Company chart of accounts

What it means

A company chart of accounts is the list of accounts a particular accounting entity uses. It is based on the statutory chart of accounts and contains the general ledger accounts the company needs plus analytical accounts suited to it, for example separately for each bank, type of revenue or cost centre.

The Accounting Act requires a company to have its chart of accounts set up for each accounting period. While the statutory chart is common to all businesses, the company chart is its own and reflects what the company wants to track and in how much detail.

Together with posting templates, the chart forms the basis of the accounting software set-up. Its structure determines which overviews and reports can be drawn from the books without extra recalculation.

How it works in practice

For a new client we design the chart to suit both statutory reporting and management needs. Revenue is split by activity and VAT rate, costs by nature and centre, receivables and payables by type of partner, such as domestic, foreign or related.

We keep the chart lean. Too many analytical accounts lead to posting errors and complicate the close unnecessarily. More detailed breakdowns that change often are better handled with dimensions in the software, such as jobs or projects.

When the class structure changes or the company moves to new software, we prepare a mapping between the old and new charts. Comparability of data between years matters for analysis and for banks.

What to watch out for

New accounts added during the year without rules create chaos, with the same costs posted sometimes to one account and sometimes to another. One responsible person should approve new accounts, and every account should have a description of what belongs on it.

The company chart must follow the statutory chart in force. If the statutory chart changes, for example a new account is added or an existing one’s content changes, the company chart must be adjusted from the start of the next period.