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									              NTTS 2009
         New Techniques and Technologies for Statistics
                       18-20 February 2009




Check, edit and imputation of the variable
turnover of the Italian Business Register



           Speaker: Viviana De Giorgi (Istat)




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                           Check, edit and imputation of the variable turnover of
                                       the Italian Business Register


                                                                Contents

                                                                  Keywords

                                                        Background and motivations

                                                                The procedure

                                                                Conclusions




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Viviana De Giorgi – NTTS 2009 – Brussels, 18-20 February 2009
                             Check, edit and imputation of the variable turnover of
                                         the Italian Business Register
Keywords



                                                                  administrative sources


                                                                    outliers detection


                                                                       data editing




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  Viviana De Giorgi – NTTS 2009 – Brussels, 18-20 February 2009
                             Check, edit and imputation of the variable turnover of
                                         the Italian Business Register
Keywords                ASIA
                        (Statistical Archive of Active Enterprises) Italian Business
                        Register.

                        Vat returns
                        Administrative source of annual statements of VAT payments,
                        provided by the Italian Tax Authority.

                        Sector Studies
                        Administrative source of the annual survey on business
                        economic sectors carried out by the Tax Authority.

                        Istat Business Surveys
                           1) Annual Survey on Large Enterprises Accounts System
                              (total)
                           2) Annual Survey on Small and Medium-sized Enterprises
                              (sample)


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  Viviana De Giorgi – NTTS 2009 – Brussels, 18-20 February 2009
                               Check, edit and imputation of the variable turnover of
                                           the Italian Business Register
Background                A new need to improve the quality of the business register
                          In 2005, working on the data of the taxation year 2003, a new need
                          arises: making the variable turnover available for dissemination.
                          In fact, until then, data from the VAT returns had been used for
                          the ASIA units, without any processing, only for internal use.

                          The study implies:
                           • analysis of the available sources and data,
                           • analysis of the available category of enterprises, including
                             missing values analyses
                           • analysis of the method for imputing missing and non-correct
                             values

                          Missing, zero and non-correct values are to be checked and
                          imputed in order to obtain comparable and consistent data.




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    Viviana De Giorgi – NTTS 2009 – Brussels, 18-20 February 2009
                               Check, edit and imputation of the variable turnover of
                                           the Italian Business Register
Background                        Available procedures for editing and imputation of
                                                   numerical data

                         Automatic procedures for identifying invalid data, such as the
                         Hidiroglou-Berthelot algorithm, which had not given good
                         results in the case of the ASIA turnover.

                         Software for editing and imputation of numerical data, such as
                         the BANFF Sas application. Its implementation requires edits
                         on the basis of numerical variables and in the case of ASIA we
                         have only few variables to build effective rules for the turnover.

                         An ad hoc procedure, which can better fit data and is the
                         solution here proposed.




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    Viviana De Giorgi – NTTS 2009 – Brussels, 18-20 February 2009
                               Check, edit and imputation of the variable turnover of
                                           the Italian Business Register

Background                                                          Available sources in Istat


                          1. Sector Studies

                          2. Annual VAT returns

                          3. Istat Business Surveys




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    Viviana De Giorgi – NTTS 2009 – Brussels, 18-20 February 2009
                                 Check, edit and imputation of the variable turnover of
                                             the Italian Business Register

Background                Sector Studies
                          Instituted by the Tax Authority in 1996 in order to evaluate the
                          capacity of the enterprises to produce income and knowing
                          whether they pay taxes, they are a source of great interest as
                          they gather a lot information on about 3.5 million enterprises. The
                          subjects liable to Sector Studies are industrial commercial and
                          manufacturing income owners and VAT number proprietors, with
                          some exclusion principles (e.g. the turnover threshold and the
                          activity type and time).

                          Financial information retrievable from the Sector Studies:
                             •   Volume of business
                             •   Proceeds
                             •   Agios and Income from the Sales of Goods Subject to Fixed Revenue
                             •   Other Proceeds
                             •   Other Positive Income Components
                             •   Other Operations that Produce Income



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    Viviana De Giorgi – NTTS 2009 – Brussels, 18-20 February 2009
                               Check, edit and imputation of the variable turnover of
                                           the Italian Business Register

Background                Annual VAT returns
                          Only the variable called Volume of Business is available. The
                          definition is the same as the Sector Studies one. The VAT
                          statement is declared by (almost) all the Italian enterprises
                          (excluding some activities that are not subject to declaration).

                          Istat Business Surveys
                          These surveys provide for the variable named Proceeds, whose
                          definition is the same as the Sector Studies variable. A part from
                          the survey on large enterprises whose values are integrated in
                          the imputation phase, Istat has only sample data on enterprise
                          turnover, and they are used here mainly in the outcomes
                          assessment phase.
                          Other Istat turnover sample surveys are non taken into
                          consideration.




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    Viviana De Giorgi – NTTS 2009 – Brussels, 18-20 February 2009
                               Check, edit and imputation of the variable turnover of
                                           the Italian Business Register

Background                Which source and variable?
                          Notwithstanding both the VAT returns and the Sector Studies
                          provide for turnover time series we have chosen the variable
                          called Volume of Business from the VAT returns to be used for
                          imputing values and the same variable from the Sector Studies to
                          be used as a cross check variable.
                          Why?
                             • The VAT statements are declared by (almost) all Italian
                               Enterprises whereas the Sector Studies are a partial survey.
                             • The same variable is also in the Sector Studies source and it
                               can be used for cross checks.
                             • The VAT returns are less subject to laws and directions than
                               Sector Studies.
                             • From a statistical point of view the VAT returns missing data
                               can be considered MAR.


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    Viviana De Giorgi – NTTS 2009 – Brussels, 18-20 February 2009
                           Check, edit and imputation of the variable turnover of
                                       the Italian Business Register
                                          The ASIA turnover imputation procedure

                     Characteristics

                         • It is an ad hoc procedure.
                         • It has been running since the taxation period 2004 after an
                           experimental period of one year.
                         • It combines administrative and statistical sources
                           information, to provide non zero values for (almost) all the
                           ASIA units.
                         • It consists of 5 steps, strictly in sequence.


                           The ASIA turnover, available for all the ASIA units, is being
                                           disseminated by classes



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Viviana De Giorgi – NTTS 2009 – Brussels, 18-20 February 2009
                           Check, edit and imputation of the variable turnover of
                                       the Italian Business Register
                      The procedure

                         1. identification of the enterprises set to be checked, imputed
                            and validated (reference set)
                         2. identification of the existence set of turnover permitted
                            values (turnover range)
                         3. data editing through 3-year time series consistency (outliers
                            detection)
                         4. missing zero and outliers imputation
                         5. data validation                     using   external   indicators   (outcomes
                            assessment)




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Viviana De Giorgi – NTTS 2009 – Brussels, 18-20 February 2009
                                Check, edit and imputation of the variable turnover of
                                            the Italian Business Register

The procedure                                                        Step 1: Reference set
                           All the following steps work on the enterprises active for at least
                           six months of all economic activity sectors in the Istat business
                           surveys with the exception of:
                              • divisions 65* (Financial intermediation) and 66* (Insurance and
                                pension funding): not in Istat surveys
                              • divisions 85* ( Health and Social Work) and 67* (Activities auxiliary to
                                financial intermediation): not liable to VAT
                              • divisions with very                     few   enterprises   (Mining):   non   effective
                                characteristics values
                              • enterprises that have suffered a merger/acquisition event whit a non-
                                zero turnover value
                           Enterprises excluded will have a value of turnover (including zero
                           and missing values) as declared in the Volume of Business of the
                           VAT statement.

                           *NACE rev. 1.1


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     Viviana De Giorgi – NTTS 2009 – Brussels, 18-20 February 2009
                                Check, edit and imputation of the variable turnover of
                                            the Italian Business Register

The procedure                                                        Step 2: Turnover range
                           ASIA previous year turnover bounds are used: the minimum and
                           maximum values by economic activity division of the previous
                           year data serve as a band-pass filter, determining the following
                           sets:
                              • set P (permitted values): contains all the values within the band-pass
                                filter
                              • set NP (non permitted values): consists of all the values outsides the
                                bounds

                           Previous year data (checked and imputed)
                              • are considered correct
                              • are capable of managing the turnover short term variability




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     Viviana De Giorgi – NTTS 2009 – Brussels, 18-20 February 2009
                                Check, edit and imputation of the variable turnover of
                                            the Italian Business Register

The procedure                                   Step 3: Data editing for outliers detection
                           Use of the Sector Studies current year data as a cross check
                           variable
                           Use of changes in value in the last three years of
                                  • turnover
                                  • turnover per capita
                           Different rules (bounds) for set P and set NP to calculate
                           consistent and non-consistent changes in value by economic
                           activity groups (3 digits)
                           Use of a three-element binary vector to identify
                                  • current year non-correct values (to be imputed)
                                  • previous year non-correct values (to be excluded in the imputation
                                    step)
                           Missing and zero values are beforehand considered non-correct
                           (outlier)
                                                  definition from now on:
                                     outlier is a zero, missing or non correct value

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     Viviana De Giorgi – NTTS 2009 – Brussels, 18-20 February 2009
                                Check, edit and imputation of the variable turnover of
                                            the Italian Business Register

The procedure                                                        Step 4: Outliers imputation
                           (The large enterprises values are automatically replaced by the Istat
                           enterprise survey ones, without any checks. Survey data are supposed to
                           be correct. They are already checked and revised in the survey.)




                           The enterprises with a non correct current year value are divided
                           into:
                                  1. enterprises whose previous year data is non correct: their
                                     values are imputed with a mean value imputation
                                  2. enterprises whose previous year is correct: their values are
                                     imputed with a previous year imputation




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     Viviana De Giorgi – NTTS 2009 – Brussels, 18-20 February 2009
                                 Check, edit and imputation of the variable turnover of
                                             the Italian Business Register

The procedure Mean value imputation: multiplication of the number of employed
              persons by the average turnover per capita of the group the
              enterprise belongs (all data refer to the current year).

                                                                     it k  tpckxy  ek
                           Previous year imputation: multiplication of the number of
                           employed persons by the sum of the previous year turnover per
                           capita and the previous year turnover per capita multiplied by
                           the change in value between the last two years.
                                                          itk  (tpck 1  tpck 1  tpc )  ek   xy


                            1)     itk is the imputed turnover in the current year
                            2)     tpcxyk is the current year turnover per capita of the activity groups (3-digit) or division (2-
                                   digits) x and the class of employed persons y (group xy)
                            3)     ek is the number of persons an enterprise employs in the year k
                            4)     tk is the turnover an enterprise obtained in the previous year
                            5)     ∆tpcxy is the percentages turnover change in value that occurs in the group xy between
                                   the previous and the current years



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     Viviana De Giorgi – NTTS 2009 – Brussels, 18-20 February 2009
                                Check, edit and imputation of the variable turnover of
                                            the Italian Business Register
The procedure                                                Step 5: Outcomes assessment
                           Comparing 1) Istat surveys and ASIA data
                                     2) ASIA previous and current year data
                           by economic activity and class of persons employed through:
                              1. by group absolute differences and/or ratios of the number of
                                 enterprises
                              2. by group absolute differences and/or ratios of the number of
                                 persons employed
                              3. by group differences of the amount of turnover between ASIA and
                                 the Istat surveys, before and after the imputation process
                              4. by group amount of imputed turnover and percentages of imputed
                                 enterprises, for both all the values and only missing and zero
                                 values
                              5. by group average values, before and after data imputation
                           Index 1 and 2 could be quite different from zero as the enterprise
                           survey universe is an expansion by mean of sample coefficients;
                           index 3, 4 and 5 are useful to understand the data quality
                           improvement.
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     Viviana De Giorgi – NTTS 2009 – Brussels, 18-20 February 2009
                           Check, edit and imputation of the variable turnover of
                                       the Italian Business Register
                                                                Conclusions
                      Every year:
                         • about 3% of data are missing or zero values (the percentage
                           decreased drastically in 1999)
                         • about 2% of data are non correct values
                         • only very few enterprises register a previous year non correct value
                           (to not use in the previous year imputation)
                         • few ad hoc studies are necessary, and it depends on the available
                           data and the reference year (e.g. Aeolian power enterprises in the year
                           2004)


                      The procedure preserves time series consistency and
                      comparisons, punctual data are available for internal uses, e.g.
                      National Accounts and surveys, macro-data dissemination is
                      possible by classes of turnover.



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Viviana De Giorgi – NTTS 2009 – Brussels, 18-20 February 2009
                           Check, edit and imputation of the variable turnover of
                                       the Italian Business Register
                                                                Future developments
                      As the activities liable to the Sector Studies has been increasing
                      year by year, above all due to the inclusion of more activities and
                      the rising of turnover thresholds, we are thinking about
                      rebuilding the process, substituting the Volume of the business
                      with the Proceeds coming from the Sector Studies, in order to:
                         • make the use of Sector Studies information more effective
                         • Improve integration of the VAT returns and the Sector Studies
                         • make the ASIA turnover more comparable with Istat surveys
                           data
                         • build up an effective imputation for economic activities non
                           liable to VAT




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Viviana De Giorgi – NTTS 2009 – Brussels, 18-20 February 2009
                           Check, edit and imputation of the variable turnover of
                                       the Italian Business Register
                                                                REFERENCES
                      Bernardi A., Cerroni F., De Giorgi V. (2008). The Tax Authority Source as an example
                        of the use of an administrative source as a statistical one. Contributed Paper of
                        IAOS Conference on Reshaping Official Statistics. Shanghai, 14-16 October 2008.
                      Hidiroglou, M.A., Berthelot, J.-M. (1986). Statistical Editing and Imputation for
                        Periodic Business Surveys. Survey Methodology, vol. 12, n. 1, 73-83.
                      Italian DPR n. 633/72 on VAT returns (Italian).
                      Sector Studies filling in instructions. Document retrievable on the Italian Tax
                        Authority Internet site: http://www.agenziaentrate.gov.it (Italian).
                      Statistics Canada - BANFF Support Team (2005). Functional Description of the Banff
                        System for Edit and Imputation System. Quality Assurance and Generalized
                        Systems Section Technical Report.
                      TUIR Italian consolidated act on income taxes (Italian).
                      VAT returns filling in instructions. Document retrievable on the Italian Tax Authority
                        Internet site: http://www.agenziaentrate.gov.it (Italian).




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Viviana De Giorgi – NTTS 2009 – Brussels, 18-20 February 2009
Thank you for your attention!




   for further information: viviana.degiorgi@istat.it




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