Hi all,
Back again. Last time wasn’t the right time to look at anything as Coronavirus sent our sales through the roof.
I’ll start of by saying I think the chart of accounts is too prescriptive. I don’t advocate for using regulatory accounting formats for a chart of accounts. The basis for a sane chart of accounts should be driven by the needs of management accounting as they are the ones who need to provide monthly performance and other data for Management use. Financial Accounting whilst extremely important is secondary to good management accounting data. The chart of accounts can be adapted to accommodate easy extraction of data needed to create the Financial Accounts.
I think the approach being currently taken makes getting approved localisation too slow as the end result is something highly prescriptive and hard to attain when the point should be to help a business get up and running as quickly as possible. They will need to adapt the accounts anyway therefore being too prescriptive to the point of stagnation isn’t helping anyone, least of helping adoption of Tryton.
The focus should be less on a regulatory based chart of accounts and more on the chart of taxes as that is where there is really no room, as regards the recording of taxes, for creativity and where the tax rules apply to all in a standard way.
I know this view is unpopular therefore explain why regulatory accounts are so important to the day to day operation of a business? Financial accounts are historic data. Management accounts are about the here and now. The business lives and dies on its ability to take sane decisions and that relies on up to date, accurate and easily accessible information which comes from the accounting data in the system. There are no Financial Accounting reporting needs if the business has gone bust. The point being to serve the needs of management accounting first and, as mentioned above, add whatever is needed to allow Financial accounts to be created more easily not the other way round.
Show me what accounting software out there has the overblown regulatory chart of accounts that is proposed here and that’s not in anyway given any disservice to the work Dave has put in as this is the approach that is clearly favoured in Tryton therefore it’s a product of that philosophy? I can’t think of one. Sage / Xero / Quickbooks, the more general purpose accounting packages don’t. They give a basic template whose purpose is to serve as ready to use for micro businesses who have no internal Management Accountant and instead have an external Financial Accountant who will do all the work to provide them with compliant accounts and tell them their tax liabilities. Those businesses which have Management Accounts will draw up their own charts of accounts. All they want to know is how to adapt it correctly to their needs.
Any ERP I’ve seen have the bare bones of a chart of accounts, if they have anything at all, even less than what Sage, etc have. They only want to get a sense of what the chart looks like and then expect you to go away and draw up what is needed for your business. I think that is entirely reasonable.
What makes adoption harder? Having a regulatory based chart of accounts that takes years to make into Tryton or having a chart of accounts which is much more compact, and no I’m not suggesting the minimal chart of accounts which is too compact, and available for a much wider range of countries because it is not so intimidating to produce a localisation package which is available now?
You can’t be all things to everyone and I fear on this issue it has bogged things down to the extent that a chart of accounts will probably never make it into mainstream.