The case for common standards
California's schools share one chart of accounts. Its cities and special districts should too, and the State Controller is in the best position to make it happen.
The problem
Every California city files the same Financial Transactions Report with the State Controller. Every one of them is audited against the same GASB standards. Yet almost every city keeps its books in a chart of accounts it designed for itself, and so does nearly every special district and joint powers authority.
The result is paid for every year:
- The FTR is rebuilt by hand. Somebody maps the local chart to several hundred state report lines, usually in a spreadsheet, usually from last year's spreadsheet, often after the person who built it has left.
- Every audit starts with translation. Auditors, consultants, and new staff each learn a new numbering system before they can read the books.
- Comparisons are unreliable. When two cities classify the same cost differently, the state's published data compares classification habits as much as it compares cities.
- Software is bespoke. Every ERP implementation designs a chart from scratch, and every report built on it works for one agency only.
None of this buys a single hour of service for residents.
The proof it can work
California's school districts and county offices of education have used a single statewide chart, the Standardized Account Code Structure (SACS), for more than twenty years. Because every school agency codes the same way, state financial reports come straight from the ledger, staff move between districts without relearning the books, and statewide comparisons mean something.
Local governments have no equivalent. They should.
What a common chart changes
A common chart does not tell an agency how to run its operations or override its auditor. It gives every agency the same vocabulary for the same things, and it lets the state report come from the ledger instead of from a mapping exercise.
The CACOA is a working version of that chart: complete enough to use today, published for free, and open to correction. Every one of its posting codes has a published line on the Cities FTR, and each release proves it with a coverage test run across every code, fund type, and function.
A principle worth adopting
The mapping is the asset. The reports are views. Changes are journal entries.
Most agencies treat the state report as a document to be produced. It is better treated as a view of the ledger: define once how each account reports, and every form follows. When a number is wrong, fix it with a journal entry in the ledger, not an override in the report, so the correction carries into the audit, the next year's opening balances, and every other report built on the same books.
What each party can do
The State Controller
- Publish the FTR as a machine-readable schema: forms, lines, field identifiers, and the formulas between them.
- Publish a reference crosswalk from a common chart to the FTR, and accept a mapped trial balance as a way to file.
- Convene the working group of finance officers and auditors that the FTR instructions already credit with its classifications, and put a common chart on its agenda.
- Keep FTR lines aligned with the financial statement presentation GASB requires, so the two reports stop diverging.
Agencies
- Map existing accounts to the CACOA once. The FTR mapping is inherited from then on.
- Adopt it outright when replacing an ERP; it costs little more than designing a new chart, and far less than converting later.
- Report errors and suggest codes, so the standard gets better for everyone.
Auditors
- Accept a crosswalk-based FTR reconciliation as support, and encourage the agencies they audit to post adjustments to the ledger rather than to the report.
Software vendors
- Ship the CACOA as a template chart and the published crosswalk as a standard report. The MIT License allows it without permission or fees.
Why this matters
Compliance work is necessary. Much of its cost is not. Every hour spent translating one agency's private numbering system into a state form is an hour not spent on the work the public actually sees. Common standards will not eliminate compliance, but they can make it a small, predictable cost instead of a recurring project.
If you work in public finance and agree, the most useful thing you can do is use the chart, tell others about it, and say so to the people who can make it standard.