Net errors and omissions

Net errors and omissions

The errors and omissions in balance of payments accounting arise in large part from the statistical difficulties involved in gathering balance of payments data.Because officials do not have the necessary information to make the double entries they make single entries based on the information available to them.This information often comes from multiple sources that vary in coverage and reliability.For example, merchandise trade figures are derived from customs documents, freight charges from reports by shipping organizations, and the resulting changes in international bank accounts from either banks’ balance sheets or from transaction records compiled by banks or others.Short-term capital movements are particularly difficult to track, especially when there is an intent to evade exchange controls, taxes and other restrictions.Capital movements may also lead or lag the transactions they are meant to finance.For example, an export shipped in the month of November or December may not be paid for until January or February of the following year.The net errors and omissions account offsets the cumulated net difference in the other accounts.