With the advent of iXBRL, we've been exploring the possibility of running risk assessments and detailed compliance checks on accounts before they get submitted to HMRC alongside the CT600 form.
The government gateway and HMRC's own validation checks only look at around 21 very rudimentary items. What interests us here at AccountingWEB.co.uk is the scope for expanding those checks to pick up the sorts of things that will make the accounts more likely to be subject to an enquiry (eg turnover/profit up/down more than 20% on previous year, associated companies mentioned in related party disclosure note, but not adjusted in CT profit limits etc etc).
Steve Collings has highlighted some of these points in his financial reporting problems articles. But what are the tests you think are most important before submitting a set of accounts?
Look forward to hearing your suggestions, and if you're interested in the underlying project and where it may go, come and let us know your thoughts in the AccountingWEB feedback discussion group.
Replies (3)
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Why go to the trouble?
I am not sure why we would want to undertake such an exercise. IXBRL has already used up a lot of our time and resources. I would like to rely on my software to flag any problems. As long as HMRC accept our submitions I am happy to get on with the next job.
If profit is up or down 20% this is likely to generate an enquiry even if I do tag it correctly. The time to query the figures in the accounts is during the audit not at the submission stage!
IDEA
HMRC have, for years, been using IDEA software to electronically interrogate data during enquiries to enable them to identify potential problem areas. Thats why they will usually at least request the business records in electronic format at the outset of an enquiry. It is possible for accountants to buy IDEA licences and so undertake similar exercises, and there is undoubtedly some value in doing this in certain circumstances.
iXBRL seems to offer HMRC an extension to this approach, automatically interrogating data as it is received, letting them shortcut straight to the 'risky' cases and allowing a focussing of effort and resources into cases with higher liklihood of recompense. Hopefully it will be possible, in time, for practitioners to acquire that software also, as it would certainly be an interesting additional tool to have at our disposal.