Guidance Note - Guidance for Developers of Business and Accounting Software Concerning Tax Audit Requirements

 

The OECD’s Committee on Fiscal Affairs (CFA) recently approved two notes arising from work to develop a set of guidance on business accounting system data requirements for tax audit purposes, and associated practical implementation issues for software developers. The set of guidance was prepared by a task group consisting of representatives of national revenue authorities, the Business Applications Software Developers Association (BASDA), accounting bodies, and other interested parties.

The aims of the guidance are to simplify tax compliance and tax audit requirements as they relate to information required for tax purposes from business and accounting systems. This guidance should encourage voluntary compliance by businesses that will also add to profitability by encouraging better internal control procedures. The guidance should also help promote compliance with new legislation on accounting standards such as Sarbanes Oxley and IFRS (International Financial Reporting Standards). The application of standards through software development also provides both public and private auditors with a reference point.

Guidance Note: Guidance on Tax Compliance for Business and Accounting Software

This guidance note describes the processes needed in business and accounting software to attain a sufficient level of reliability for electronic records kept in support of tax returns during the retention period prescribed by tax legislation in individual countries.

The principles outlined cover:

1. integration of effective tax protection controls;
2. production of audit trails;
3. enabling audit automation;
4. production of SAF-T (Standard Audit File for Tax Purposes – see separate Guidance note);
5. allowing users to file returns electronically;
6. archive procedures to ensure integrity and readability; and
7. provision of comprehensive documentation.

Guidance Note: Guidance for the Standard Audit File - Tax (SAF-T) (zip file)

This guidance note focuses on the creation of a computer file that allows the easy export of a predefined set of accounting records in a commonly-readable format.  This file also makes it easier for taxpayers to provide their electronic records to tax auditors in support of their tax return and for auditors to review accounting records. It results from a specification of one of the principles set out in the note ‘Guidance on Tax Compliance for Business and Accounting Software’.

SAF-T also provides businesses with a tool to meet the requirements of other Government or Non-Government bodies (e.g. statistics agencies, banks, industrial organizations) and it is easier to switch from one accounting package to another.