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Approaches to harmonised chart of accounts

Issue paper presented at the EPSAS Working Group meeting Luxembourg, 21-22 November 2017

Contents

Introduction

3

Available accounting and reporting guidance

6

Country analysis

9

Key considerations when setting up a chart of accounts

11

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Introduction

Objectives of the issue paper

? Discuss possible approaches to harmonised chart of accounts for national purposes by Member States.

? Topics currently addressed in the paper:

- Accounting and reporting guidance available. - Country analysis. - Key considerations when setting up a chart of accounts.

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Introduction

Background of the issue (1/2)

? IPSAS CP `Alignment of IPSAS and GFS reporting guidelines' (2012).

- An organisation's Chart of Accounts (CoA) usually serves multiple purposes, including both management and financial reporting. The same accrual based information system that generates data for a government's financial statements can generate most of the data necessary for the government's statistical reports. The term `Chart of Accounts' is used here with its broad sense, i.e. a chart that encompasses all the codings used by a financial information system to produce accruals financial statements.

? 2013 Staff Working Document from the Commission to the Council and the European Parliament:

- The development of a new chart of accounts is a key step in the adoption of accruals accounting. A well-planned chart of accounts can assist in the efficient generation of financial information for a variety of purposes.

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Introduction

Background of the issue (2/2)

? PwC 2014 study report.

- Best practice in terms of reporting and design of consolidation procedures include the setting up of a standard chart of accounts (SCoA). 21 Member States declared the use of a SCoA.

Standardised reporting formats

22

Standard chart of accounts

21

Harmonised accounting policies

20

0

5

10 15 20 25

Number of EU countries

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Available accounting and reporting guidance

IPSAS and IFRS

? Neither IPSAS nor IFRS imposes the use of a CoA.

? IPSAS 1 and IAS 1 `Presentation of financial statements' include some minimal presentation requirements relating to the statement of financial position and statement of financial performance/statement of comprehensive income, however they do not impose how to meet these requirements via the use of specific accounts.

? This leaves the necessary freedom for governments to design a chart of accounts as well as reporting formats and templates, that meet local and management reporting requirements.

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Available accounting and reporting guidance

EAR

? EAR have similar requirements regarding presentation of financial statements. But the Financial Regulation imposes the use of a CoA.

- EU institutions and bodies have to apply the same harmonised chart of accounts. A common consolidation chart of accounts is used for the capturing of information in the reporting package for consolidation purposes.

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Available accounting and reporting guidance

ESA 2010

? The ESA 2010 system is built around a sequence of interconnected accounts.

? ESA 2010 rules will certainly differ from EPSAS upcoming rules in terms of recognition, measurement or presentation as they do in comparison to IPSAS/IFRS.

Governments' chart of accounts need to include the coding necessary for producing statistical reports.

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