Republic of Slovenia

Inventory of methods, procedures and sources used for the compilation of deficit and debt data and the underlying government sector accounts according to ESA2010 Republic of Slovenia December 2015

Background Compilation and publishing of the Inventory of the methods, procedures and sources used to compile actual deficit and debt data is foreseen by Council Regulation 479/2009, as amended. According to Article 8.1: The Commission (Eurostat) shall regularly assess the quality both of actual data reported by Member States and of the underlying government sector accounts compiled according to ESA 95... Quality of actual data means compliance with accounting rules, completeness, reliability, timeliness, and consistency of the statistical data. The assessment will focus on areas specified in the inventories of Member States such as the delimitation of the government sector, the classification of government transactions and liabilities, and the time of recording. In line with the provisions of the Regulation set up in Article 9, "Member States shall provide the Commission (Eurostat) with a detailed inventory of the methods, procedures and sources used to compile actual deficit and debt data and the underlying government accounts. The inventories shall be prepared in accordance with guidelines adopted by the Commission (Eurostat) after consultation of CMFB. The inventories shall be updated following revisions in the methods, procedures and sources adopted by Member States to compile their statistical data". The content of the Inventory and the related guidelines have been endorsed by the Committee on Monetary, Financial and Balance of Payments statistics in June 2012 and are followed by all EU Member States. This version introduces references to the ESA2010 as well as some updates of the relevant topics mirroring the changes introduced by the ESA2010. 2

Contents A. Institutional arrangements, sources, procedures and methods used for the calculation of deficit and debt data... 7 1. General government... 7 1.1. Central government sub-sector (S.1311)... 7 1.2. State government sub-sector (S.1312)... 8 1.3. Local government sub-sector (S.1313)... 8 1.4. Social security funds sub-sector (S.1314)... 8 2. Institutional arrangements... 9 2.1. Institutional responsibilities for the compilation of general government deficit and debt data... 9 2.1.1 Existence of an EDP unit/department... 11 2.1.2 Availability of resources for the compilation of GFS data... 11 2.2. Institutional arrangements relating to public accounts... 12 2.2.1 Legal / institutional framework... 12 2.2.2 Auditing of public accounts... 13 2.2.2.1 General government units...13 2.2.2.2 Public units, not part of general government...15 2.3. Communication... 16 2.3.1 Communication between actors involved in EDP... 16 2.3.1.1 Agreement on co-operation...16 2.3.1.2 Access to data sources based on public accounts...17 2.3.2 Publication of deficit and debt statistics... 17 2.3.2.1 Publication of EDP data...17 2.3.2.2 Publication of underlying government ESA2010 accounts...18 3. EDP tables and data sources... 19 3.1. EDP table 1... 19 3.1.1 Compilation of Maastricht debt... 19 3.1.1.1 Specification of debt instruments...19 3.1.1.2 Data sources used for the compilation of Maastricht debt...19 3.1.1.3 Amendments to basic data sources...20 3.1.1.4 Consolidation of Maastricht debt...20 3.2. Central Government sub-sector, EDP table 2A and 3B... 20 3.2.1 Data sources for main Central Government unit : The State... 20 3.2.1.1 Details of the basic data sources...23 3.2.1.2 Statistical surveys used as a basic data source...24 3.2.1.3 Supplementary data sources and analytical information...24 3.2.1.3.1 Supplementary data sources used for the compilation of non-financial accounts.. 24 3.2.1.3.2 Supplementary data sources used for the compilation of financial accounts... 25 3.2.1.4 Extra-budgetary accounts (EBA)...25 3.2.2 Data sources for other Central Government units... 28 3.2.2.1 Details of the basic data sources...30 3.2.2.2 Statistical surveys used as a basic data source...31 3.2.2.3 Supplementary data sources and analytical information...31 3.2.2.3.1 Supplementary data sources used for the compilation of non-financial accounts.. 31 3.2.2.3.2 Supplementary data sources used for the compilation of financial accounts... 31 3.2.3 EDP table 2A... 32 3.2.3.1 Working balance - use for the compilation of national accounts...32 3.2.3.2 Legal basis of the working balance...32 3.2.3.3 Coverage of units in the working balance...32 3.2.3.3.1 Units to be classified outside the subsector, but reported in the WB... 32 3

3.2.3.3.2 Units to be classified inside the subsector, but not reported in the WB... 32 3.2.3.4 Accounting basis of the working balance...33 3.2.3.4.1 Accrual adjustment relating to interest D.41, as reported in EDP T2... 33 3.2.3.4.2 Accrual adjustments reported under other accounts receivable/payable F.8 in EDP T2... 34 3.2.3.4.3 Other accrual adjustments in EDP T2... 36 3.2.3.5 Completeness of non-financial flows covered in the working balance...36 3.2.3.6 Financial transactions included in the working balance...36 3.2.3.8 Net lending/net borrowing of central government...37 3.2.4 EDP table 3B... 38 3.2.4.1 Transactions in financial assets and liabilities...38 3.2.4.2 Other stock-flow adjustments...39 3.2.4.3 Balancing of non-financial and financial accounts, transactions in F.8...40 3.3. State government sub-sector, EDP table 2B and 3C... 43 3.4. Local government sub-sector, EDP table 2C and 3D... 44 3.4.1 Data sources for Local Government main unit: local budgets... 44 3.4.1.1 Details of the basic data sources...44 3.4.1.2 Statistical surveys used as a basic data source...45 3.4.1.3 Supplementary data sources and analytical information...45 3.4.1.3.1 Supplementary data sources used for the compilation of non-financial accounts.. 45 3.4.1.3.2 Supplementary data sources used for the compilation of financial accounts... 45 3.4.2 Data sources for other Local Government units... 46 3.4.2.1 Details of the basic data sources...46 3.4.2.2 Statistical surveys used as a basic data source...47 3.4.2.3 Supplementary data sources and analytical information...47 3.4.3 EDP table 2C... 47 3.4.3.1 Working balance - use for the compilation of national accounts...47 3.4.3.2 Legal basis of the working balance...47 3.4.3.3 Coverage of units in the working balance...47 3.4.3.3.1 Units to be classified outside the subsector, but reported in the WB... 47 3.4.3.3.2 Units to be classified inside the subsector, but not reported in the WB... 48 3.4.3.4 Accounting basis of the working balance...48 3.4.3.4.1 Accrual adjustments relating to interest D.41, as reported in EDP T2C... 48 3.4.3.4.2 Accrual adjustments reported under other accounts receivable/payable F.8 in EDP T2C... 48 3.4.3.4.3 Other accrual adjustments in EDP T2C... 48 3.4.3.5 Completeness of non-financial flows covered in the working balance...48 3.4.3.6 Financial transactions included in the working balance...48 3.4.3.7 Other adjustments reported in EDP T2C...48 3.4.3.8 Net lending/net borrowing of local government...48 3.4.4 EDP table 3D... 49 3.4.4.1 Transactions in financial assets and liabilities...49 3.4.4.2 Other stock-flow adjustments...50 3.5. Social security sub-sector, EDP table 2D and 3E... 51 3.5.1 Data sources for Social Security Funds main units : xxx... 51 3.5.1.1 Details of the basic data sources...51 3.5.1.2 Statistical surveys used as a basic data source...52 3.5.1.3 Supplementary data sources and analytical information....52 3.5.1.3.1 Supplementary data sources used for the compilation of non-financial accounts.. 52 3.5.1.3.2 Supplementary data sources used for the compilation of financial accounts... 52 3.5.2 Data sources for other Social Security units... 53 3.5.2.1 Details of the basic data sources...53 3.5.2.2 Statistical surveys used as a basic data source...53 3.5.2.3 Supplementary data sources and analytical information...54 4

3.5.2.4 Extra-budgetary accounts...54 3.5.3 EDP table 2D... 54 3.5.3.1 Working balance - use for national accounts compilation...54 3.5.3.2 Legal basis of the working balance...54 3.5.3.3 Coverage of units in the working balance...54 3.5.3.3.1 Units to be classified outside the subsector, but reported in the WB... 54 3.5.3.3.2 Units to be classified inside the subsector, but not reported in the WB... 54 3.5.3.4 Accounting basis of the working balance...55 3.5.3.4.1 Accrual adjustments relating to interest D.41, as reported in EP T2D... 55 3.5.3.4.2 Accrual adjustments reported under other accounts receivable/payable F.8 in EDP T2D... 55 3.5.3.4.3 Other accrual adjustments in EDP T2D... 55 3.5.3.5 Completeness of non-financial flows covered in the working balance...55 3.5.3.6 Financial transactions included in the working balance...55 3.5.3.7 Other adjustments reported in EDP T2D...55 3.5.3.8 Net lending/net borrowing of social security funds...55 3.5.4 EDP table 3E... 56 3.5.4.1 Transactions in financial assets and liabilities...56 3.5.4.2 Other stock-flow adjustments...57 3.6. Link between EDP T2 and related EDP T3... 58 3.6.1 Coverage of units... 58 3.6.2 Financial transactions... 58 3.6.3 Adjustments for accrued interest D.41... 59 3.6.4 Other accounts receivable/payable F.8... 59 3.6.5 Other adjustments/imputations... 60 3.7. General comments on data sources... 61 3.8. EDP table 4... 61 3.8.1 Trade credits and advances... 61 3.8.2 Amount outstanding in the government debt from the financing of public undertakings... 61 4. Revision policy used for annual GFS... 62 4.1. Existence of a revision policy in Slovenia... 62 4.1.1 Relating to deficit and non-financial accounts... 62 4.1.2 Relating to debt and financial accounts... 63 4.2. Reasons for other than ordinary revisions... 63 4.3. Timetable for finalising and revising the accounts... 63 B. Methodological issues... 64 5. Sector delimitation practical aspects... 64 5.1. Sector classification of units... 64 5.1.1 Criteria used for sector classification of new units... 65 5.1.2 Updating of the register... 65 5.1.3 Consistency between different data sources concerning classification of units 66 5.2. Existence and classification of specific units... 66 6. Time of recording... 68 6.1. Taxes and social contributions... 68 6.1.1 Taxes... 68 6.1.2 Social contributions... 69 6.2. EU flows... 70 6.2.1 General questions... 70 6.2.2 Cash and Schengen facility:... 71 6.2.3 Jeremie/Jessica... 71 5

6.2.4 Market Regulatory Agencies... 71 6.3. Military expenditure... 73 6.3.1 Types of contracts... 73 6.3.2 Borderline cases... 73 6.3.3 Recording in national accounts... 73 6.4. Interest expenditure... 73 6.4.2 Interest Revenue... 74 6.4.3 Consolidation... 74 6.4.4 Recording of discounts and premiums on government securities... 74 6.5. Time of recording of other transactions... 74 7. Specific government transactions... 76 7.1 Guarantees, debt assumptions... 76 7.1.1 Guarantees on borrowing... 76 7.1.1.1 New guarantees provided...76 7.1.1.2 Treatment of guarantees called...77 7.1.1.3 Treatment of repayments related to guarantees called...77 7.1.1.4 Treatment of write-offs by government in public accounts of government assets that arose from calls, if any...78 7.1.1.5 Data sources...78 7.1.2 Guarantees on assets... 78 7.2 Claims, debt cancellations and debt write-offs... 78 7.2.1 New lending... 78 7.2.2 Debt cancellations... 79 7.2.3 Repayments of claims... 79 7.2.4 Debt write-offs... 79 7.2.5 Sale of claims... 79 7.3 Capital injections in public corporations... 79 7.4 Dividends... 80 7.5 Privatization... 80 7.6 Public Private Partnerships... 81 7.7 Financial derivatives... 82 7.7.1 Types of derivatives used... 83 7.7.2 Data sources... 83 7.7.3 Recording... 83 7.8 Payments for the use of roads... 83 7.9 Emission permits... 84 7.10 Sale and leaseback operations... 84 7.11 Securitisation... 85 7.12 UMTS licenses... 85 7.13 Transactions with the Central Bank... 85 7.14 Lump sum pension payments... 86 7.15 Pension schemes... 86 Annex I List of general government units 6

Institutional arrangements, sources, procedures and methods used for the calculation of deficit and debt data A. Institutional arrangements, sources, procedures and methods used for the calculation of deficit and debt data This chapter provides a summary description on the general government sector components and specifies institutional responsibilities and basic data sources used for EDP tables and for the compilation of general government national accounts. Special attention is given to EDP tables: detailed description of components of the working balance and the transition into EDP B.9 (net lending/net borrowing); compilation of Maastricht debt and of stock-flow adjustments; explanation of the link between EDP table 2 and 3, balancing process and statistical discrepancies. 1. General government This section describes the coverage of the general government sector and its sub-sectors. In attached Annex 1 complete list of the general government units is given for 2013 and 2014. In the general government sector three groups of units are distinguished. The first group is direct budget units at the central and at the local government level. Direct budget units are with all transactions included in the budgetary statistics at the central and at the local government level and are by definition included in the general government sector. The second group is indirect budget units ; this group includes those public service providers (hospitals, universities, schools, etc.) which are according to the 50% criterion classified as non-market units. The third group includes public corporations which are identified as non-market producers after applying the 50% criterion, the Slovenian Restitution Fund and the Capital Fund. Delimitation of the general government sector is regularly maintained. In 2004 the Statistical Office of the Republic of Slovenia (SORS) set up an official expert group composed of representatives of SORS, the Ministry of Finance, the Bank of Slovenia and the Agency for Public Records and Related Services (AJPES, for details see chapter 2.1.2) with the purpose of maintaining the institutional sector of all units in the Business Register of Slovenia in line with ESA2010. According to ESA2010 criteria all together 22 units were reclassified from inclusive 2010 on into the general government sector, of which 18 units at the central government level and 4 at the local government level. The general government sector is composed of three sub-sectors: central government (S.1311), local government (S.1313) and social security funds (S.1314). 1.1. Central government sub-sector (S.1311) The main units of the central government sub-sector are direct budget units: ministries, state bodies, courts, offices and administrative units established by central authorities (108 units). This subsector includes also public funds at the central government level (9 units),. public service providers and public agencies (340 units, of which 27 hospitals and 30 universities and their members), legal persons of private law (6 units) and non-market public corporations (16 units; after the reorganization of the Slovenian Railways into four units in 2011, two of them, namely the Slovenian Railways Passenger Transport and the Slovenian Railways Infrastructure, were included in the central government sub-sector as non-market producers). 7

Institutional arrangements, sources, procedures and methods used for the calculation of deficit and debt data Among corporation is one extra budgetary public fund included Slovenian Sovereign Holding (SSH) restructured from the Slovenian Restitution Fund (SRF). With ESA 2010 also the Agency of the Republic of Slovenia for Commodity Reserves (SPE) was included in the central government sector. For two funds managed by SID Bank (Slovenian Export Bank) on the account and in the name of central government all transactions with effect on B.9 were with ESA2010 revision included in the central government as other B.9 adjustments. Number of units is given for 2014 and all these units have annual accounting data as the main data source for the compilation of non-financial accounts and EDP tables. In 2014 the central government sub-sector thus in total includes 479 units. 1.2. State government sub-sector (S.1312) Not applicable. 1.3. Local government sub-sector (S.1313) The main units of the local government sub-sector are municipalities as direct budget units (211 units as local budgets). The local government level also includes public funds at local level (9 units), local communes (795 units), indirect budget units of public service providers and public agencies (1011 units), legal persons of private law (9 units), associations of municipalities (3 units) and non-market public corporations (19 units). The local government sub-sector in 2014 in total includes 2057 units having annual accounting data as the main data source for the compilation of non-financial accounts and EDP statistics. 1.4. Social security funds sub-sector (S.1314) The sub-sector social security funds include three units: the Health Social Security Fund, the Pension Social Security Fund and the Capital Fund (extra budgetary fund). Further details relating to practical aspects of sector classification for individual units into general government sector could be found in Chapter B, section 1. 8

Institutional arrangements, sources, procedures and methods used for the calculation of deficit and debt data 2. Institutional arrangements This section provides general information on institutional arrangements relating to the production and dissemination of government deficit and debt statistics: responsibility of national authorities for the compilation of individual EDP tables and underlying government national accounts, as defined by the ESA2010 Transmission Programme; institutional arrangements relating to public accounts which are used by statistical authorities for the compilation of government national accounts and EDP tables; general overview about bookkeeping system used by public units, internal quality checks and external auditing; communication between individual national authorities involved in EDP; publishing of deficit and debt statistics. Legal basis for the compilation of GFS and EDP data Fiscal data of budgets and accounting data of government units (direct and indirect budget units) are prepared according to the Accounting Act (2002) and relevant accounting standards. Government national accounts and EDP statistics are prepared in line with relevant EU legislation, the National Statistics Act and the Annual Programme of Statistical Surveys. Responsibilities for the compilation of these statistics is further specified in the Memorandum of Understanding in the Field of Macroeconomics Statistics (2004, amended in 2007 and 2009) signed between SORS, the Ministry of Finance and the Bank of Slovenia. The Memorandum of Understanding in the Field of Macroeconomics Statistics is in Annex 3. 2.1. Institutional responsibilities for the compilation of general government deficit and debt data This section describes institutional responsibilities for compilation of Government Finance Statistics (national accounts for general government and EDP tables). Further related information is described in section 2.3 Communication. National accounts data for general government are transmitted to Eurostat 1 via the following tables (see the related EU legislation) 2 : Table 2 Main aggregates of general government (annual data) Table 6 Financial accounts by sector (annual data) Table 7 Balance Sheets for financial assets and liabilities (annual data) Table 801 Non-financial accounts by sector (quarterly) Table 9 Detailed Tax and Social Contribution Receipts by Type of Tax or Social Contribution and Receiving Sub-sector (annual data) Table 11 Expenditure of General Government by function (annual data) Table 25 - Quarterly Non-financial Accounts of General Government 1 http://epp.eurostat.ec.europa.eu/portal/page/portal/statistics/search_database 2 http://eur-lex.europa.eu/lexuriserv/lexuriserv.do?uri=oj:l:2013:174:0001:0727:en:pdf 9

Institutional arrangements, sources, procedures and methods used for the calculation of deficit and debt data Table 26 Balance sheets for non-financial assets (annual data) Table 27 Quarterly Financial Accounts of General Government Table 28 Quarterly Government Debt (Maastricht Debt) for General Government Data on government deficits and debt levels are reported to Eurostat twice a year (in April and October) in EDP notification tables 3. Table 1 - Institutional responsibilities for the compilation of general government national accounts and EDP tables Institutional responsibilities (appropriate cells are crossed) SORS Ministry of Finance Bank of Slovenia Compilation of national accounts for general government: Non-financial accounts Financial accounts annual quarterly annual quarterly Maastricht debt quarterly X X X X X X Compilation of EDP tables: EDP table 1 actual data planned data deficit/surplus X Debt X X other variables X deficit/surplus X X Debt X other variables X EDP table 2 (actual data) 2A central government X 2B state government - 2C local government X 2D social security funds X 3A general government X X X EDP table 3 (actual data) 3B central government X X X 3C state government - 3D local government X X 3E social security funds X X EDP table 4 General government national accounts and EDP tables are the responsibility and compiled by SORS (in Slovene: Statistični urad Republike Slovenije). ESA non-financial accounts tables, X 3 http://epp.eurostat.ec.europa.eu/portal/page/portal/government_finance_statistics/excessive_deficit/edp_notificat ion_tables 10

Institutional arrangements, sources, procedures and methods used for the calculation of deficit and debt data debt, EDP tables and reporting are the responsibility of SORS. Financial accounts data compiled by the Bank of Slovenia are used in EDP tables 3. All data for debt compilation are prepared by the Ministry of Finance. Planned figures for each EDP reporting are prepared by the Ministry of Finance and SORS. Work on each round of EDP reporting is supported by a permanent working group of experts from all three institutions. EDP tables with annexes, signed by the director-general of SORS, are transmitted to Eurostat in electronic form and by surface mail by SORS. The same arrangements apply to April and October reporting. 2.1.1 Existence of an EDP unit/department EDP statistics in SORS is responsibility of the National Accounts Department within the Sector for Macroeconomics Statistics. Within the National Accounts Department a group of four persons is responsible for the compilation and transmission of ESA non-financial accounts and relevant tables for general government annually (Tables 2, 9 and 11) and quarterly (Table 25) together with the preparation of EDP tables/annexes and notification. Annual and quarterly financial accounts including general government are responsibility of the Bank of Slovenia. Data for quarterly debt are prepared by the Ministry of Finance with the cooperation of the Bank of Slovenia and with some adjustments finalized and transmitted to Eurostat by SURS. 2.1.2 Availability of resources for the compilation of GFS data The compilation of GFS data (ESA and EDP) by a rather small group of persons in SORS is possible due to complete, exhaustive and timely data collection system for all units of the general government sector. The first main data sources for GFS are budgets: at basic account level all budget data (central budget, municipality budgets and the budgets of the Health and the Pension Social Security Fund in EDP working balance). Budget reporting includes current and capital transactions (revenue and expenditure) and financial transactions. Budgets are to SORS via the Ministry of Finance available quarterly within one month after the end of the period in the Microsoft Office Excel format. The second main data source is annual accounting statements (profit and loss account and balance sheets) of public units and corporations. For public units reporting from 2000 on includes accrual profit-loss accounts and also parallel cash statements. These accounting statements are adapted to statistical needs (national accounts) and are electronically collected by a special public unit, the Agency for Public Legal Records and Related Services (AJPES). AJPES was established in 2002; its main tasks are the collection of annual accounting statements from all institutional sectors and the maintenance of the Business Register of Slovenia. With part of its activities it is included in the system of official statistics as so-called authorised producer of official statistics determined by the Medium Term Programme of Statistical Surveys. All accounting statements are available to SORS by the end of April for the previous year. For government units and public service providers the questionnaires collected by AJPES are prescribed by the Ministry of Finance. Exhaustive and complete data for all government units are for work of the GFS group prepared and analysed in the National Accounts Department within the work on GDP compilation. GFS group is also responsible for 11

Institutional arrangements, sources, procedures and methods used for the calculation of deficit and debt data providing data of the general government sector upon request to other international and national organizations (OECD, VAT Report for EU own resources, etc.). The third main data source is the Whole Government Accounts (WGA Premoženjske bilance) collected by the Ministry of Finance (from 2005 onwards). This data are much more detailed and all government units are included (except public corporations in general government, for which accounting data and balance sheets for corporations are available). However, the source is available in June/July each year and is used for the second EDP notification in the October. 2.2. Institutional arrangements relating to public accounts Generally, public accounts are basic data source for the GFS compilation, i.e. EDP tables as well as annual and quarterly accounts for general government. Public accounts are used by public units and refer to accounting records and relating accounting outputs (e.g. financial statements) based on the accounting framework defined by a national legislation. This section provides a general overview on institutional responsibilities relating to public accounts. Further details on public accounts for individual government sub-sectors are described under relevant sections on data sources and EDP tables. 2.2.1 Legal / institutional framework The compilation of public accounts for direct and indirect budget units is prescribed by the Ministry of Finance in the Accounting Act and accounting rules in the Accounting Manual. Budgets of the central (1) and of the local government level, of the Health Social Security Fund and the Pension Social Security Fund, as well as accounts and balance sheet for direct and indirect budget units (public service providers) are based on actual (cash) transactions and include current account, capital account, financial account transactions and balance sheets. The forms of accounts and statements are different for direct and for indirect budget units and are prescribed by the Ministry of Finance. The system is consistent with the International Monetary Fund's recommendations for Government Finance Statistics. Public service providers parallel to cash balances annually prepare also profit and loss account on an accrual basis according to similar accounting standards and rules as non-financial corporations. Public corporations use the same accounting standards and rules as private corporations in line with the international accounting standard for corporations. Accounting rules and standards for corporations are prescribed by the Slovenian Institute of Auditors. Designing of accounting statements and questionnaires for annual reporting to AJPES are for direct budget units and for public service providers prescribed by the Ministry of Finance. At present there is no plan for further major changes or improvements of the present accounting system and standards used by public units. 12

Institutional arrangements, sources, procedures and methods used for the calculation of deficit and debt data 2.2.2 Auditing of public accounts 2.2.2.1 General government units All general government units (direct and indirect budget units) should provide internal audit. The audit is done by internal audit services or by external private experts. The internal financial control and internal audit is developed, harmonized and supervised by the Budget Supervision Office. Frequency of audits depends on the size of unit; for units with a budget above approximately two million euro a budget internal audit must be performed annually and for other units every three years. Units in the general government sector are therefore subject to internal audit according to the Public Finance Act which regulates the composition, preparation and execution of the budget of the Republic of Slovenia and the budgets of local government units, the management of assets, debts, guarantees, borrowings of central and local government and the accounting and financial control, auditing. Provisions of this act relate to direct and indirect budget units, the Health Social Security Fund, the Pension Social Security Fund, public funds, public institutions and agencies. Article 100 determines that financial control of direct budget units at central level and local government level is a system of internal inspections and internal audits. Direct budget units organize appropriate forms of financial control for all state bodies and organizations and other indirect budget units within their competence. The system of control may be supplemented by organizing services of internal authorized auditors, acting under direct budget unit. The Accounting Act defines in article 53 more in detail which indirect budget units are obliged to internal audit (for description of article 53 see chapter 2.2.2.2). According to the Court of Audit Act also external audit is obligatory for most units in the general government sector and the Court of Audit is responsible for audit realization. Article 25 defines that the Court of Audit can independently determine which audits will be carried out in a calendar year. In the selection of audits that will be carried out in a calendar year, the Court of Audit considers also proposals of working bodies of the National Assembly, the Government, ministries and local authorities, and it is obliged to consider at least five proposals from the National Assembly. The Court of Audit is obliged to audit annually the regularity of the implementation of the central budget, regularity of the business operations of the Health Social Security Fund, the Pension Social Security Fund, and business operations of suitable number of important municipalities, other direct and indirect budget units including public corporations in accordance with annual programme. In principle all units of the general government sector are audited according to above mentioned criteria. The subject and coverage of auditing depends on the system of internal inspections and internal audits organized by direct and indirect budget units. With internal audits, financial statements auditing auditing of accounting and auditing of compliance with regulations is done. The subject of audit is similar to financial audit in corporations. Audit is done by bodies and persons who are set up within the internal auditing system. In scope of audit also monitoring of the use of funds transferred from central budget can be done. For external auditing the Court of Audit is responsible. In implementing audits it follows the international auditing standards adopted by the INTOSAI (the International Organization of Supreme Audit Institutions), European guidelines for the implementation of international 13

Institutional arrangements, sources, procedures and methods used for the calculation of deficit and debt data INTOSAI auditing standards, and international Standards on auditing and international views on auditing adopted by the IFAC (International Federation of Accountants). The main types of audit are tax auditing and budget auditing. Tax auditing, which can be also referred to as auditing of settlement and payment of taxes, has the aim to examine whether taxes were properly accounted and paid in accordance with applicable laws, acts and decisions. For budget auditing the main objective is to check the purposeful, correct (compliance with regulations and accounting standards) and rational use of funds from central and local budgetary resources, assessing the economic efficiency of units that use the resources from the budget intended for public use, assessing the achievement of goals in other areas for which budget resources have been provided. In this case business operations, performance and its effectiveness and efficiency are audited performance governmental auditing and value for money auditing. In the scope of audit the system and subsystem of business operations and accounting are checked, accounting documents and other documents related to business operations are reviewed, premises, facilities and equipment used for business are inspected and other necessary audit steps are taken to achieve the goals of audit. Simultaneously, it is the goal of audit the reduction of costs and increase of benefits in the use of budget funds. Audit is done in accordance with the Court of Audit Act and the rules of procedure of the Court of Audit which sets out the organization and working methods of the Court of Audit. With internal and external audits all flows and accounts of units in general government sector are audited. Regardless whether the flows and accounts are inside or outside the budget, they are audited when the unit is under internal or external audit. Internal audits take place for the whole time in the accounting year. The external audit by the Court of Audit, for example of the regularity of the implementation of the central budget takes place from 31 March, when the financial statements and accounts of the central budget are submitted to the Court of Audit, till 1 October at the latest when all financial data, accounts, reports and the final audit report of the Court are submitted to the National Assembly. The procedure of preparation and adoption of the central budget is further explained in article 97 of the Public Finance Act. External audit of regularity of business operations of direct and indirect budget units takes place based on the annual programme of the Court of Audit. Audit begins when the decision of the audit is issued; in the decision the unit, the type of audit, extent and timing of audit is defined. The audit cannot be carried out before 28 February of the current year for the previous accounting year till when units are obliged to prepare the financial statements, accounts and reports according to articles 98 and 99 of the Public Finance Act. External audit ends when the Court of Audit submits the final audit report to the National Assembly, the Prime Minister and the competent minister or the competent authority of the local community. The results of audited financial statements and financial reports are available to GFS compilers when they are published by the Court of Audit on its website 4,5. Reports are published according to the annual programme of the Court of Audit. Audit reports mostly do not include a risk analysis and relevant details, e.g. on payables, contingent liabilities. 4 http://www.rs-rs.si 5 http://www.rs-rs.si/rsrs/rsrs.nsf/porocilaarhiv? OpenForm&appSource=91F2455D38551D7CC1257155004755A7&start=31 14

Institutional arrangements, sources, procedures and methods used for the calculation of deficit and debt data Formally, audits by the Court of Audit are not part of the EDP compilation. The flows and processes under audits and the results of audits do not influence and were not yet relevant for the compilation of EDP statistics. However, GFS compilers are regularly contacted by the Court of Audit to clarify the differences in bookkeeping transactions in public accounts (working balances) and in the EDP statistics according to ESA. 2.2.2.2 Public units, not part of general government According to article 57 of the Companies Act, annual accounting statements and annual business reports of large and medium corporations, associated corporations and those small corporations whose securities are quoted on the stock exchange are obliged to external review or audit by an independent audit corporation in accordance with the Auditing Act which is the basic act for this matter. Another act that defines which units are obliged to audit is the Accounting Act. In article 53 it provides that legal persons of public law whose revenue financed from government budget for the accounting period exceeds around EUR 0.5 million or if the funding share of central or local government exceeds around EUR 2.1 million are obliged to internal audit. In several cases auditing of annual accounting statements of public corporations is done by the Court of Audit in accordance with the Court of Audit Act. In this case tax and budget auditing is done. According to above mentioned criteria almost all units in the public corporation sector as defined in ESA2010 are audited. Audit can be carried out by a unit or person who is not in a relationship with the unit that is being audited. In accordance with the Auditing Act, auditing in Slovenia can be carried out only by audit companies and independent auditors that meet statutory requirements and are enrolled in the register of auditing firms maintained by the Slovenian Institute of Auditors. Auditors are further on supervised by the Agency for Public Oversight Over Auditing. The main role of this agency is to provide an efficient supervision of certified auditors, auditing companies, authorized reviewers and supervision over the work of the Slovenian Institute of Auditors. According to article 24 of the Court of Audit Act, the Court can independently determine which audits will be carried out in a calendar year; this applies also to auditing of public corporations. The plan of audits of public corporations is determined by the annual programme of the Court of Audit. Depending on the object and the purpose of auditing three types of audits are distinguished: audit of financial statements and accounts, audit of compliance and audit of business. Financial statements auditing is the most typical one and it is mostly carried out by external auditors it is also referred as auditing of accounting. It begins with the testing of internal controls and continues with the examination of data from financial statements. In some cases it is extended to other parts of accounting, especially in the forecast financial statements and financial analysis methodology. With audit of financial statements an opinion on the truth and fairness and reality and objectivity of financial information which the corporation presents in its statements has to be given. By audit of financial statements and accounts all flows and all accounts of the unit are audited. 15

Institutional arrangements, sources, procedures and methods used for the calculation of deficit and debt data Audit of compliance with regulations assesses whether acts, laws and other regulations, like statutes, internal policies, regulations and professional standards, are respected and if not to inform the competent authority to take appropriate preventive measures. Audit of business is focused on the auditing of operations, like auditing of performance and its effectiveness and efficiency. It covers all basic business functions (technical, personnel, production, sales and financial), management functions (planning, preparation and implementation of control) and information functions (handling data about the past and the future, monitoring and analysis of data). The external audit takes place for six months after the accounting year which is in most cases equal to calendar year. So it takes place from January till June next year. On the other hand internal audit takes place for the whole time in accounting year. In accordance with article 24 of regulation on the submission of annual reports and other data of corporations, cooperatives and unincorporated enterprises, public corporations are obliged to submit results of audit in eight months after accounting year. The results of audited financial statements and financial reports are published by AJPES on its website 6 30 days after the last possible day for submitting the results by corporations being audited. The extent of audit is not the same in all cases. In most cases it includes financial statements auditing and compliance with regulations. In some cases also auditing of operations is carried out which contains also risk analysis. This kind of audit is carried out especially in larger public corporations. Regardless, in this kind of analysis AJPES is engaged as it assesses according to data received from financial statements and financial and business reports the credit ratings of corporations. A model used for calculating credit ratings includes European standards for credit rating agencies and classifies Slovenian corporations into 10 credit rating scores according to their credit risk. 2.3. Communication 2.3.1 Communication between actors involved in EDP 2.3.1.1 Agreement on co-operation In 2004 SORS, the Ministry of Finance and the Bank of Slovenia signed the first Memorandum of Understanding in the Field of Macroeconomics Statistics; the Memorandum was amended in 2007 and 2009. The Memorandum is signed by the director-general of SORS, the minister for finance and the governor of the Bank of Slovenia. It covers all aspect of institutional responsibilities and cooperation in preparing ESA accounts and tables together with ESA2010 transmission obligations as well as other obligations to the EU and other international organizations in the macroeconomics statistics. Implementation of the Memorandum is monitored by the group of representatives of the three institutions. 6 http://www.ajpes.si 16

Institutional arrangements, sources, procedures and methods used for the calculation of deficit and debt data Memorandum is attached in Annex 2 of this document. Work in areas covered by the Memorandum can be organized in working groups. EDP statistics and reporting is the responsibility of SORS. Work and cooperation with the Ministry of Finance and the Bank of Slovenia is organized in the permanent working group of experts of three institutions and is chaired by SORS. Group meets regularly during each reporting round and meetings cover methodological and current statistical problems of EDP tables preparation. Minutes are prepared for meetings on methodological improvements and plans for future work and not for daily meetings covering current work and timing problems at each reporting. Data collection system is described in chapter 2.1.2 above. All additional and detailed data for the compilation of EDP tables and particularly Annex 3 tables are available to the permanent working group by inviting relevant experts from both institutions, particularly from the Ministry of Finance. SORS has agreements also with all other institutions providing data sources, specifying the scope of data as well as deadlines and other modalities of delivery and availability (the Financial Administration (before 2014 Tax Administration Office and the Custom Office), AJPES, etc.). The obligation of these institutions to provide data is primarily determined by the Annual Programme of Statistical Surveys. 2.3.1.2 Access to data sources based on public accounts As mentioned in chapter 2.1.2 all data of general government units and budgets data of the central budget, municipality budgets and of social security funds are available in electronic format to SORS and processed accordingly for needs of the general government accounts and EDP work. Data in sources are available at unit level and at basic account level. From all other databases of the Ministry of Finance (Treasury, individual transactions within the central budget accounts, etc.) detailed data are available on request to the GFS group for EDP statistics. 2.3.2 Publication of deficit and debt statistics 2.3.2.1 Publication of EDP data SORS publishes main EDP figures on the last working day in March and September each year. This is done with a press release and a press conference and includes main aggregates of the general government sector (table 2 of the ESA Transmission Programme and debt figures); data are also published in the SI-STAT database 7. After the competition of EDP verification all EDP tables of Annex 1 are published with the press release one or two days before publishing by Eurostat and are available at SORS website. 8 SORS also makes available the whole history of EDP tables of Annex 1. 9 All forms of publications are available in Slovene and English. In this document, only links to English publications are provided. 7 http://pxweb.stat.si/pxweb/database/economy/03_national_accounts/25_03149_ government_accounts/25_03149_government_accounts.asp 8 http://www.stat.si/doc/vsebina/03/edp_slovenija_ang.xls 9 http://www.stat.si/doc/vsebina/03/historical%20edp%20tables.xls 17

Institutional arrangements, sources, procedures and methods used for the calculation of deficit and debt data The Ministry of Finance also publishes regular annual EDP report with explanatory notes after EDP verification in April and October 10. The same document is available at SORS's website 11. 2.3.2.2 Publication of underlying government ESA2010 accounts ESA2010 accounts of the general government sector (tables 2, 9 and 11), quarterly Maastricht debt (table 28) and quarterly general government non-financial accounts (table 25) are published with a press release 12 before transmission to Eurostat and are available at SORS website in standard ESA tables in Excel format and in the SI-STAT database. 13 At SORS website are also relevant explanatory notes of sources and methods are provided. 14 Annual and quarterly financial accounts (tables 6, 7 and 27) are prepared, published 15 and transmitted to Eurostat by the Bank of Slovenia. 10 http://www.mf.gov.si/si/delovna_podrocja/tekoca_gibanja_v_javnih_financah/ porocilo_o_primanjkljaju_in_dolgu_sektorja_drzave/ 11 http://www.stat.si/doc/vsebina/03/poročilo%20o%20primanjkljaju%20in%20dolgu %20(Ministrstvo%20za%20finance).pdf 12 http://www.stat.si/eng/tema_ekonomsko_nacionalni.asp 13 http://www.stat.si/eng/tema_ekonomsko_nacionalni_racunidrzave.asp 14 http://www.stat.si/eng/metodologija_pojasnila.asp?pod=3 15 http://www.bsi.si/en/publications.asp?mapaid=923 18

EDP tables and data sources - Central Government sub-sector, EDP table 2A and 3B 3. EDP tables and data sources This section reports on availability and use of basic data sources for the compilation of national accounts and EDP tables, by general government subsectors and main units/groups of units. It also aims at describing adjustments to basic data source in order to compile ESA2010 based deficit/surplus; EDP tables compilation techniques, balancing practices; link between EDP table 2 and 3. 3.1. EDP table 1 EDP table 1 provides the core, summary information for the reporting period, as requested by the related EU legislation 16 : net borrowing (-)/net lending (+) (EDP B.9) for general government sector and its subsectors, outstanding amount of Maastricht debt by instruments, Gross Domestic Product (GDP), gross fixed capital formation (GFCF) for GG sector and data on interest expenditure (ESA2010 D.41 and EDP D.41) 17. This section focuses on Maastricht debt only. A detailed description of EDP B.9 calculation and data sources for individual subsectors is covered under section 3.2. 3.1.1 Compilation of Maastricht debt 3.1.1.1 Specification of debt instruments In the attached Annex 5 detail specification of Maastricht debt by instruments, including maturity, creditors and interest rates (when possible) and by subsectors/units is shown separately for securities and for loans. The valuation of instrument is in face value except bills, which are in nominal value. Figures are shown gross and net, after intra-subsector and between subsectors consolidation. Data are consistent with the official figure of Maastricht debt, which is shown on the first page of Annex 5. 3.1.1.2 Data sources used for the compilation of Maastricht debt Maastricht debt is compiled quarterly by the Ministry of Finance Treasure Department in cooperation with the financial account group in the Bank of Slovenia. Two sets of unit (instrument) level data are prepared by the Treasure Department and available in national accounts for ESA and EDP reporting. The first set of data includes direct budgetary units at central and at local government level and of social security funds. The second set of data includes indirect budgetary units at central and at local government level. Both sets of data are complemented with debt of relevant non-financial corporations according to data sources for financial accounts compilation by the Bank of Slovenia. However, far the most important is debt of the central government (central budget) at the amount of almost 96 % of the total Maastricht debt. Borrowing in securities is only possible in central budget and exceptionally by the SSH/SRF (SOS 2E, 1994). Debt figures are already final for the April EDP notification without any further routine revisions. However, revisions are possible due to changes in sector classifications. 16 http://eur-lex.europa.eu/lexuriserv/lexuriserv.do?uri=oj:l:2014:069:0101:0101:en:pdf 17 http://eur-lex.europa.eu/lexuriserv/lexuriserv.do?uri=oj:l:2001:344:0001:0004:en:pdf 19