Standard audit file: Key to compliance

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Kamlesh Rajyaguru, director of international products at NetSuite, says an increasing number of tax authorities now require audit files to be issued according to a standardised format.

The standard audit file for tax (SAF) is an international standard for electronic exchange of tax accounting data between companies and their external auditors or national tax authorities. The file format is based on XML and originated from a project undertaken by the Organisation for Economic Co-operation and Development (OECD). SAF files are now used in several European countries including the Netherlands, Portugal, Austria, Germany and France.

SAF documents detail related transactions such as customer receivables, payables, VAT returns whether filed monthly or quarterly, and all sales invoices issued.

Rajyaguru explained: “What the taxman really wants to know is on one hand you’re submitting your VAT returns periodically, that’s good you’re complying there, but they have no other way of identifying whether other declarations are absolutely correct or not.

“So what a lot of the tax authorities are saying is, we now require you to submit this audit file.”

Rajyaguru said in some countries like Portugal businesses now have to send the file on a monthly mandatory basis.

In other countries like Germany it can be on demand, in the event that when they come to audit they can request the file for the whole year. France also went the same route as of January last year where the file should be available on demand from the company’s accounts software. Hungary is introducing it in January next year.

Rajyaguru added it was important that the file is in the right format.

“The file has to be available in either XML or CSV format so that the tax authority can read it using their own proprietary software to see all the transactions,” he said.

Such tweaks pose a challenge for developers like NetSuite as they need to respond quickly to any changes.

“If it’s a generic file that’s okay because we have that as standard. But some countries tweak it for their own particular requirements. We look at those requirements, add those into the generic one, and we make it available as part of our Suite App.

“In other words it’s there even if it happens to be something that comes into play in two or three months, or six months. We don’t have to wait for a major release of the software,” he said.

When Mexico introduced the SAF standard last year, Rajyaguru said, it was relatively easy for the cloud software provider to added it to the Mexico version of the ERP application.

“We’re going to see more and more use of that globally,” he added.

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