ESA (European System of National and Regional Accounts), COFOG (Classification of the Functions of Government) and New Classification of Expenses by Missions and Programs

The European System of National and Regional Accounts (ESA 2010) is the European Union accounting framework for a systematic and detailed description of the activities of an economy, its components and the relations between them. This is the basic coding through which each member state of the European Union sends information to the European Commission for monitoring public finance trends [46].

The ESA 2010, implemented in September 2014 to replace the previous ESA 95, is the result of a close cooperation between the Statistical Office of the European Commission (EUROSTAT) and the statistical offices of the member states. Indeed, at European level consolidated reporting has a statistical nature. The ESA 2010 has been adopted with Regulation no. 549 of the Council of the European Union (Official Journal “G.U.” 26/06/2013), which defined in detail the data reporting methodologies to be used and their subsequent transmission by governments to EUROSTAT.

In the ESA 2010 coding, which concerns the entire economic system, public organizations are distinguished into state central administrations (ministries and autonomous public agencies), local governments (regional and local governments, healthcare organizations, other public organizations whose competence extends to a part of the national territory) and social security institutions.

The ESA 2010 adopted, as part of public finance statistics, a coding system of expenses classified by public policies, developed in 1997 by the OECD and called Classification of the Functions of Government (COFOG). The COFOG code is the same for all public organizations of the member states of the European Union.

The COFOG, which highlights the aims of activities of public organizations [47, 48], includes three levels of analysis for expenses:

  • • Divisions or first-tier functions representing the primary goals pursued by the public organizations (totalling a number of 10)
  • • Groups or second-tier functions concerning the specific areas of intervention of public policies (totalling a number of 68)
  • • Classes or third-tier functions identifying the single objectives that include the areas of intervention of public organizations (totalling a number of 106)

In this respect we should point out that in Italy, after the accounting harmonization process, in the budget and annual report, the new classification of expenses by missions and programs (requested to all public organizations) is in line with the COFOG code. Missions and programs are identified by a progressive number, thus creating a coding system of expenses by destination.

More specifically, public organizations must indicate in their budgets and in their annual reports the corresponding second-tier function of COFOG for each

“program”. There are different mission and program codes according to different budgets and annual reports of public organizations, such as regional and local governments, universities, healthcare organizations and other public organizations. Conversely, at present there is not a predefined mission and program scheme for the state central administration, so every year state budget and state annual report must indicate the corresponding COFOG for each “program”.

The set of information is reported in two free access and very user-friendly websites (,, but their data cannot be copied into a file.

The codes of missions and programs could be used as a basis for the creation of an XBRL taxonomy. In this case, data in XBRL format would increase the information potential of the aforementioned websites, as in this way they would offer visitors the opportunity to download data in a format that can be immediately reprocessed.

In this regard, the major criticalities are that this code only concerns the expenses classified by destination and that the number of mission and program items is rather limited, with the risk of reducing the possibilities for users to process data.

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