East Africa Community set to adopt UN accounting system
Members of the Ganda Foundation from the United Kingdom unveil equipment they donated to Kawolo Hospital. Such remittances from abroad will also be included in the new system. PHOTO By STEPHEN OTAGE
What you need to know:
Comprehensive. The new system covers all economic activities and data necessary for policy purposes.
KAMPALA.
The East African Community has agreed with the Economic Community of West African States (Ecowas) on how the two blocs can quickly transit from the current 1993 System of National Accounting (SNA) to the UN recommended version SNA 2008 next year.
The SNA are complete and consistent accounting standards of the economic activities of a nation.
The SNA 2008 is a preferred system due to its exhaustive coverage of economic activities and data necessary for policy purposes, enlarged description of economic services other than financial intermediation common with the 1993 system.
Also, research and development (R&D) is not treated as a secondary activity in the new system as it has been with the 1993 system and is valued at market price of the sum of total production costs.
Measurements depend on double-entry accounting productions and the resulting incomes.
In the 2008 SNA, treatment of assets previously called intangible produced assets or intellectual property products has been expanded as these assets are treated as part of the the guarantee of the economy.
The treatment of databases and expenditure on research and development as capital formation has been introduced. Also, transactions between general government and public corporations and loan guarantees will be captured in the new system. The 2008 SNA assets treated will include non-produced, non-financial assets, covering both tangible assets like natural resources and intangible assets for example contracts, leases and licenses, fixed capital expenditure on weapons, which was previously not captured in the 1993 systems.
The 1993 system of National account has been criticised by compilers who argue that it does not give a clear picture of the economy because of its limitations in compiling data and mainly focusing on consumption and production of the economy leaving out the capital assets.
The treatments of stocks and flows common with economic globalisation will now be expanded to include remittances accrued from people living abroad and loan guarantees
Super dividends paid by public corporations and capital injections into public enterprises will be covered in the 2008 SNA.
