Dáil Éireann Debate, Wednesday - 9 November 2016
49. Deputy Sean Fleming asked the Taoiseach if he will provide a list of contingent assets known to the Central Statistics Office and the amount that he recorded in various State Departments and bodies; the reason these are not included in the State's balance sheet; the rules in relation to this as approved by Eurostat; and if he will make a statement on the matter. [33957/16]
View answerThe legally binding rules underlying the preparation of the national accounts, including government finance statistics, are those of the European System of Accounts 2010 (ESA 2010). These rules define contingent assets and liabilities as "agreements whereby one party is obliged to provide a payment or series of payments to another unit only where certain specific conditions prevail. " (ESA 2010 para 5.08) The rules further clarify that "As they do not give rise to unconditional obligations, contingent assets and contingent liabilities are not considered as financial assets and liabilities" ESA 2010 para 7.19 (d) clarifies that contingent assets and contingent liabilities lie outside the asset/liability boundary and are therefore not recorded in the national accounts. However ESA 2010 acknowledges (para 5.11) that "Although contingent assets and contingent liabilities are not recorded in the accounts, they are important for policy and analysis and information on them needs to be collected and presented as supplementary data." The guidance in ESA 2010 is thus in line with other accounting standards (IPSAS 19, IAS 37) which direct that contingent assets/liabilities should not be recognised in the balance sheet but should generally be disclosed unless the likelihood of their realisation is extremely remote.
The focus on reporting of such supplementary information for the government accounts in recent years has been on the disclosure of contingent liabilities rather than contingent assets. Information on guarantees and off-balance sheet PPPs have been collected as part of the bi-annual EDP notification for a number of years, but these data have not been published in a consistent format across Member States until recently. Article 14 of the European Council Directive 2011/85/EU of 8 November 2011, on requirements for budgetary frameworks of the Member States, established the requirement for publication of "relevant information on contingent liabilities with potentially large impacts on public budgets, including government guarantees, non-performing loans, and liabilities stemming from the operation of public corporations, including the extent thereof. Member States shall also publish information on the participation of general government in the capital of private and public corporations in respect of economically significant amount. "
In 2014 Eurostat put in place templates and a transmission facility for countries to report on contingent liabilities of government in compliance with the Directive. Annual data on contingent liabilities have been transmitted to Eurostat and published nationally since end 2014. These data are available on the Department of Finance website http://www.finance.gov.ie/what-we-do/public-finances/draft-budgetary-framework/budgetary-framework.
No similar framework for the reporting of contingent assets currently exists and the CSO do not currently compile data on the contingent assets of government.
