The National Standard Chart
of Accounts for Not for Profit
Organisations
Implementation Manual for Western Australia
July 2011
Contents
Acknowledgements .................................................................................................. ii
Introduction ............................................................................................................... 1
Implementation of the National SCOA in Western Australia ............................................ 1
Support for organisations to adopt the National SCOA ................................................... 2
Where can I download a copy of the National SCOA? .................................................... 3
Other Useful Websites for Treasurers and Bookkeepers ................................................ 3
What is the National SCOA and why adopt it? ........................................................ 5
What is a SCOA?.............................................................................................................. 5
Why develop a National SCOA? ...................................................................................... 6
The Benefits of introducing a National SCOA .................................................................. 6
Frequently asked questions by not for profit organisations about the SCOA ..... 7
How to convert a not for profit organisation’s accounts to the SCOA.................. 9
Manually (recommended) ................................................................................................. 9
Electronically................................................................................................................... 10
Key activities to consider when updating your chart of accounts .................................. 11
Explanatory Notes on the National Standard Chart of Accounts ........................ 14
Using the National SCOA and this Manual .................................................................... 14
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The National Standard Chart of Accounts for Not for Profit Organisations
Acknowledgements
The National Standard Chart of Accounts (the National SCOA) was developed by the
Queensland University of Technology (QUT) with the input of the Commonwealth, State
and Territory governments and various not for profit organisations. It draws on State
SCOAs previously prepared, including one in Western Australia (2008).
Western Australia is grateful for QUT’s efforts in developing the Western Australian and
National SCOAs and for their continuing input at different stages in the implementation
process.
We would also like to thank all government departments and agencies, and not for profit
organisations, that assisted in the development of the Western Australian SCOA (in
2008), and that participated in consultations on implementing the National SCOA (in 2010
and 2011).
This manual is based largely on support material prepared by the Victorian Department of
Planning and Community Development, we thank Victoria for their assistance.
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Implementation Manual for Western Australia
Introduction
Implementation of the National SCOA in Western Australia
Implementation of the National SCOA in Western Australia will, alongside other not for
profit (community) sector reforms being pursued by the State Government, assist in
reducing the administrative burden on Western Australian not for profit (NFP)
organisations. The National SCOA outlines a set of accounts and a data dictionary which
will act as a common guide for NFP organisations to maintain their accounts, and will
allow government funding bodies to request financial information from the sector, where
needed, in a more consistent way.
From 1 July 2011, State Government departments, agencies and authorities are
expected to make use of the National SCOA in new funding agreements by using it as a
common accounting reference to communicate with the sector about the reporting of
financial information. However, State Government departments, agencies and authorities
should not compel organisations to adopt the National SCOA, and should allow flexibility
for them to report financial information based on other acceptable charts of accounts. It
is not the intention of this reform that NFP organisations be required to adopt the National
SCOA, though many may want to adopt it as a way to improve their accounting practices.
The National SCOA was developed at the request of the Council of Australian
Governments (COAG) by the Queensland University of Technology (see box below).
The National SCOA
On 7 December 2009, the Council of Australian Governments (COAG) agreed that:
… where possible, jurisdictions adopt a standard chart of accounts (excluding gaming
and fundraising elements), by 1 July 2010, on all new funding agreements involving the
Not for Profit Sector and that remaining jurisdictions adopt a standard chart of accounts
by 1 July 2011.1
Following this agreement, jurisdictions worked together with the Queensland University
of Technology to develop the National SCOA, and the National SCOA was agreed by
COAG at its meeting on 19-20 April 2010.
New South Wales, Victoria and Queensland adopted the National SCOA on
1 July 2010, with other jurisdictions, including Western Australia, planning to follow suit
from 1 July 2011.
1
COAG (Council of Australian Governments), Council of Australian Governments Meeting 7 December 2009:
Business
Regulation
and
Competition
Working
Group
Report
Card,
page 7,
source:
www.coag.gov.au/coag_meeting_outcomes/2009-12-07/docs/bus_reg_comp_working_group_report_card.rtf
(accessed 28 December 2010).
Department of Finance
1
The National Standard Chart of Accounts for Not for Profit Organisations
Support for organisations to adopt the National SCOA
The State Government is providing support for Western Australian NFP organisations
that are considering adopting the National SCOA. This includes a:
National SCOA Implementation Manual
The National Standard Chart of Accounts for Not for Profit Organisations: Implementation
Manual for Western Australia (this Manual) has been prepared primarily for
NFP organisation’s treasurers and bookkeepers to assist them in adopting the National
SCOA. However, it is also a useful reference for State Government departments,
agencies and authorities to use as they go through the process of making use of the
National SCOA in their funding agreements.
National SCOA Recommended Guide for the grouping of accounts for
reporting and acquittals
The National Standard Chart of Accounts for Not for Profit Organisations: Recommended
Guide for the grouping of accounts for reporting and acquittals (The Guide) is intended
for use by NFP organisations for their internal reporting, and for State Government
agencies to consider for acquittal templates and other financial communication with the
NFP sector. These recommended account groupings can be used by an organisation
whether they have adopted (or are intending to adopt) the National SCOA or have a
different chart of accounts.
The Guide has been prepared at the request of, and with input from, a number of State
Government departments and agencies and NFP organisations. It was prepared to
provide guidance to support the National SCOA on how accounts could be structured,
especially for reporting purposes.
While it is expected the Guide will be a useful reference for many users of the National
SCOA, it is an advisory document only, and it is not mandatory for government or the
sector to use.
Help Desk – 1800 628 749
A telephone helpline has been established for NFP organisations in Western Australia. It
is open from 9am to 5pm (EST) to answer any questions regarding the National SCOA.
Help Desk – scoa@mob.com.au
For NFP organisations who would prefer to email their enquiries.
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Implementation Manual for Western Australia
Where can I download a copy of the National SCOA?
The National SCOA can be downloaded from the following websites:
The Council of Australian Governments
www.coag.gov.au/coag_meeting_outcomes/2010-04-19/docs/Standard_chart_accounts.rtf
The Australian Centre for Philanthropy and Nonprofit Studies
(Queensland University of Technology)
https://wiki.qut.edu.au/display/CPNS/Standard+Chart+of+Accounts
Other Useful Websites for Treasurers and Bookkeepers
Department of Commerce
This site has useful information for Western Australian incorporated associations
including how to become incorporated, the Associations Incorporations Act 1987,
fundraising, and reporting requirements:
www.commerce.wa.gov.au/ConsumerProtection/Content/Business/Associations
Australian Centre for Philanthropy and Nonprofit Studies (Queensland
University of Technology)
The Australian Centre for Philanthropy and Nonprofit Studies sits within the Queensland
University of Technology.
The QUT website contains useful information on the
NFP sector, including statistics, research publications, upcoming seminars and workshops.
Interested parties are able to subscribe free-of-charge to a variety of nonprofit email alert
services that contain information on NFP accounting, taxation and GST:
www.bus.qut.edu.au/research/cpns/
Australian Business Register
Used to check the validity of a supplier’s Australian Business Number (ABN) as well as
accessing information about the entity’s GST status:
www.abr.business.gov.au
Department of Finance
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The National Standard Chart of Accounts for Not for Profit Organisations
Australian Taxation Office (Non-profit Section)
This part of the Australian Tax Office (ATO) website is specifically devoted to the taxation
affairs of NFP organisations. It includes information, fact sheets and forms covering a
variety of tax related topics relevant to NFP organisations, including ABNs, GST, gifts
and fundraising, PAYG, superannuation and other information. The website also
contains a free-of-charge Non Profit News Service whereby the ATO sends out e-mail
alerts advising of new additions to the website and recent events and taxation changes
affecting NFP organisations:
ato.gov.au/nonprofit/default.asp
Charities Consultative Committee – Resolved Issues Document
In May 1999, the Federal government announced the establishment of the
Charities Consultative Committee. The purpose of this committee is to assist the
NFP sector to understand its obligations under the Goods and Services Tax Act (1999)
as amended.
The Committee comprises representatives from the major charitable organisations and
peak bodies in Australia and have released a paper entitled ‘The Resolved Issues
Document’ which provides clarification of a variety of GST issues affecting charities and
NFP organisations, such as fundraising, donations and grants:
www.ato.gov.au/nonprofit/content.asp?doc=/content/16250.htm
Australian Securities and Investments Commission
The Australian Securities and Investments Commission (ASIC) regulates the affairs of
the 1.3 million companies incorporated in Australia under the Corporations Act (2001).
This site is useful for any entity that is a public company limited by guarantee. This
website contains copies of all ASIC forms in PDF format. It also contains a very useful
business names and companies search facility:
www.asic.gov.au
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Implementation Manual for Western Australia
What is the National SCOA and why adopt it?
What is a SCOA?
A Standard Chart of Accounts (SCOA) provides a common approach to the capture of
accounting information by NFP organisations, enabling government departments and
other funding bodies to talk the same accounting language as NFP organisations and
their advisors.
The Chart of Accounts is grouped into:

Assets

Liabilities

Equity/Accumulated Funds

Income

Cost of Goods Sold

Expenses
Once transactions are accurately coded according to the Chart of Accounts and then
processed in an accounting system (for example MYOB or QuickBooks), the accounting
system will group ‘like’ transactions together and can generate reports that separate
income and expenses into appropriate and meaningful groupings. For example,
government grant income would be able to be distinguished from interest income. NFP
organisations can then differentiate their Chart of Accounts to break these accounts down
further, for example by establishing a new and separate account for each source of
government funding and for various sources of interest (for example Term Deposits or
Savings Accounts).
A SCOA consists of a set of accounts which can be set up in most accounting software
systems, and provides a data dictionary for guidance on how to process transactions and
decide which transactions go to which accounts.
Department of Finance
5
The National Standard Chart of Accounts for Not for Profit Organisations
Why develop a National SCOA?
The lack of consistency in reporting requirements placed on NFP organisations by
Commonwealth, State and Territory funding agencies has caused:

significant compliance costs to NFP organisations from having to reformulate their
accounts for reports to different government agencies;

an inability to aggregate and compare financial data for any purposes, such as public
policy development, benchmarking of performance and for indicators of financial
effectiveness or efficiency; and

significant administration and follow up costs for government departments.
Many NFP organisations and government agencies across Australia, have called for the
introduction of a National SCOA to address these issues.2 Having a standard accounting
structure to refer to will allow NFP organisations and government agencies to
communicate financial information in a more consistent fashion that is easier to interpret
for all involved.
Implementation of the Delivering Community Services in Partnership Policy and related
reforms announced in the 2011-12 State Budget should also contribute to addressing
these issues. These reforms will, over time, remove many requirements to report
detailed financial information as part of funding agreements and allow more flexibility in
reporting requirements where they continue to exist.
The Benefits of introducing a National SCOA
Implementation of the National SCOA in Western Australia will provide benefits to
NFP organisations that receive funding from government, and to government funders
who collect financial information from NFP organisations. The likely benefits of
introducing the National SCOA include the:

creation of a consistent accounting framework in which NFP organisations dealing
with multiple government agencies can work;

facilitation of consistent collection of data by NFP organisations to submit to
government agencies for their analysis;

usefulness of the National SCOA as an accounting guide for small to medium
organisations that do not have full time book-keepers or accountants and or have
volunteer treasurers who have limited accounting experience; and

reductions in the number of investigations auditors have to conduct into
NFP organisations, because of the more consistent application of accounting
definitions.
2
6
For example, see the Productivity Commission’s (2010) Report ‘Contributions of the Not-For-Profit Sector’, and
the Economic Audit Committee’s (2009) Report ‘Putting the Public First: Partnering with the Community and
Business to Deliver Outcomes’.
Implementation Manual for Western Australia
Frequently asked questions by not for
profit organisations about the SCOA3
Will it be mandatory for my
organisation to adopt the
National SCOA?
It will not be mandatory for NFP organisations to adopt
the National SCOA in their accounting systems.
In practise, NFP organisations will have flexibility in
how they make use of the National SCOA. Some may
choose to adopt the National SCOA whole-heartedly,
while others may choose to keep their existing chart. It
is up to each organisation to choose how they’ll make
use of the National SCOA.
Does it matter which
accounting software I use?
The National SCOA is a general accounting reference
document, and it is not intended that preference be
given for organisations to use the National SCOA with
one accounting software package over others. NFP
organisations can make use of the National SCOA as
they see fit, including amending or removing the
recommended MYOB account numbers if it is
appropriate for them to do so.
Should I just download the
MYOB/QuickBooks
file
from the QUT website and
automatically convert my
accounts?
No. There are many risks in converting accounts, and
it is best to do so with caution. There is a risk that
downloading the National SCOA and attempting to
convert the accounts automatically could cause the
organisation to lose its accounting information.
It is best for NFP organisations to create a backup of
their accounting information, and then convert their
accounts through a mapping process, either manually,
line for line, or with the use of a spreadsheet tool.
3
This list of frequently asked questions has been prepared with input from material previously prepared by
Australian Centre for Philanthropy and Nonprofit Studies (QUT), and consultation with affected parties by the
Department of Treasury.
Department of Finance
7
The National Standard Chart of Accounts for Not for Profit Organisations
Does this mean I have to fit
all of my accounts into the
form
outlined
in
the
National SCOA?
The National SCOA is there as a guide to government
agencies and organisations. It is simply not possible
for the National SCOA to capture all of the accounts
that an organisation would require. Not all of the
National SCOA will be relevant to your organisation,
and it is likely that you will need to add extra accounts
or account headers to your own chart beyond those in
the National SCOA.
My organisation is large,
and has its own accounting
system. What benefit is
there to us in adopting the
National SCOA?
The National SCOA was primarily designed with small
and medium organisations, without significant
accounting expertise or resources, in mind. It may not
immediately be beneficial for your organisation to adopt
the National SCOA, though as more government
funding bodies make use of it over time there may be
efficiencies for your organisation to align your accounts
accordingly.
My
organisation
only
receives limited funding
from government (or from
one funding source)? What
are the benefits to my
organisation of adopting
the National SCOA?
While your organisation may not benefit from having
more consistent reporting requirements across multiple
funding sources, there may be other benefits. For
example, the National SCOA may be a useful
reference for your organisation to use in reviewing and
improving upon your current chart of accounts. Also,
adopting the National SCOA would assist new
Treasurers and bookkeepers, or external accounting
professionals, to more easily understand and work with
your accounts if they are already familiar with the
National SCOA.
Will the National SCOA
change
the
acquittal
formats
used
by
my
funding agency?
Potentially yes. As agencies progressively make us of
the National SCOA it is expected that acquittal formats,
and other reporting requirements relating to funding
agreements will change over time.
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Implementation Manual for Western Australia
How to convert a not for profit
organisation’s accounts to the SCOA
The implementation of the National SCOA in Western Australia uses a generic template,
which can be applied to any computerised accounting software package. While it is
expected that greater alignment in the reporting requirements set by government will
occur as more and more departments and agencies apply the National SCOA in new
funding agreements, it is up to NFP organisations to decide whether, and how, they apply
it to their own accounts and to reporting.
The implementation process can be done at year-end or month-end – if the organisation
has a small number of transactions, the process could be undertaken in the first quarter
of the organisation’s financial year and transactions could be ‘rekeyed’ so that year-end
activities are not compromised. Adoption of the National SCOA will result in comparisons
to prior year’s information being ‘out of sync’ for the first 12 months, so if organisations
rely solely on the reporting features of their accounting software, they need to be aware
of this for management reporting and committee/board reporting.
In general, there are two (2) methods of conversion: manually and electronic. The
approach to adopt is a choice for the organisation. While this Manual can assist
organisations to convert their accounts, if further assistance is required they should either
call the National SCOA Helpdesk (1800 628 749) or seek the advice of an accounting
professional.
Manually (recommended)
The first method of converting to the National SCOA is to manually map an organisation’s
existing Chart of Accounts against the National SCOA. If the organisation’s officer doing
the conversion is used to their system and familiar with their organisation’s current Chart
of Accounts, it is recommended that prior to any conversion they do a manual
comparison of the National SCOA and their Chart of Accounts. The manual process
involves two main stages:

mapping their existing accounts to the National SCOA; and

updating their accounting software to reflect the new Chart of Accounts.
To do this, organisations should follow the steps outlined below:
1.
Back-up the organisation’s accounting software as a data file before beginning.
This is normally done at the end of each processing day as a normal activity, so
doing so at the beginning will provide an extra level of security.
Department of Finance
9
The National Standard Chart of Accounts for Not for Profit Organisations
2.
Print out a copy of the organisation’s existing Chart of Accounts, and the Trial
Balance, or download a copy into Excel or another electronic spreadsheet – the
mapping process may be easier using an electronic spreadsheet if the officer doing
the conversion is proficient in those products.
3.
Print out a copy of the National SCOA, or download a copy into Excel or another
electronic spreadsheet.
4.
Go through the two Charts manually, identifying similarities and differences in
the descriptions and account content. If this is being done electronically in a
spreadsheet, the officer should use the matching facilities for each line item.
5.
Tick off those accounts that agree.
6.
For those that do not match, new accounts can be added to the chart through
the accounting package, or can be changed to match the National SCOA number and
accounts. While the National SCOA comes with suggested account numbers, if
these are insufficiently flexible to cater for the number of accounts, or otherwise
inappropriate, the organisation can create their own account numbers. If this results
in different numbering between the old and new (National-SCOA based) chart of
accounts, the organisation will need to be mindful of this for reporting comparisons,
especially over the first twelve months.
7.
Once the organisation’s accounting software has been updated, and the chart of
accounts has been changed, they should ensure that the new Trial Balance equals
the original Trial Balance. For an audit trail, the officer doing the conversion should
keep a print out of the final Trial Balance before the update and also the one for after
the update process. This will also give management and the Management
Committee or Board confidence in the transition process.
Electronically
The second way an organisation can convert their chart is to download a data file of the
National SCOA into the accounting software of MYOB and QuickBooks and adopt it
automatically. If the organisation has other software, they will need to review your chart
of accounts through the manual mapping process.
If the organisation is creating a new file for the financial year, then the process will be
straightforward, as they can import the new National SCOA to replace the generic chart
of accounts. If they are downloading the National SCOA into an existing file, they will
need to be careful that they do not duplicate account numbers or override year to date
data or transactions and existing records.
In practice using the electronic method is only a practical option if the organisation is
creating a new data file. If the organisation already has existing transactions in their data
file the electronic method is only available at the beginning of a new financial year.
However, even in this situation the manual option is the best method to use.
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Implementation Manual for Western Australia
At the time that this Manual was published, a data file of the National SCOA was not
publicly available. However, it is expected that one will be made available on the
Queensland University of Technology website in 2011, following the release of new
versions of MYOB and QuickBooks.
For the moment, users of the Naitonal SCOA are recommended to download the National
SCOA document files from the QUT website and use these for a manual conversion.
When the data file becomes available, the process to download the National SCOA will
be fairly straightforward:
1.
Go to the web link (likely to be https://wiki.qut.edu.au/display/CPNS/Standard+C
hart+of+Accounts), and follow the links to select either the MYOB or QuickBooks
versions of the National SCOA;
2.
Once the officer has clicked on the link to download an electronic version of the
National SCOA, they will see instructions on downloading the file and the data file
link. They will need to read the instructions carefully prior to downloading the link
(they can print the instructions so that they have a guide prior to downloading the
data file);
3.
The officer doing the conversion should follow the instructions carefully,
particularly in regards to rejecting or updating existing account numbers that exist in
your chart of accounts – it is prudent to print out a copy of the Trial Balance prior to
any changes;
4.
Once the organisation’s chart of accounts has been changed, the officer
involved should ensure that the new Trial Balance equals the previous chart of
accounts’ Trial Balance and that the account balances for each item are correct.
Key activities to consider when updating your chart of
accounts
GST and Payroll-linked accounts
Before beginning the entering of transactions, the officer will need to check the account
linkages. The accounts used by certain transactions (particularly payroll & GST in MYOB
and payroll in QuickBooks) need to be set-up; these are known as linked accounts. The
linked accounts only need to be set-up once, but it’s very important that they are set-up
before processing any transactions. For other types of accounting software it is
recommended the organisation’s officer doing the conversion contact their software
provider to ascertain how linked accounts are dealt with.
The officer will need to check the linked accounts manually – or at least check that the
accounts are linked.
Department of Finance
11
The National Standard Chart of Accounts for Not for Profit Organisations
The following table details which type of transactions are linked with which account in the
National SCOA. Each accounting software application will have different commands to
access the linked accounts. If the officer involved is unsure of how to do this, they should
contact their software provider, peak body or professional advisor for assistance. It is
particularly important to link accounts in the payroll module.
TYPE OF TRANSACTION
SPECIFIC TRANSACTION
Payroll
PAYG Withholding
Default Tax/Deductions
Payable Account
(MYOB)
2-1180 PAYG Withholding
Payable
GST
Purchases
Sales/Income
12
NATIONAL SCOA ACCOUNT TO
LINK TO TRANSACTION
Superannuation Payable
2-1190 Superannuation
Payable
Superannuation Expense
6-0607 S&W Superannuation
Default Wages Expense
Account (MYOB)
6-0611 S&W Salaries &
Wages
Default Employer Expense
Account (MYOB)
6-0607 S&W Superannuation
(can be changed if you have
a more appropriate payroll
expense account)
Linked Account for Tax
Collected (MYOB)
2-1150 GST Payable
Linked Account for Tax
Paid (MYOB)
2-1160 Less GST Receivable
Liability Account for
Tracking Payables (MYOB)
2-1110 Accounts Payable
Bank Account for Paying
Bills (MYOB)
Link to the bank account
from where you pay supplier
bills
Asset Account for Tracking
Receivables (MYOB)
1-1210 Accounts Receivable
Bank Account for Customer
Receipts (MYOB)
Link to the bank account that
receives income from
invoices you have raised
Implementation Manual for Western Australia
Entering Transactions
Once the organisation’s officer doing the conversion has compared and reconciled the
Trial Balances from before and after conversion, and they have verified the linked
accounts are correct, the conversion to the National SCOA is complete and the
organisation can begin to enter transactions.
Comparing previous year’s figures
When an organisation introduces the new National SCOA, it will be different from your
previous chart of accounts and will mean that they cannot directly compare the previous
year’s figures with the current financial year. The organisation will need to make a note
in their Annual Financial Statements about the adjustments which were made when
switching to the new National SCOA. This will also be important in reporting to their
Management Committee or Board.
Department of Finance
13
The National Standard Chart of Accounts for Not for Profit Organisations
Explanatory Notes on the National
Standard Chart of Accounts
Using the National SCOA and this Manual
NFP organisations can refer to this Manual, or the Statement of Intent included in the first
few pages of the National SCOA document, for assistance in understanding the intent of
the National SCOA, its key features, and layout. For more general information on how to
construct a chart of accounts, good account-keeping practices, reporting, or for more
detailed advice on how to use it, it is recommended that the organisation refer to one of
the resources outlined previously (such as those in the Other Useful Websites for
Treasurers and Bookkeepers section). Alternatively, they should seek the advice of their
sector’s peak body, or an accounting professional.
How an NFP organisation chooses to use the National SCOA depends upon the needs of
that organisation and those of the bodies they report to (including government funding
bodies). For example, in adopting the National SCOA, the organisation may need to add:
1.
extra summary account headers, such as in the expenditure section (the
expenditure section of the National SCOA does not specify how accounts should be
grouped); or
2.
Extra transactional accounts (which may require amendments to account
numbering when adopting the National SCOA in you own chart).
NFP organisations (and government funding bodies) may also find the Recommended
Guide for the grouping of accounts for reporting and acquittals (see page 2 of this
Manual) useful as a guide to structuring their accounts and internal reporting (or in the
case of government, structuring reporting requirements).
This Manual was drafted to advise organisations on the use of the National SCOA, as it
was agreed at the Council of Australian Governments in April 2010, and updated in
May 2011.
This Manual will be amended as required to reflect changes in the National SCOA.
14