chart of accounts: an instrument to address …...chart of accounts: an instrument to address...
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International Conference
Accrual and Standards: the future of the EU MSs public accounting Rome, 21 November 2016
Chart of Accounts: An Instrument to Address Different Information Needs
Luís Viana Deputy Director of the Budget General Directorate - Ministry of Finance of Portugal
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Fragmented accounting framework
Based in national standards that were replaced by IFRS like standards,
European regulations and accounting directive
The Ministry of Finance (MoF) appointed in January 2013 the National
Accounting Standards Commission (CNC) in order to adapt IPSAS in
the Portuguese Public Sector
Some positive features such as the adoption by most public sector
entities of accrual accounting concepts and the availability of necessary
IT accounting systems shall be highlighted
Introduction
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Public Sector Accounting Functions
Transparency of the
pubic sector net
worth, performance
and reliability of
fiscal statistics
Evaluating the
costs and
measure outputs
of public policies
Financial
accounting
Management
accounting
Controlling the
budget
appropriations
approved by the
legislature
Budgetary
accounting
Cash based appropriations
Modified cash basis in
execution (appropriations,
pre-commitments,
commitments, payables,
payments, receivables,
receipts)
Budgetary statements
Full accrual
Financial statements
(balance sheet, changes in
net worth, income
statement, cash flow
statement and notes)
Full accrual
Management reports (link to
performance budgeting
project under the
implementation of the new
BFL)
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Simplified regime
(small and micro entities)
Ordinance n.º 218/2016, from 9 August
Notes to the
Chart of Accounts
Ordinance n.º189/2016, from 14 July
Annex I: Conceptual framework for
financial accounting (IPSAS based)
Annex II: Accounting standards
Set of 25 financial accounting
standards (IPSAS based)
Budgetary accounting standard
Management accounting standard
Annex III: Chart of Accounts
Decree-Law n.º 192/2015, 11 September: State
Accounting
Entity
(SAE)
Accounting Framework Elements
Implementation manual
(incl. transition)
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A chart of accounts is a systematic coding system for the classification and
coding of transactions and events within the accounting, budgeting and
management systems.
The chart of accounts should include codes for the budgetary process,
along with budget classifications (these may include economic, functional,
administrative, programme and regional classifications), for financial
reporting (assets, liabilities, net worth, revenues and expenses) and for
management reporting (cost centres, types of costs, projects and outputs)
Chart of Accounts
A well-planned chart of accounts can assist in the efficient generation of
budgetary, financial, fiscal and management information for a variety of purposes.
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Multidimensional Chart of Accounts
Approved budget
Budget modifications
Budget execution
Class 0 + Budget classifications
Budgetary
reporting
Budgetary
accounting
Assets
Liabilities
Net worth
Revenues
Expenses
Classes 1 to 8
Financial
reporting
Financial
accounting
Direct and indirect costs
Costing activities
Costing products and
services
Class 9
Management
reporting
Management
accounting
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Budgetary
Accounting
Accounts for Budgetary Transactions - Revenue
Initial Revenue Estimates (011)
Adjusted Estimates (012)
Budget Amendments
(013)
Outstanding Estimates (014)
Issued revenue (015)
Cancelled Liquidations
(016)
Collected Revenue (017)
Refunds (018)
Receipts of financial assets in future periods
(03)
Budgetary accounts plus budget classifications
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Budgetary
Accounting
Accounts for Budgetary Transactions - Revenue
Revenue transaction DEBIT CREDIT
Issued revenue 0152 Revenue issued 014 Budgeted revenue
Cash inflows for the revenue
issued in the year 0171 Cash inflow for the year 0153 Revenue collected
Cash inflows for revenue issued
in past years
0172 Cash inflow related to
previous years 0153 Revenue collected
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Budgetary
Accounting
Accounts for Budgetary Transactions - Expenditure
Initial Budget Appropriations
(021)
Adjusted Appropriations
(022)
Budget Amendments
(023)
Available Appropriations
(024)
Reservation (025)
Commitment (026)
Budgetary accounts plus budget classifications
Obligation (027) Payment (028) Returned
payments (029)
Payments for future periods
(04)
Cash effects of commitments for the next periods (042 and 043)
Obligations payments for future periods
(044)
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Budgetary
Accounting
Accounts for Budgetary Transactions - Expenditure
Expenditure Cycle DEBIT CREDIT
Reservation 024 Avaiable appropriation 0251 Recorded reservation
Commitment 0252 Reservation commited 0261 Commitments
Obligation (payables) 0262 Commitments converted 0271 Payables recorded
Payment 0272 Liquidated payables 0281/0282 Payment
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Chart of Accounts and Reporting
Budgetary
accounting
Chart of accounts
code
Reporting item on budgetary
statements
0261 Commitments
0271 Obligations
0281/0282 Payments
0171/0172 Revenue collected
(…) (…)
Financial accounting
Chart of accounts
codes
Reporting item on financial
statements
43+453+450+4553-
4590-4593-45953 Fixed assets
20422+25 Non-current borrowings
653+657-7623-7627 Impairments
70 Taxes and fees
(…) (…)
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Chart of Accounts Codes ESA 2010 Codes
434 - Machinery and equipment AN 113 – Machinery and equipment
251 – Loans AF 4 – Loans
604 – Capital transfers granted D.9p – Capital transfers, payable
701 – Direct taxes D 51 – Taxes on income
(…) (…)
The multidimensional chart of accounts as a correspondence between
the two codes
We need to define the reporting statements for national accounts
purposes (Cavanagh et al., 2016)
Chart of Accounts and Fiscal Reporting
Balance sheet
Statement of other economic flows
Statement of government operations
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Central Chart of Accounts
Adaptability - The entities have the flexibility to adjust the plan to their specific needs and
can create lower-level subaccounts and mapping them to the Central Chart of Accounts
Local chart of
accounts
Public entities
Central Chart of
Accounts
Ministry of Finance XML file
Local
AccountsDescription
Central
AccountsDescription
11 Cash 11 Cash
11.1 Cash 11.1 Cash
11.1.1 Central cash 11.1 Cash
12 Bank Accounts 12 Bank Accounts
12.1 Bank Accounts in the Treasury 12.1 Bank Accounts
12.1.06056 DGT - 00000006056 12.1 Bank Accounts
12.1.06167 DGT - 00000006167 12.1 Bank Accounts
21 Customers, taxpayers and users 21 Customers, taxpayers and users
21.1 Customers current account 21.1 Customers
21.1.1 National customers 21.1 Customers
21.1.1.00004 José Manuel Silva 21.1 Customers
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Central Chart of Accounts
Trial Balance
Statement of Final Position
(Balance Sheet)
Financial Performance
(Income Statement)
Cash flow Statement
Debts by seniority
Budgetary Performance (Performance statement)
Budgetary Control - Expenditure
Budgetary Control - Revenue
Schedules for notes
Cross validations between the trial balance, budget statements, financial statements and notes
Central Accounting and Reporting System – Main features
Portal for data quality and
integration
Accounting and technical
requirements that software
houses have to comply with
Web services integration with
local systems
Specific requirements for
consolidation purposes
Circular 1381 Chart of accounts of
public entities
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Central Accounting and Reporting System – Outputs
SAE accounting
information
Financial
instruments
Central Accounting
and Reporting System
Outputs
Public entities
accounting
information
Separate Budgetary and Financial Statements (State Accounting Entity, other public entities
from all levels of government)
Consolidated budgetary and financial statements (level of ministry, budget program, general
government subsectors, whole of government)
Management reports
External reporting
Government finance statistics reporting (ESA 2010)
Fixed
assets
PPPs and
Concessions
Tax assets
and liabilities
Cash
holdings
Provisions
and CL
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Many thanks you for your attention!