The classic definition of an accounting system is "a set of transactions with the same chart of accounts, calendar, currency, accounting standard, and costing method". Sometimes there is a need to use multiple accounting standards simultaneously, due to a combination of the following elements:
Accrual-based accounting vs. cash-based accounting
Different accounting standards (e.g. US-GAAP, UK-SAP, the German HGB)
Different methods of calculating the inventory value (Standard, Average, FIFO).
Different currencies
In some cases, it is enough to convert or establish a correspondence between different accounting systems. This is the only option available in most competitors' applications. However, under certain conditions this is not possible due to:
Excessive differences from rounding or conversion
The conversion effort being too high
Lack of verification methods
Excessive delays in getting results
Inability to carry out conversions due to lack of detailed information
SocrateCloud was designed to support multiple accounting requirements. The concept of "accounting system" has been improved into the Accounting Schema. An Accounting Schema is a combination of the following factors:
Chart of Accounts
Accrual-based accounting or Cash-based accounting
Accounting standard
Costing method
Currency
Most applications replicate data transactions to meet various requirements related to accounting. Unlike most applications, SocrateCloud distinguishes between the transaction and its accounting consequences. This provides the following benefits:
Transaction data is not replicated
An accounting schema can be added or abandoned at any time
Accounting information can be generated for previous transactions
Any element can be changed or replaced (accounting operations can be regenerated at any time)
Accounting schemas are easy to maintain and extend
The system is resilient because errors can be corrected and data regenerated
High priority accounting transactions (e.g. updating inventory, paying bills) are processed right away, whereas less urgent transactions are carried out asynchronously with lower priority, depending on the system workload.
Customers can extend the accounting rules, if the predefined ones are not sufficient (internally, the accounting rules are defined using an accounting rule engine). Additional accounting rules can be implemented to address issues such as management accounting, provisions, and the like.
Unlike conventional systems, SocrateCloud does not include the Calendar in the Accounting Schema. A number of Calendars can be created within the same schema. The Calendar is limited to transaction control functions (open/close periods, periodic reports, defining allocations, ease of entry).