).

The transition to the Gross National Income (GNI) is ensured by adding to GDP the flows with the rest of the world of net labour and property income, measured by the Balance of Payments. The statistics of the Balance of Payments in Italy fall under responsibility of the Bank of Italy and Istat contributes to their compilation providing information on the external trade of goods. In preparing the application of the new International standards (ESA 2010 and BPM6) the sharing of methodologies and statistical information between the two institutions has increased, making the estimation on international trades of goods and services completely coherent.

Consistently with the provisions of the Regulation 109/2005 and the ESA 2010 (§2.04-2.07), national accounts measure the transactions concerning resident units, i.e. units that have their centre of interest on the economic territory. It is important to note that with the transition to ESA 2010 a specific correction to the basic data (structural business statistics) was introduced aimed at identifying more accurately the scope of national accounts estimates. Namely, for resident companies carrying out an important part of their production activities abroad without establishing a foreign branch, the share of production and value added generated abroad is estimated and excluded from financial statement items. Companies or private bodies set up abroad, not elsewhere classified, that perform an economic activity in Italy but that do not present the characteristics of stable organization are also excluded from all the resident units.

The estimates of GDP and GNI are compiled building on a system of statistical sources and administrative data adapted to match ESA definitions. Estimates of the production-side and expenditure-side variables are based on independent approaches except for a few limited cases. In turn, estimates on the income side do not constitute a complete set allowing an independent measure of GDP. As a rule, the estimation processes are performed at the highest possible level of disaggregation to ensure both a high degree of reliability of the estimates and an adequate detail to represent the sectors evolution. The methods applied in the compilation process provides comprehensive estimates of GDP and national income, including the non-observed components of the economy.

The inventory of the sources and methods for the GNI here presented is one of the tools in the verification and certification of compilation methods, along with the results of inspections carried out by Eurostat to national offices of statistics. Based on the analysis, the Commission may suspend the judgement on the accuracy of the estimates placing "reservations" about the treatment of some specific aspects. This may relate to one country (specific reservation) or refer to cross-cutting aspects (transversal reservation).

In January 2012, the Commission notified to the Member States some specific reservation and eight transversal reservations about the estimate of GNI according to ESA 95. Italy has checked and treated the issues raised and has introduced the necessary methodological adjustments in the national accounts version released in September 2014. The only exception was a modification of the calculation method of intermediate consumption relative to the actual and imputed rents in the estimation of the output of the lease sector, introduced in the September 2015 GNI transmission. In 2015 the Commission has formally lifted the reservations notified to Italy considering all of them properly addressed and solved.

1.1.2 Organisation and responsibilities within the National Statistical Institute and the National Accounts Directorate

The Italian National Institute of Statistics is a public Institution founded in 1926, acting as the main producer of official statistics in the service of citizens and policy-makers, operating with a fully independent status. Since 1989 Istat has been charged with the role of directing, coordinating, and providing technical assistance within the National Statistical System (Sistan). The System was established under Legislative Decree 322/89 in order to rationalise the production and dissemination of national statistical information and to optimise the allocation of resources to official statistics. The Sistan includes Istat, statistical departments of Public Administrations and of local and regional bodies, Chambers of Commerce, other public bodies and administrations producing and managing statistical information.

Istat is governed by the President that is appointed for a four-years term by the Government, subject to a Parliamentary scrutiny procedure. The governance is assured by a Council that includes the President of Istat, chairing the body, and four members. The Council plans, directs and controls the activities of the Institute, and in particular its scientific and technical activities.

In 2015 the President initiated an important process of modernization of the Institute, becoming fully operational with the introduction of a new organizational structure from April 2016. Under the new organization, the Directorate of National Accounts (Direzione centrale per la contabilità nazionale - DCCN), under whose responsibility falls the compilation of national accounts, is part of the Department for statistical production (Dipartimento per la produzione statistica - DIPS). The new organizational structure is presented in the organization chart below.

Mayor Organization chart

The tasks assigned to the Directorate of National Accounts, defined in the organizational documents of the Institute[1] are the following:

- Design and implementation of the system of national and territorial economic accounts, at annual and quarterly frequency, aligned to international standards and to criteria set by the European System of Accounts (ESA), which aims at providing a systematic and detailed description of the functioning of the economic system and its interrelations with the rest of the world, as well as the behaviour of the economic agents;

- Development of the general government accounts as defined by the ESA and of the aggregates that fall under the excessive deficit procedure (EDP);

- Definition and statistical analysis of the list of units included in the General Government institutional sector (to be maintained in collaboration with the Directorate for economic statistics);

- Design and implementation of environmental accounting and development of satellite accounts.

The total staff of the National Accounts Directorate includes about 110 people organised in 4 Divisions and 3 staff units reporting directly to the Director:

Division for supply of goods and services and institutional sectors accounts;

Division for final demand, labour and capital input, environmental accounts;

Division for compilation of government finance statistics;

Division for quality management and processing of government finance data and sources;

Unit “Office of the Director”

Unit "Balance and deflation of accounts";

Unit "Quarterly National Accounts".

The current organizational structure of the Directorate defines the integration of different phases of the compilation process of National Accounts within two separate Divisions; at the same time, it defines the activities concerning Government Finance Statistics by separating two functions: the compilation of annual and quarterly accounts of the General Government, as well as of EDP aggregates; the collection, processing, verification and quality management of source data and procedures to be utilised in the compilation of GFS and EDP statistics. The design is completed by two activities managed in a staff position: the coordination of quarterly accounts (with the exception of General Government quarterly accounts); the finalisation of annual estimates via the SUT balancing procedure and the coordination of the deflation system.

The Division "Supply of goods and services and institutional sector accounts" manages the estimation of supply variables of industry and services sectors, as well as the agricultural sector accounts. It manages the activities concerning accounts of financial companies, of NPHIS institutions, and of the rest of the world, compiling institutional sector accounts. It develops the measures of the distribution of household income and compiles the estimates of compensation of employees. It handles the estimate of territorial national accounts and the development of local economic indicators coherent with the national accounts framework.

The Division "Final demand, labour and capital inputs, environmental accounts" manages the activities concerning the annual estimate of the aggregates of the domestic demand and the construction sector, the estimate of non-financial assets and the estimate of foreign trade of goods and services. It compiles the estimates of capital stock, capital consumption, the labour input variables, and productivity indicators. It manages the production of environmental accounts of material flows, atmospheric emissions and environmental taxes as well as the implementation on new environmental account modules.

The Division "Compilation of government finance accounts" is in charge of the compilation of annual and quarterly accounts of General Government and its sub-sectors, it manages the procedures concerning the EDP notification and oversees the application of the relevant methodologies. It manages the compilation of the accounts of social protection (ESSPROS) and Health accounts (SHA). It compiles estimates of aggregates related to General Government included in the national accounts.

The Division "Treatment and verification of the quality of public finance data" provides analysis for the verification of the perimeter of General Government (S.13) and manages its ongoing updating. It defines and develops the procedures of processing and verification of the quality of basic data for the compilation of government finance statistics. It manages the activities for developing quality management procedures and robust accounting methods in the administrations that provide the sources of public finance.

The Office of the Director acts as the secretariat of direction, taking care of institutional relationships. Manages the planning procedures in the framework of the Institute strategic and operational planning and monitors the interaction affecting the annual budget; takes care of the documentation regarding data confidentiality and handling rules. It handles relationships with Eurostat and international bodies.

The Unit "Balance and deflation of the accounts" is in charge of the synthesis of the different components of the central accounts, managing the balancing of supply and use tables at current prices, from preliminary estimates of supply and demand produced by other units of the Directorate. The unit is responsible for the estimate at current prices of the intermediate inputs table (domestic production), and manages the deflation of the aggregates of the supply of goods and services and GDP, developing a balancing system at constant prices.

The Unit "Quarterly National Accounts" coordinates the compilation and dissemination of quarterly economic accounts, including flash estimates of GDP; it carries out quarterly estimation of market value added, gross fixed investment, labour input and compensation of employees, prices and volumes measures. The unit is in charge of managing the compilation and dissemination of quarterly institutional sector accounts, excluding the General Government accounts.

1.1.3 The supervisory and control system of National Accounts

Since 2013, Istat has started a formal procedure of organizational risk management (RM) that has an impact on the statistical processes. The institute's RM system refers to the following standards and risk definitions: ISO 31000:2009 risk management principle and guidelines, ISO/IEC31010: 2009 risk assessment techniques, ISO TR 31004:2013 guidance for the implementation of ISO 31000:2009, COSO Model 2004/2013. The procedure is managed through RiskInIstat information system that provides for the preparation of the risk catalogue, the definition of indicators, the evaluation of the impact and probability of the risk occurring, the monitoring of risk response actions, and, finally, the control of effectiveness of the entire system. The procedure allows monitoring the risks, updating the information and checking the progress. (Http://risk.istat.it/).