Country experience: United States
6.110. In 1976, the International Investment Act authorized the Bureau of Economic Analysis (BEA) of the United States to collect data on the finances and operations of foreign-owned enterprises in the United States and of United States parent enterprises and their foreign affiliates. The International Investment Act was expanded to include trade in services in 1984. The Act made responding to BEA surveys mandatory and required BEA to maintain the confidentiality of the data collected. The Paperwork Reduction Act, passed in1980, governs the collection of data from the public by any government agency. The Paperwork Reduction Act requires agencies to minimize the burden they place on private businesses and citizens in collecting information.
6.111. The BEA surveys of the operations of multinational corporations collect data on balance sheets, income statements, sales, employment and employee compensation, research and development expenditures, property, plant and equipment, taxes, trade in goods and the components necessary to estimate value added. While the surveys cover both majority-owned and minority-owned affiliates, more data are collected for majority-owned affiliates.
6.112. BEA uses a system of benchmark surveys, conducted every five years, and annual surveys to collect data on FATS. Benchmark surveys cover the universe of multinational enterprises, but data collection is much less detailed for smaller reporters and for minority-owned reporters.
6.113. Annual surveys are conducted between benchmark surveys. The smallest reporters are exempt from reporting on the annual surveys, and BEA uses statistical sampling for the medium-sized reporters. Large reporters are required to report annually and provide the most detailed information. The reporting thresholds are based on the reporter’s assets, sales or net income. Estimates are made for reporters not required to report, or failing to do so, in a given year, so the published statistics cover the universe. Smaller majority-owned foreign affiliates report less detail than larger majority-owned foreign affiliates. To present statistics on the operating data of all majority-owned foreign affiliates, BEA estimates items that are collected only for large majority-owned foreign affiliates for the smaller majority-owned affiliates. Those estimates are based on relationships among the data items for a panel of comparable larger majority-owned foreign affiliates.
6.114. Regarding United States parents, data are collected for both inward FATS and outward FATS on an enterprise group basis and cover the fully consolidated domestic entity. For outward FATS, the United States parent is required to report on the operations of its foreign affiliates, but that report tends to be less consolidated. First, affiliates can never be consolidated across countries. Second, affiliates cannot be consolidated across industries unless they were part of an integrated production process. Finally, affiliates cannot be consolidated if they do not have the same ownership structure.
6.115. Data are collected on an accrual basis and generally follow United States Generally Accepted Accounting Principles (GAAP). Data are reported on the basis of the enterprises’s fiscal year. For outward FATS, items recorded in foreign currency are translated into United States dollars following GAAP, which calls for assets and liabilities to be translated using the exchange rate on the date of the balance sheet, and for revenues and expenses to be translated using weighted-average exchange rates for the period.
6.116. For inward FATS, operations are classified by the country of the ultimate beneficial owner (UBO), which is equivalent to the UCI. However, a few data items are classified by the country of the foreign parent. For outward FATS, the statistics are classified by the country in which the affiliate is located, that is, where the affiliate’s physical assets are located and its primary activities are carried out. In most cases, the country of location and the country of incorporation are the same. However, in some cases, a business enterprise is incorporated in one country, but part or all of its physical assets are located in a second country. If all of its operations are in a single country outside of its country of incorporation, then the affiliate is treated as a single affiliate in the country of its physical presence. If the affiliate has physical assets in each country, it is treated as two affiliates.
6.117. For classification by industry, BEA uses industry codes derived from the North American Industry Classification System (NAICS), generally at the four-digit level. For inward FATS, each affiliate reports up to 10 industries in which it has sales. These are used to assign a primary industry code to the affiliate in three steps. First, a given affiliate is classified in the NAICS sector that accounted for the largest percentage of its sales; NAICS sectors are at the two-digit level. Next, the affiliate is classified into the three-digit subsector within that sector. Third, within that three-digit subsector, the affiliate is classified in the four-digit industry for which its sales were largest. For outward FATS, the same process is followed to assign United States parents and each foreign affiliate to a primary industry.
6.118. BEA asks reporters to break out their sales into goods, services and investment income. For inward FATS, enterprises are asked to further break out their sales of services between sales to United States persons and sales to foreign persons. For outward FATS, BEA asks that sales of goods, services and investment income each be broken out by destination: to the United States, to the host country and to third countries. For each of these, BEA asks that the reporter further distinguish between sales to affiliated parties and sales to unaffiliated parties.
6.119. The data reported must pass a large number of computerized editing checks and reviews for consistency with such data as quarterly FDI surveys. As a result of that editing and review process, a number of changes are made to the reported data, usually after consultation with the reporter. In some cases, usually involving smaller affiliates, estimates based on industry averages or other information are substituted for missing or erroneously reported data.
 P.L 94-472, 90 Stat. 22 U.S.C.3101-3108, as amended, http://uscode.house.gov/view.xhtml?path=/prelim@title22/chapter46&edition=prelim