The Chinese subsidiary of a US company submits reports to their head office based on the corporate operational COA structure. However, the company must also create financial reports that use statutory Chinese account codes and structures in order to fulfill the local requirements from the Chinese Financial Bureau.

China Accounting Standards (CAS) regulations require that an account code be structural. The first four digits are designated by the Chinese Financial Bureau, and the company then defines its own structure based on these requirements. In CAS, the GL code also contains the sub-account and cost center.

The Chinese subsidiary then creates a structural alternate COA to satisfy CAS requirements, and maps the alternate COA to its operational COA using COA Cross-Reference Create (25.3.14.1).

COA Example from Chinese Accounting shows the alternate COA structure the company created for its bank accounts. The alternate COA structure contains four levels, and only the level 4 accounts are mapped to the company’s operational COA. For example, alternate account 1002-01-01-0001 HR is mapped to operational account 30001 Bank RMB, sub-account 010, and cost center 3001 HR.

When the company runs Chinese statutory reports, the statutory account code balances for parent accounts, such as 1002 Bank, are summed from the child alternate COA codes.