Basic principles for compiling financial accounts are defined under the European System of Accounts (ESA 2010).

A complete financial account entry for one period comprises the following:

                              outstanding amount at the end of the previous period
                                           + transactions
                                           + exchange rate fluctuations
                                           + price changes
                                           + other changes
                                           = outstanding amount at the end of the reporting period

An outstanding amount is the amount of financial instruments at a particular point in time.

A transaction is the value of a creation or liquidation of, or exchange with financial instruments between institutional units.

Net financial worth is the difference between the total outstanding amounts of financial instrument assets and those of financial instrument liabilities, while net financial transactions represent the difference between the total transactions in financial instrument assets and those in financial instrument liabilities.

Revaluation and other changes are those occurring in the outstanding amount values as a result of exchange rate fluctuations or price changes in the respective time period or due to changes in classification, structure or respondent accounting methods.

The whom-to-whom data or the financial account by debtor/creditor is an extension of the non-consolidated financial account. It is a three dimensional presentation of financial transactions where both parties to a transaction are shown, as well as the nature of the financial instrument being transacted. The whom-to-whom data are compiled on deposits, loans, debt securities, listed shares and investment fund shares.

Financial instruments are economic assets comprising means of payment, financial claims and claims which are close to financial claims in nature. Financial instruments are broken down mostly by their liquidity.

Breakdown of financial instruments

Monetary gold and special drawing rights
Monetary gold
Special drawing rights
Currency and deposits
Transferable deposits
Other deposits
Debt securities
Short-term debt securities
Long-term debt securities
Short-term loans
Long-term loans
Equity and investment fund shares or units
Listed shares
Unlisted shares
Other equity
Investment fund shares or units
Insurance, pension and standardised guarantees
Non-life insurance technical reserves and provision for calls under standardised guarantees
Life insurance and annuity entitlements
Pension entitlements, claims of pension funds on pension managers, entitlements to non-pension benefits
Financial derivatives and employee stock options
Other accounts receivable/payable
Trade credits and advances
Other accounts receivable (or payable) excluding trade credits and advances

Financial instruments are measured at market prices; transactions are recorded as at the time of their creation; double/quadruple entry accounting principle is used for entries (i.e. each change has to be recorded by the institutional unit in the accounting records twice, while, for financial account statistics, each change with the same values between institutional units has to be recorded four times – twice for each institutional unit).

Quarterly financial accounts are non-consolidated. It means that all transactions arising between institutional units are recorded, while not excluding mutual financial instrument transactions. Annual financial accounts are both non-consolidated and consolidated.

In the quarterly financial accounts, institutional units are grouped by sector or subsector depending on the principal activity and function of the institutional unit. Each institutional unit belongs to only one sector or subsector. In Latvia, the list of institutional units is maintained by the Central Statistical Bureau of Latvia.

Breakdown of institutional units by sector

Non-financial corporations
Financial corporations
Monetary financial institutions
Central bank
MFIs (excl. central bank)
Financial corporations, except MFIs, insurance corporations and pension funds
Insurance corporations and pension funds
Insurance corporations
Pension funds
General government
Households and non-profit institutions serving households
Non-profit institutions serving households

Principles for compiling financial accounts are defined in the European System of Accounts 2010.