AGA Today

Federal Accounting Corner 

Charts of Accounts from Around the World

For the past decade, there has been a concerted effort by accountants around the world to formulate more meaningful government financial statements. Here in the U.S., the federal accounting community has placed a great deal of emphasis on creating a Standard General Ledger (SGL) that can easily be used to produce statements. But how did other countries structure their charts of accounts? Certainly their intended audience requires similar information to ours. We're going to compare the SGL of the U.S. and some other countries. For ease of comparison, only two other countries will be used, whose accounting rules are similar to those of the U.S.: Australia and Canada.

Code Structure

The U.S. SGL has four-digit posting account codes, though summary accounts can have a four-digit code (e.g., 1100 Cash) or may not (e.g., Borrowing Authority before 4140, which functions more as a section header than as a summary account). The Australian SGL uses seven-digit codes, and forms summary accounts by making the last digits zero (generally, the last three digits are zero). The Canadian SGL has a five-digit code, but summary accounts have fewer digits, so total assets is No. 1, current assets is 11, and the first posting account is 11111. No one uses alpha characters.

Basic Account Classification

The following chart shows the basic classifications for SGL accounts, based on the first digit of the account number.

Comments

The Australian accounting system is interesting in that it assigns accounts in the SGL to report lines. The Financial Statements set of accounts includes such items as 9000046 Accumulated Results at Year End, and 9000002 Balance Sheet.

Both the Canadian and Australian charts include special accounts for cash reconciliation, but the Canadian accounts are used for interdepartmental cash transfers, while the statements-based Australian system includes activity that gives rise to a difference between the accrual and cash bases, such as 7110100 Revenues not Providing Cash and 7110200 Expenses not Requiring Cash. These accounts parallel those in other statements, for example, cash flow reconciliation account 7110008 records depreciation as does income statement account 2241000. A similar duplication exists in the accounts for cash flow, which parallel the accrual based accounts (e.g., 6211001 records cash received for taxes while 1100000 records all taxes accrued, whether or not they have been collected).

The biggest difference between the U.S. and the other charts of account is with the budgetary accounts.  The Canadian chart has no budgetary accounts at all.  The terms "appropriation" and "commitment" (which in the U.S. is called an obligation) do not occur anywhere.  The Australian system, on the other hand, does have a Capital Budget Statement and a Schedule of Commitments, but there is no self-balancing set of budgetary accounts as we have in the U.S. SGL.

Conclusions

The idea of having statement lines in the chart of accounts, as an account that always equals the sum of a fixed set of other accounts, is intriguing, but also confusing. The U.S. SGL originally treated summary accounts this way, but never issued definitions for these accounts. They disappeared in 1999 only to return in 2003. The lack of budgetary accounts in Australia and Canada may just be because the chart of accounts is used to produce the government-wide statements, and most budgetary information loses its meaning at such a high level. Even the Financial Report of the U.S. Government does not include dollars appropriated or obligated, though every individual department is required to report these. —by Simcha Kuritzky, CGFM, CPA

This column is provided as part of a free exchange of ideas in federal accounting, and is not reviewed substantively before publication.  Please send all comments, queries, or corrections to Simcha.Kuritzky@CGIFederal.com