Strengthening national accounting systems

Rehabilitating basic national accounting
Assisting national economic analysts to strengthen national accounting systems

Description

A country's monetary economy is defined as the total amount of money that changes hands each year (and including the material economy, roughly measured by the annual Gross Domestic Product (GDP)). This is drawn from data published annually in the Bank for International Settlements’ Red Book. The Red Book is not all-inclusive; it leaves out such payments as commodity trading, various options, crypto currency trades, and exchange-traded funds. Even its partial accounting in certain countries can show payments may be several hundreds of times the national collective income.

Implementation

This strategy features in the framework of Agenda 21 as formulated at UNCED (Rio de Janeiro, 1992), now coordinated by the United Nations Commission on Sustainable Development and implemented through national and local authorities.

Agenda 21 suggests that agencies dealing with national accounts should cooperate closely with environmental statistics and natural resource departments with a view to assisting national economic analysts and decision makers in charge of national economic planning. National institutions should play a crucial role not only as depositary of the sustainable accounting system but also in its adaptation, establishment and continuous use. Unpaid productive work such as domestic work and child care should be included, where appropriate, in satellite national accounts and economic statistics. Time-use surveys could be a first step in the process of developing these satellite accounts.

Improving the basic accounting system implies recording spending as it occurs. Other improvements include computerization of government payrolls and simple and systematic monitoring of the investment programme. Efforts towards the latter have focused on preparing simple, standardized project profiles containing a concise description of project content and objectives, an unambiguous identifying title and project number, an estimate of total investment costs, a proposed annual phasing of investment costs, and an estimate of recurrent costs arising from the project. If regularly prepared and updated, these simple standardized profiles can be very useful in tracking project spending.

Claim

The correct recording of expenditure as it occurs is an integral part of proper fiscal control. Whether, and after what delay, government accounts appear, and their credibility when they do, are the most basic indicators of the health of a fiscal system. However, in some developing countries accounts are often so late or so unreliable that they cannot serve as the basis for rational public expenditure planning or monitoring. This can jeopardize the discipline of the entire planning and budgeting regime. In cases such as this, rehabilitation of basic accounting functions is a prerequisite for improving public expenditure management.

Counter-claim

Strengthening national accounting systems is an overblown concern that distracts from pressing issues like poverty, healthcare, and education. While accurate accounting is important, the obsession with perfecting these systems diverts resources and attention from real-world problems that affect people's lives daily. Instead of fixating on bureaucratic processes, we should prioritize direct action that addresses urgent societal needs. Focusing on national accounting is a misallocation of effort in a world facing far more critical challenges.