Public Accounting Standards: PGCP Aims, Scope & Structure
Aims and Objectives of the General Plan of Public Accounting
The main purpose of the General Plan of Public Accounting (PGCP) is accounting standardization. It sets regulations and general rules to which the accounts of various public administrations must conform.
The objectives of the PGCP are:
- To ensure all public authorities submit accounting information uniformly.
- To align the Plan with private law accounting, using the same principles and accounting terms.
Scope of the General Plan of Public Accounting
Generally, all government entities subject to administrative law, whose financial activity is linked to a budget and a control system covering legal compliance, financial accuracy, and operational efficiency, are subject to the PGCP.
The General Plan of Public Accounting applies in the following sectors:
- State Sector: Constitutional bodies, the General State Administration, autonomous bodies, public business entities, public entities governed by specific laws, and institutions managing common Social Security services.
- Autonomous Public Sector: Regional governments, autonomous bodies, and public institutions with special status.
- Local Public Sector: Local authorities themselves, autonomous bodies, and public business entities dependent on local authorities.
Characteristics and Structure of the PGCP
The PGCP is open, allowing future changes based on policy, technical, or scientific developments. It is also flexible, capable of adapting to the different needs of the organizations that must apply it.
Structure of the General Plan of Public Accounting
The PGCP is structured as follows:
- Accounting Principles: A set of rules whose application allows the annual accounts to faithfully express the financial position (assets, liabilities, and equity) of public entities.
- Chart of Accounts: Contains the chart of accounts based on decimal classification. The accounts are integrated into 8 groups:
- Group 1: Core Funding
- Group 2: Fixed Assets
- Group 3: Stocks
- Group 4: Creditors and Debtors
- Group 5: Financial Accounts
- Group 6: Procurement and Expenses by Nature
- Group 7: Sales and Income by Nature
- Group 0: Accounts for Budgetary Control and Accounting Relationships
- Definitions and Relationships: Contains definitions of the groups, subgroups, and accounts within the PGCP, along with their accounting relationships, indicating the most common reasons for debiting and crediting the different accounts.
- Annual Accounts: Includes rules concerning the preparation and structure of the financial statements, which are: the balance sheet, the economic performance statement (profit and loss account), the statement of budget execution, and the notes to the accounts (Memoria).
- Valuation Standards: Develop accounting principles and outline the criteria and rules applicable to transactions, economic events, and changes in equity.
- Glossary of Terms: Defines the most significant terms used.
Chart of Accounts and PGC Comparison
The second part of the PGCP details the chart of accounts, based on decimal classification. The third part provides definitions for all account groups and numerous sub-accounts.
Key differences between the Public General Chart of Accounts (PGCP) and the General Chart of Accounts (PGC) for private entities include:
- The PGC does not have a Group 0, whereas the PGCP includes it to facilitate budgetary control.
- The PGCP annual accounts include specific accounts related to the budget and its settlement, which are not typically found in the PGC structure.
- Some accounts included in the PGC do not appear in the PGCP.