What is the purpose of the chart of accounts for a business? It is not to produce a set of regulatory accounts. That’s the role of the Financial Accountant. Therefore using a regulatory chart of accounts is not what the business needs. A chart of accounts sole purpose is to give structure to the accounts that are needed in the business so that they appear on the correct place in the financial statement. Nothing about that relies on regulation. Regulation over complicates the chart of accounts and makes them hard to verify.
Ok so Dave produces the chart of accounts. Tell me how you will verify it? You can’t that’s why it hasn’t been done. You never will. By some miracle you actually adopt the chart of accounts Dave produces who is going to monitor the legislation to ensure that the format hasn’t changed? No one is my guess therefore maintainability has just gone out the window. It’s in air of maintainability and nothing more than that.
A simple chart of accounts is far more maintainable because it is not overcomplicated as it simply implements basic accounting principles which is this type of account goes in this section. Nothing about the law changes that. Hitching your wagon to the law is no guarantee of anything other than you will likely never have any localisation in many, many countries. For no reason other than dogma. Complicated is the enemy of maintainability.
IFRS is irrelevant. The accounts used in the business are primarily management accounts therefore IFRS is an irrelevance. The Financial Accountant gets to worry about that. If that person wants some minor tweaks to the chart of accounts that person will make their case. The Director of Finance, who almost certainly is a Management Accountant, will decide whether it is adopted or not.
As I’ve stated before the Financial Accountant produces accounts for reporting. There are incompatibilities between Management Accounting and Financial Accounting in every business therefore you will never produce fully compliant Financial Accounts in Tryton. That needs understood. You are shooting for an unattainable goal. Yeah some might want to try implement some elements. Good for them but they will never, ever get a set of Financial Accounts that are legally compliant without affecting Management Accounting information. Management Accounting information is primary so where the incompatibilities arise Management Accounting win out.
Ok I can’t help myself but reply. Couldn’t help myself.
For me the main focus should be on the chart of taxes as that is where people will have most difficulty setting up their own that’s why localisation is important. Also a basic chart of accounts is expected so when it doesn’t exist people just give and move on as they don’t necessarily feel confident in producing it themselves.
Realise what the real purpose of chart of accounts is and then realise that a basic chart of accounts is very simple. You have a Balance Sheet and you have an Income Statement. All the accounts either point to one or the other (leaving aside off statement accounts). All those statements have a set basic format. Balance Sheet - Fixed Assets, Possibly Intangible Assets, Current Assets, Current Liabilities, Long Term Liabilities and a Capital/Equity Section. An income statement which split into Income, Cost of Sales, Expenses & Profit. All the accounts simply end up in one of those sections. All you have to do is verify that they are in the right section. That isn’t complicated. A car is a fixed asset is goes in fixed assets. Electric goes in the expenses. All these things are known to anyone with any modicum of accounting knowledge and anyone who has every looked at set of accounts. You do not need the law for any of that.
My point is the law is hindrance not a help. The basics are the basics. They are known. Their format exists everywhere. No one is saying just do any old thing but to dismiss every source because it is not a site used for Regulatory compliance is foolish as if you have enough sources and they are from reputable sources then you can be confident that your structure is good.
Make life easy for yourself. The law doesn’t make it remotely easy.
And I’ll go back to one of my first points. Show me which accounting software intended to be used by businesses has the Regulatory chart of accounts you require? None. There’s a reason for that because they aren’t useful.
Never try to be the expert in the field when you never can be .
I think, perhaps, the way forwards is to have the Taxes, Balance Sheet and Income Statements from the authoritative sources, and a very minimal chart of accounts which can the be added to and changed by anyone who is using the module?
That makes sense. The main concern was the sources were not oficial but with just including the very minimal chart and all the other oficial source you are solving it
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