Chart of accounts
The chart of accounts (COA) is the organised list of all general-ledger accounts used to record financial transactions. It is the backbone of financial accounting, every posting hits an account defined in the chart of accounts.
The COA structure shapes all financial reporting, so it is designed carefully and early.
- The chart of accounts is a structured list of GL accounts, each with a number, description and type (balance sheet or…
- One operating chart of accounts can be shared by many company codes, which enables consistent, comparable reporting across a group.
- Operating COA: used day to day, assigned to company codes.
- Watch out: Designing the COA hastily, it constrains reporting for years.
What the COA contains
The chart of accounts is a structured list of GL accounts, each with a number, description and type (balance sheet or profit-and-loss). It defines the "language" in which all financial postings are recorded and from which financial statements are produced.
Types of chart of accounts
- Operating COA: used day to day, assigned to company codes.
- Group COA: for consolidated group reporting across entities.
- Country-specific COA: to meet local legal reporting requirements.
COA and company codes
One operating chart of accounts can be shared by many company codes, which enables consistent, comparable reporting across a group. Each company code, though, controls which accounts it actually uses and their local settings.
Design importance
The COA structure shapes all financial reporting, so it is designed carefully and early. A well-designed chart supports both statutory and management reporting; a poor one constrains the business for years.
Common pitfalls
- Designing the COA hastily, it constrains reporting for years.
- Confusing operating, group and country COAs.
- Inconsistent account use across company codes.