What is RGS and do I need it for my annual accounts?

Short answer

RGS gives ledger accounts standard codes. It is not legally required for the annual accounts and does not remove the need to check the mapping substantively.

Basis: RGS 3.x

What exactly does RGS standardise?

Every company names its accounts differently. RGS lays a standard coding over them, so that 'Debiteuren', 'Handelsvorderingen' and 'Vord. handelsdebiteuren' all point to the same reference code.

RGS (the Dutch Reference Ledger Scheme, Referentie Grootboekschema) gives a common reference to ledger accounts that companies name differently themselves. An account 'Handelsdebiteuren' and an account 'Klanten openstaand' can have the same economic meaning, although the local account numbers differ. The code supports exchange between bookkeeping and reporting. It does not change the underlying transaction and does not by itself determine whether an amount is correctly valued. For a BV with 200 ledger accounts, a well-maintained scheme can mainly help to present the same kinds of items in the same place every year.

How does an RGS code help with the annual accounts?

If your bookkeeping works with RGS codes, a program can more easily propose suitable reporting line items. The code does not prove that a balance is correctly classified; even with RGS you assess doubtful cases, the direction of the balance and the notes.

Suppose the bookkeeping has three separate cost accounts: rent €20,000, energy costs €4,000 and maintenance €1,000. RGS can help link these accounts consistently to the appropriate reporting line items, while the annual accounts themselves choose a different degree of aggregation. Check the chosen version of the scheme and keep your local mapping. A new account for, say, software subscriptions does not automatically get the right code. When importing without codes, ask for a proposal per account and go through the deviations one by one.

Why is substantive checking still needed?

Record the mapping per company and check it for new accounts and changes in the scheme. Good maintenance can reduce later work, but the amount of work differs per bookkeeping.

An account number or RGS code does not tell you whether a balance should be debit or credit. A negative bank account of €6,000 calls for a different presentation than a positive balance, even if the name stays the same. Also look at whether transactions with directors, taxes and assets require separate notes. The Reference Ledger Scheme is an aid for standardisation, not a replacement for Title 9 or for an accountant where one is mandatory. Keep the mapping with the bookkeeping so that a colleague can reconstruct next year how the annual accounts line items arose.

How do you test whether the chosen RGS mapping is right?

After the first linking, select a few items with a clear meaning, such as bank, trade receivables, turnover and wages. Take a trade receivables balance of €14,000 and check whether it appears as a receivable from customers, not as a loan to the shareholder. Then look at doubtful cases: an account 'prepaid rent' may, depending on period and amount, call for a prepayments item. Record per exception which RGS code was chosen and why. That way you can see next year whether a new account number has the same economic content or requires a new assessment.

Check the reconciliation with the trial balance after accounts have been combined. If five cost accounts together make €75,000, the annual accounts line item must also show €75,000 unless a substantiated correction has been made. The RGS code does not change the number and does not make an incorrect entry correct. Keep track of which version of RGS and which local scheme set-up you used, especially if you switch bookkeeping software. In case of an unexpected result, ask for an overview of the source accounts per annual accounts line item. That keeps the standard coding verifiable instead of an invisible automatic decision.

Sources

• RGS: explanation of the reference ledger scheme
• KVK: XBRL annual accounts

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