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Presentation from Joost Kuipers, Tax Authorities
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Conference VAT forum April 27thJoost Kuipers, Netherlands
EDP-auditCompliance of e-invoices
Rotterdam November 2008 - 1 -
Why do we need a new
approach?
Overview of Compliance e-Invoicing
Bent u in control en compliant met e-factureren?
Rotterdam, November 2008
Joost Kuipers
Conference VAT forum April 27thJoost Kuipers, Netherlands
EDP-auditCompliance of e-invoices
Rotterdam November 2008 - 2 -
Introducing …
• Joost Kuipers RA RE Nederlandse Belastingdienst
• Expert group for tax auditing (and LBE);• member Expert Group on e-Invoicing;• member of Fiscalis Project Group on
e-audit (steering group). Chairman of “activity audit of e-invoicing;
• member CEN/ISSS workshop on e-invoicing 2. Chairman of WG2.
Conference VAT forum April 27thJoost Kuipers, Netherlands
EDP-auditCompliance of e-invoices
Rotterdam November 2008 - 3 -
The program: ....
• The fiscalis project group on e-audit;• The (e-) audit process;• The CEN/Fiscalis e-Invoicing
Good Practice Guidelines;• Assurance in the Netherlands.
Conference VAT forum April 27thJoost Kuipers, Netherlands
EDP-auditCompliance of e-invoices
Rotterdam November 2008 - 4 -
a changing audit environment: ....
• Computerised accounting systems, cross border exchange of electronic data;
• Change in legal environment;• Compliance initiatives in different
MemberStates;• Change of perception?
Conference VAT forum April 27thJoost Kuipers, Netherlands
EDP-auditCompliance of e-invoices
Rotterdam November 2008 - 5 -
So: ……….…
• Our audit environment becomes more and more complex;
• We need a structured audit approach;• We need to work together in our audits
- mutual assistance;- multilateral audits (joint audits);
• We need to work together in development,
• we need a Framework for e-audit(invoice directive December 2001).
Conference VAT forum April 27thJoost Kuipers, Netherlands
EDP-auditCompliance of e-invoices
Rotterdam November 2008 - 6 -
The (virtual) eAudit Group...
• Steering group. Meeting of the steering group (projects, exchange of information);
• Contact persons in every Member State;• Brother countries system.• Workshops, seminars, targeted fiscalis
exchanges, twinning projects.
Conference VAT forum April 27thJoost Kuipers, Netherlands
EDP-auditCompliance of e-invoices
Rotterdam November 2008 - 7 -
The audit model(e-audit road map, 4 section 2)
Exploring audit environmentExploring
audit environment
Conditional auditsConditional audits
Preplanning or Orientation(Understanding The Business)Preplanning or Orientation
(Understanding The Business)
PlanningPlanning
Performing the AuditPerforming the Audit
EvaluationEvaluation
IT-audit should be an integrated part
Conference VAT forum April 27thJoost Kuipers, Netherlands
EDP-auditCompliance of e-invoices
Rotterdam November 2008 - 8 -
Preplanning: Exploring audit environment .…Audit the presence;UNDERSTANDING THE ENTITY
AND IT’S ENVIRONMENTAUDITABILITY
- organisation: nature and size of the organisation. Internal organisation - system: inventarisation ICT. Logistic, financial, personnel systems, packages (in relation to the organisation)
Explaining the system is a legal obligation in the Netherlands
Conference VAT forum April 27thJoost Kuipers, Netherlands
EDP-auditCompliance of e-invoices
Rotterdam November 2008 - 9 -
Preplanning: conditional auditsSCAC 330/ eAudit Road Map chapter C3
• completeness transactions• completeness and correctness recording• availability for audit (kept for x years)• auditability (audit trail)
Every taxable person has the obligation to ensure that the data is stored electronically (incl. electronic signature), as produced or received. Readability should be guaranteed throughout the storage period. (SCAC330, eAudit road map)
The taxpayer should co-operate and support the auditor, including exercising data access. Supporting documentation including file structures, field formats and sizes should be provide’. (SCAC330, eAudit road map, legal obligation in the Neth.)
Conference VAT forum April 27thJoost Kuipers, Netherlands
EDP-auditCompliance of e-invoices
Rotterdam November 2008 - 10 -
Tax audit
Business
Internal control
External audit
Taxaudit
Preplanning:
in control statement (SOX)
SOX-audit
SAS70 (TPM)
Audit of annual accounts
Other audit techniques
Conference VAT forum April 27thJoost Kuipers, Netherlands
EDP-auditCompliance of e-invoices
Rotterdam November 2008 - 11 -
Audit techniques completeness checks
• Analytical reviews;• Rely on internal control;• Rely on external control;• Movement of goods, monetary
transactions;• Observations (audit on the spot);• Third party information;• Third party investigation.
Conference VAT forum April 27thJoost Kuipers, Netherlands
EDP-auditCompliance of e-invoices
Rotterdam November 2008 - 12 -
Audit techniques correctness checks
• Analytical reviews;• (statistical) Sampling;• File interrogation (may also give
information for completeness)• (other) Audit tools
Conference VAT forum April 27thJoost Kuipers, Netherlands
EDP-auditCompliance of e-invoices
Rotterdam November 2008 - 13 -
E-invoicing, abouth he perception of complexity and not clear (VAT-)regulation...
• Corporate e-invoicing users, Service Providers and
solution vendors feel insecure about their e-invoicing solutions. They want to be (VAT-) compliant;
• Today, most tax administrations do not provide
accreditation services or self-assessment
programmes to assist e-invoicing users or their
Service Providers to ascertain that e-invoicing systems are VAT-compliant.
• Tax administrations seek guidance how to audit
e-invoicing solutions. They feel insecure
Conference VAT forum April 27thJoost Kuipers, Netherlands
EDP-auditCompliance of e-invoices
Rotterdam November 2008 - 14 -
Activity “audit of e-Invoicing”....
• Audit process facilitation- Producing of audit standards (guidance paper) for tax auditors. Including verification of the authenticity and integrity of invoice transmissions. - Produce training standards (requirements) for different target groups;
• Audit facilitation.
Conference VAT forum April 27thJoost Kuipers, Netherlands
EDP-auditCompliance of e-invoices
Rotterdam November 2008 - 15 -
CEN/ISSS workshop e-invoicing 2
• Compliance of electronic invoice implementations with Council Directive 2001/115/EC and the national legislation as regards electronic invoices- Criteria for certification of service providers and e-invoice solutions- A framework for tax authorities to audit VAT invoice solutions
Conference VAT forum April 27thJoost Kuipers, Netherlands
EDP-auditCompliance of e-invoices
Rotterdam November 2008 - 16 -
CEN/FISCALIS E-INVOICING GOOD PRACTICE GUIDELINES...
• Based on strong similarity between Fiscalisproject and CEN WG2 en WG3 (Cost effective authenticity and integrity) tasks for guidelines
– Desire to avoid overlap– Exploit synergies– Joint promotion & implementation
opportunities
http://cenfiscalisguidelines.com/
Conference VAT forum April 27thJoost Kuipers, Netherlands
EDP-auditCompliance of e-invoices
Rotterdam November 2008 - 17 -
CEN/FISCALIS E-INVOICING GOOD PRACTICE GUIDELINES
• Part 1a. Business process analyse (matrix) included a commentary paper (CEN/FISCALIS);
• Part 1b. Further Guidance on Authencityand Integrity (CEN WG3)Part 1c. BPA for (micro-)SME’s
• Part 2. Guidance paper about audit approach specific for tax-auditors - build around the matrix (FISCALIS):
Conference VAT forum April 27thJoost Kuipers, Netherlands
EDP-auditCompliance of e-invoices
Rotterdam November 2008 - 18 -
CEN/FISCALIS E-INVOICING GOOD PRACTICE GUIDELINES
• Part 1. Business process analyse (matrix) included a commentary paper:- for business (including service providers):
to verify they’re in control (self assesment)
- for external auditors (including tax auditors):
to be able to verify if a business is in control.
The model is based on trust in companies, but verifiable for external audit
Conference VAT forum April 27thJoost Kuipers, Netherlands
EDP-auditCompliance of e-invoices
Rotterdam November 2008 - 19 -
CEN/FISCALIS E-INVOICING GOOD PRACTICE GUIDELINES...
• Commentary paper: background, definitions, descriptions
• Excel document where ~100 process steps are mapped to:Risks (why), requirements (what), controls
(how)• Process filters allow viewing specific end-to-
end process configurationsExamples: Direct e-invoicing, Self-billing, Service provider(s), Audit step correlation, Integrity/authenticity method
Technology neutral, non-discriminitative, protecting investment, protecting SME’s.
Conference VAT forum April 27thJoost Kuipers, Netherlands
EDP-auditCompliance of e-invoices
Rotterdam November 2008 - 20 -
The Guidelines are addressed to:
• Companies engaged in e-invoicing• Service and solution providers offering e-
invoicing functionality.
• Internal and external auditors.
• VAT auditors in tax administrations
Conference VAT forum April 27thJoost Kuipers, Netherlands
EDP-auditCompliance of e-invoices
Rotterdam November 2008 - 21 -
Process overview: life cycle....
Conference VAT forum April 27thJoost Kuipers, Netherlands
EDP-auditCompliance of e-invoices
Rotterdam November 2008 - 22 -
The Matrix ....
Conference VAT forum April 27thJoost Kuipers, Netherlands
EDP-auditCompliance of e-invoices
Rotterdam November 2008 - 23 -
What we did ....
• Invited companies, Service Providers and developers of e-invoicing solutions to assess the applicability;
• Invited all auditors specialising in e-invoicing applications and VAT administrations to review the Guidelines
Conference VAT forum April 27thJoost Kuipers, Netherlands
EDP-auditCompliance of e-invoices
Rotterdam November 2008 - 24 -
Guidance Paper “Audit of e-INVOICING”
• Guidance paper about audit approach specific for tax-auditors -build around the matrix
• Regular (e-) auditors (chapter 7)- verification of invoices;
• E-audit specialists (chapter 8) - verification of e-invoicing solutions
Conference VAT forum April 27thJoost Kuipers, Netherlands
EDP-auditCompliance of e-invoices
Rotterdam November 2008 - 25 -
Assurance in the Netherlands ....
• AssuranceBeschikking (“ministerial” decree)
Vooroverleg (pre-consultation).
• Expert Groups• Obligation for the local tax
administration to ask advice (giving binding advice is a regular task of the
Expert Group for Tax Auditing);
• Unity in treatment/Central point for questions.
Conference VAT forum April 27thJoost Kuipers, Netherlands
EDP-auditCompliance of e-invoices
Rotterdam November 2008 - 26 -
Invoices maybe issued by …...
• Invoices may be issued on PAPER as well as by ELECTRONIC MEANS
• RESPONSIBILITY OF THE COMPANY• Invoices sent electronically, will be accepted by the
“inspecteur”, provided that the authenticity of the origin
and the integrity of its contents are guaranteed.
“More then the tranport vehicle.Is a business in control”
Conference VAT forum April 27thJoost Kuipers, Netherlands
EDP-auditCompliance of e-invoices
Rotterdam November 2008 - 27 -
authenticity of the origin/integrity of its contentsHow can it be done??
• (a) An advanced electronic signature as mentioned in article 2…………;
• (b) The electronic data interchange (EDI), as defined in Article 2 of Commission Recommendation 1994/820/EC……;
• © Another method provided the method is prior notified to the “inspecteur” (tax inspector). We do not ask for a:
- qAES or - supplementary summary (paper)
Conference VAT forum April 27thJoost Kuipers, Netherlands
EDP-auditCompliance of e-invoices
Rotterdam November 2008 - 28 -
Seeking assurance
• BESCHIKKING(formal decision applicable for appeal)
Who? Only the supplier in case of use of the other method
• VOOROVERLEG (pre-consultation)Official Letter (formal decision) or anAgreement (vaststellingsovereenkomst)
Can ask means: it’s VOLUNTARY
Pre-consultation is also VOLUNTARY
Conference VAT forum April 27thJoost Kuipers, Netherlands
EDP-auditCompliance of e-invoices
Rotterdam November 2008 - 29 -
I thank you for
your attention
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