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Dual booking and reporting by PRC GAAP and IFRS/US

A foreign company often needs to prepare 2 sets of financial reports, one for PRC reporting and the other for global reporting. Some companies even need to track the reports down to transaction level so that they require 2 sets of general ledger to be maintained for PRC GAAP and IFRS respectively. The difference between PRC GAAP and IFRS may lie in different CoA and/or different bookkeeping principles.

  • For CoA discrepancy, a CoA mapping needs to be done before consolidating PRC CoA and global CoA into one, i.e. set the 1st level account codes and part of 2nd level account codes (mostly tax accounts) consistent with standard PRC account system and map the global account codes in the sub-level accounts. Thus, for a transaction to be captured in the global report, the user will retrieve data from the sub-level account balance; for the same transaction to be captured in the PRC report, the user just needs to retrieve data from the 1st level account balance, which is automatically rolled up from its sub-level accounts.

  •  Different bookkeeping principles, eg. different revenue recognition principles, can be accommodated by setting up 2 databases. One database is used as the main database and follows PRC GAAP in bookkeeping. With the standard entry import/export tool of the K/3 system, journal entries in the main database can be exported and imported into the other database, where adjusting entries will be booked in order to satisfy IFRS, US GAAP or whatever global accounting principles.
  • With the Report Writer module in the K/3 system, PRC reports and global reports can be defined respectively by retrieving data either from different account levels in one GL or from two GL’s.