Posted on 13 February 2020
Luxembourg’s New Standard Chart of Accounts Has Lift-Off
On 23 September 2019, the Grand-Ducal Decree of 12 September 2019, which determines the new Luxembourg Standard Chart of Accounts (“SCA”), was published in the Luxembourg Official Journal. The new SCA brings with it a number of innovations and clarifications to the accounting doctrine.
While not considered to be a complete transformation of the standard chart of accounts, this new SCA draws upon lessons from the original Grand Ducal Regulation of 10 June 2009. It intends to address many of the main concerns users expressed during the public consultation made by the Accounting Standards Commission in 2014.
Objectives of the new SCA
This timely modernisation is part of the regulator’s efforts to progressively reshape the Accounting Standards environment in Luxembourg.
As a whole, the modernisation of the SCA was designed to better meet the needs of companies and public users. It aims to improve the traceability of accounting information, to harmonise the practice, and to simplify the process of preparing annual accounts.
The new SCA will apply to financial years beginning on or after 1 January 2020 and is relevant for nearly all commercial companies which are obliged to keep accounting books and draw up and deposit annual accounts with a few exceptions.
Differences between the old and new SCA
With a focus on simplifying administrative formalities and enhancing the technological aspect to reduce the risk of error, the new SCA is made with both accounting professionals’ and Luxembourg’s administrators’ interests in mind.
The Grand Ducal Regulation introduces the use of a mandatory mapping table for filling-in the balance sheets and profit and loss accounts. The mapping table is customisable and can be made to fit the needs of individual companies.
Under the new regulation, additional consistency checks will automatically be performed when the standard chart of accounts and financial statements are filed.
When compared to its previous version, some accounts in the new SCA have been added, merged or split. Specifically, in order to eliminate unused accounts and any discrepancies between the SCA and the financial statements, some accounts in the SCA have been completely deleted. As such, it’s paramount that accounting professionals involved in preparing these documents have received adequate training on this new standard.
Preparing for Luxembourg’s new SCA
Companies will have to adapt their current chart of accounts to this new one. Mastering the practical and technical aspects of this new regulation is crucial for all accounting practitioners. It’s also important to ensure that accounting software can support the new SCA in order to ease the transition. Companies or their service providers will need to anticipate the timing and transitional steps necessary in order to move from the previous SCA to the new one.
At Alter Domus Luxembourg, a task force has been in place since June 2019 to help teams prepare for the new SCA. They’ve worked to ensure that internal tools and software can not only support it, but guarantee a smooth migration to the new standard. Teams have also received extensive technical training in order to be fully prepared to utilize the new SCA.
According to Sandra Legrand, Country Executive Luxembourg at Alter Domus, “This move by the Luxembourgish authorities to modernise the Standard Chart of Accounts is yet another example of the local regulator adapting to the evolving needs of financial professionals in the country. Streamlining and updating the SCA certainly requires a great deal of coordination and effort on the part of service providers initially, but the outcome will ultimately be more straightforward and streamlined once fully adopted.”
If you would like to receive a printed copy of Luxembourg’s new Standard Chart of Accounts, one can be requested here.