Clarification Expended Universal COA with XBRL

Hi All,

I looking to implement the Expended Universal COA with XBRL.
I'm pretty new to this and I'm having difficulties wrapping my head around how this COA work, even after many hours of studying it and researching the web.

Can someone helps me or point to some documentation on the following topics?

1) Expanded Accounts
The way I understand expanded accounts is that some accounts are separated into multiple accounts all on the same depth.
Why not indent the expended accounts 1 lvl down and why this difference in behaviour vs normal accounts?.
Why is there a need for expanded accounts? (IFRS and/or US GAAP requirement? need for more refinement?)
Do expanded accounts behave differently (except for indenting) than normal accounts or they are exactly the same?
How do the expanded accounts interact with accounts of lower lvl, should I not consider them when looking at the three structures?

Precision on Expanded Accounts #
Please define these terms and explain in which context to use them:
Adjustments ("/")
Additional Attribute (";")

Attount # Expanded Account # Depth Balance Line #
1.1.2.1.1 1.1.2.1.1 ; 2 / 0 - 0 4 Dr 82 What does the 0 point to?
1.1.2.1.1 1.1.2.1.1 ; 2 / 1 - 0 4 Dr 83 What does the 1 point to?
1.1.2.1.1 1.1.2.1.1 ; 2 / 5 - 0 4 Dr 84 What does the 5 point to?
1.1.2.1.1 1.1.2.1.1 ; 2 / (5.3) - 0 4 (Cr) 85 What does the (5.3) point to?
1.1.2.1.1 1.1.2.1.1 ; 2 / 4 - 0 4 Dr 86 What does the 4 point to?
1.1.2.1.1 1.1.2.1.1 ; 2 / (4) - 0 4 (Cr) 87 What does the (4) point to?
1.1.2.1.1 1.1.2.1.1 ; 2 / 7 or (7) - 0 4 Dr or (Cr) 88 What does the 7 or (7) point to?

Additional attribute numbering seems to be sequential but what is the logic behind the numbering of the adjustment accounts?

2) IFRS & US GAAP cohabitation
If I want to follow both IFRS and US GAAP can this chart off account enable both implicitly or do I need to pick one standard and change it as needed?
Should the IASB (XBLR) accounts not be included for US GAAP and FASB (XBLR) accounts not included for IFRS?
Do I need to use the Expended XBRL version of the COA to be compliant with the IFRS and/or US GAAP or the Advance version could do the work?

3) Nature & Function
How to deal with Nature & Function in expenses accounts, how can a transaction be in a nature account and a function account at the same time?
Is it possible to have this implicitly of it has to be changed as needed?

Hopefully, my questions are not too basic and this topic will end up being usefull to others.
Looking forward to your answer.

Regards,

Vincent Paquet

Not at all.  They are good questions. The expanded COAs are fairly complicated because they need to accommodate various types of information, not all of which can be (elegantly) captured at the account level.

BTW, on each COA's intro page, click release notes, which will expand to provide comments.  Clicking on each link, will expand more comments.  Answers to most of your questions should be there.

But to summarize: the basic accounts are indented and numbered to denote aggregation.  For example Assets 1. comprises Cash And Financial Instruments + 1.1 Receivables 1.2 + Inventory 1.3, etc. so total assets 1 will be 1 = 1.1 + 1.2 + 1.3 etc.

The expanded COAs include additional account attributes.  The "-" denotes current non-current in that "0" is both current and non-current (IFRS allows a balance sheet in order of liquidity so this attribute is applicable to that balance sheet) while "1" is current and "2" is non-current.

If a company prepares an IFRS order of liquidity balance sheet, the basic account could be taken directly to that balance sheet.  

On the other hand, US GAAP requires a current non-current distinction.  So if a company is preparing a US GAAP balance sheet “Financial Assets (Investments) - current” # 1.1.2 - 1 is reported in current assets while “Financial Assets (Investments) - non-current” # 1.1.2 - 2 in non- current.

If a company reports under both IFRS and US GAAP, it would use the expanded account “Financial Assets (Investments)” - current & non-current # 1.1.2 - 0 for its IFRS order of liquidity BS and “Financial Assets (Investments)” # 1.1.2 - 1 and “Financial Assets (Investments) - current” # 1.1.2 - 1 and “Financial Assets (Investments) - non-current” # 1.1.2 - 2 for its US GAAP BS.

An additional benefit of using this approach (instead of setting up the COA as current and non-current, which a lot of people do) is that an attribute is that an item can be changed without having to change its account.  For example, lets say a company has a three year note.  In the first two years it would report it with an - 2 attribute while in the third with the - 1 attribute.  

"/" works similarly but denotes adjustments.  For example, assume a company has a truck that cost $10,000 and associated with that truck accumulated depreciation of $3,000. 

Trucks / Net 1.5.3.2.1.1.1 / 0 would have a net balance of $7,000

Trucks / Gross1.5.3.2.1.1.1 / 1 would have a gross balance of $10,000

Trucks / Adjustment: Accumulated Deprecation 1.5.3.2.1.1.1 / (1) an adjusting balance of ($3,000)

Unfortunatly, some items require additional info.  For example, a gain or loss on a remeasured financial instrument could be reported in net income or in comprehensive.  The ";” delimitation allows this type of fine tuning.

Unlike "-" or "/", the ";” deloimitationn is not consistent throughout the COA.  It varies depending on the context of the attribute that needs to be captured.  Similarly, the numbering of this attribute does not always follow the same format.  It too varies based on context.

To your second question.  The universal chart was designed to fulfill both IFRS and US GAAP reporting requirements (which is why its expanded version is relatively complication). 

BTW, I do not use these charts as they are.  They have been designed to be universal so include items that most companies simply do not need.  But, when a design a COA for a particular client, I use them as a starting point.  I have to warn you however, getting it up and running requires coordination with the company’s IT department. Sometimes that’s easy, sometimes not so much.

To your third question.  All expenses have both a function and a nature.  For example, salaries is the expense's nature.  Administrative salaries is the expense's function.  This implies that every company always has an aggregate nature-based expense i.e. total, company-wide salaries.  It can then further subclassify this expense by function: administrative salaries, sales salaries, R&D salaries, etc. 

From an accounting perspective, it is simply easier to use nature first, function second.

So, day-to-day, when it accrues salaries, a company would use its Salaries 5.1.2.1.1.2 account.  When it comes to generating the report, it would map this account's balance to Office Staff Compensation 5.2.2.2.1.1.1, Officer Compensation 5.2.2.2.1.1.2, Sales Staff Compensation 5.2.2.1.1.1.1, etc.

In other words, it would treat its function accounts like a reporting attribute for its nature accounts.

BTW, while US GAAP requires depreciation and amortization to be disaggregated by function, IFRS does not (though in the future it will likely start).

Hope this helps.  If not, post additional comments.
 

 

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