The purpose of this paper is to analyse the role of adjustments made when translating data from Governmental Accounting (GA) into National Accounts (NA), as a way of managing the final budgetary balance reported in NA to EUROSTAT by EU member-States for the purpose of deficit assessment. In particular, factors (both relating to economic policy and technical-accounting issues) that might encourage managing NA budgetary balance via GA-NA adjustments are explored, using data from EDP Reporting regarding Central Governments of all 27 EU member-States for the period 2007-2012. Main findings show that some factors, such as the accounting basis used in GA (particularly a mixed basis instead of cash basis), the percentage of GDP change compared to the previous year (economic growth/recession period) and the deficit accomplishment in the previous year, seem to affect adjustments materiality. Moreover those factors are statistically significant particularly to some categories of adjustments (e.g. adjustments related to non-financial transactions not included in the ‘working balance’, accounting basis adjustments associated to other accounts payable, and adjustments related to net borrowing/lending of other Central Government entities – somehow linked to the scope of the GGS), more susceptible to be managed. Consequently, the paper allows concluding that some factors, as affecting GA-NA adjustments materiality, might constitute incentives to increase/decrease their amount, indicating that adjustments might be manageable and therefore the final deficit reported to EUROSTAT in NA as a result from those adjustments, might be prone to management too.

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Budgetary Reporting; National Accounts; Deficit/Surplus; Adjustments Management; EUROSTAT.