Navigation Begin wacoss
Content Begin

Accounts, Account Groups and SCoA

Skip Navigation LinksThe Funding Reform Costing and Pricing Accounts, Account Groups and SCoA
Every organisation and every accounting system uses Accounts. 

The specific list of Accounts is generally built to reflect the type and needs of the organisation over time. As mentioned above, as we are dealing primarily with Income and Expenditure, we can say that our Accounts represent a generic description of the type of good or service the transaction refers to, e.g. Travel expense, Grant income etc. We also mentioned the importance of using Activity codes to complement our Accounts list rather than attempt to combine Program or Service descriptors within the Accounts themselves. 

Recently the Council of Australian Governments (COAG) decreed that all government agencies, when communicating with the NFP sector about financial information, should move toward a standardised list of account definitions, known as The Standard Chart of Accounts (‘SCoA’). Whilst in itself this seemed like a sound idea - and a number of NFP organisations have subsequently moved to a SCoA-based Accounts list - some issues have emerged that have blurred the practical use of the SCoA.

The breadth and number of organisations in the NFP sector means even with all good intentions the SCoA can never cover the needs of all organisations and will always be limited to a good set of example Accounts. It should be recognised the SCoA is best used as a guide only, as applying it literally restricts an organisation in building an Accounts list that reflects their practical needs.

Converting current data files to a SCoA-based Account list can bring into play technical software issues best handled with care. This creates understandable caution amongst management in moving their Accounts list in line with SCoA.

A real shortcoming of the SCoA is that it does not provide clear direction with regard Account Groupings. Clear and consistent Account Groupings are an integral part of any quality Accounts list given they enable financial reports to be produced at varying levels of detail from the same transactional data (regardless of whether the report is for an Activity, Activity group or organisation). The SCoA suggests some Account Groupings in the Balance Sheet and Income area but, disappointingly, it does not provide guidance in the Expenditure Accounts. The effect of this is that individual organisations are left to group their expenditure Accounts as they see fit, which simply defeats the purpose of standardising the Accounts list in the first place.

One can appreciate the difficulty in gathering enough momentum to implement something like a Standard Chart of Accounts – but having done that excellent work, it’s just a damn shame we haven’t been able to settle on a set of standardised Account Groups within that Chart. Further discussions are taking place in an effort to update the National SCoA to eventually include standardised Account Groups.

It may seem a bit pedantic to highlight this issue further, but it has the potential to have significant effect on the efficiency of the NFP sector for the following reasons:
Standard Account Groups across the sector facilitates an opportunity for consistent reporting between all government agencies and NFP organisations – going some way to defeating the scourge of the sector – varying reporting/acquittal requirements across agencies.
Standard Account Groups will allow a more structured set of financial reports for all stakeholders, including the expanded requirements that will exist under the new Australian Not-for-profit and Charities Commission (ACNC) legislation.
Standard Account Groups will provide for an opportunity to build ‘off-the-shelf’ standardised cost and price models for broader use across the sector.

Whilst the suggested Standard Account Groups may not be the final product, they represent a good starting point, and it is our hope that some momentum is built around their ongoing use, because there is little doubt that finally settling on a set of Standard Account Groups would provide a real practical benefit to the sector and its financial reporting methodologies.

At the time of writing, those critical Standard Account Groups can be found, mapped to SCoA accounts, with some associated explanatory material at: 
SiteMap header