What is the reference chart of accounts?

Suppose you change bookkeeping program, or accountant. Until now every program and every firm had its own account numbers and names, so on switching someone had to work out which account matched which. The Referentiemodel Grootboekschema, known as RGS, addresses that: one shared list of codes that is widely used in the Netherlands.

The standard gives each type of account a fixed code, from bank account to revenue and from depreciation to housing costs. You can link your own accounts in the general ledger to such a code. You are still free to choose numbers and names that suit your business. The link to the code makes sure others still understand what is behind them.

What goes wrong without it? At every change of system, or when reporting to a bank or accountant, each ledger account has to be translated by hand. That takes time and brings mistakes, for example when two cost items end up on one line of a report by accident.

Decide how closely you want to follow the standard. A small company needs only a limited selection. Ask your accountant which codes they need and link just those accounts. After linking, check that the totals match your trial balance, so that nothing goes missing.

The scheme is not a law and not an obligation for every company. It is an agreement to speak the same language. The better that shared language is used, the less time you lose translating. When you set up a new system or switch to one, it is wise to take it into account from the start.