Tag Archive | "audit"

Will we have to file all business costs monthly? It’s a SAF bet

Last week’s news round-up related that the UK had taken a lead in the data it expects companies to publish about itself. That remains true. The transparency UK government wants in place by 2016 still goes beyond EU legislation.

But recent information from NetSuite suggests that our European cousins have the jump on us in another discipline.

Transmission of tax information to auditors and government authorities will be by way of a standardised document. Known as a SAF, these documents already form part and parcel of some member states’ monthly tax submission process.

Europe to conform to rigorous standards

SAF files aren’t a European invention. Rather, it’s to the OECD that we have to look for their origin.

In its most basic form, the file is written in XML. Not that there’s anything basic about coding for the layman.

But that’s where people like NetSuite come in. They play the middle man’s role, giving businesses a UI that’s in English (or Portuguese, French, Dutch, German – all countries already some way down the line with SAF). Not that having an intermediary is in any way convoluted or open to criticism, of course. 😉

Example of XML in Portuguese

Example of XML in Portuguese

Portugal have took the SAF document to heart and made it a staple of their audit. Portuguese businesses have no choice but to file their file once a month.

Last week, we alluded that member states adopting a uniform way of presenting their tax audit information was improbable. But there’s an app for that!

Different countries have different demands and ways of working. Indigenous criteria drive their economy, so we can’t all bat on the same playing field.

Again, this isn’t so much of a problem if everyone’s using the basic, generic document, even if they ‘tweak it’ a bit to suit their own rules and regs.

Mexico, for example, had such a need. Such is the advancement of cloud technology, a bolt-on app was all it took to get the Mexicans’ information communicating with the database.

What will the SAF document require?

Companies will have to record their data in either the aforementioned XML format. Or in a CSV file – plain text spreadsheets, for want of a better description.

Kamlesh Rajyaguru gives us an overview of what authorities typically want included for their audit offices. Like we say, it can differ from country to country.

Rajyaguru, NetSuite’s Director of International Products, tells us that all manner of company accounting information appears on the files:

  • receipts and expenses;
  • VAT returns;
  • sales invoices…
    • …to name a few.

Rajyaguru goes on to explain that, whilst audit offices regularly see VAT returns, they don’t see the other costs that make a business tick. All that could be about to change, and not just in Europe.

If we stick with Europe, reporting all business transactions every month may become the norm. It’s burdensome, yes. But at least with a uniform document that’s (hopefully) user friendly, it should ease the pain.

“What will be permissible as expenses?” will be the next big thing. There’ll no doubt be a file for that, too.

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Will contractor accountants sit new qualification?

The AAT, ICAEW and Manchester Metropolitan University have got together and launched a low cost accountancy qualification which it hopes will enable more people to take up the profession.

The new programme starts in January next year and will be delivered through MMU’s business school. Students will be required to attend two three-hour weekly sessions. The programme is flexible, there are multiple entry points and students will gain a recognised qualification once they have completed each stage. The entire course costs £15,000 but this is based on current fee levels.

Students will be able to obtain an AAT qualification, as well as a BA (Hons) in professional accountancy after three years nine months. A further two years of study will complete the ACA qualification from the ICAEW and a masters degree in professional accountancy.

AAT president, Hilary Lindsay, said that making accountancy an affordable career choice will lead to a larger pool of talent to support future economic growth.

PwC has applauded the decision to launch the part-time course, saying the combination of higher education and professional skills development will ensure its graduates receive favourable treatment from the firm.

Meanwhile, the Professional Oversight Board has said that audit qualifying bodies should improve the way they award exemptions from some professional examinations. Furthermore, all supervisory bodies must strengthen the process for approving people who are allowed to sign audit opinions.

In particular, the report singled out the ACCA as an organisation that needs to ensure applicants are competent to do their job when initial audit experience was obtained some years ago. The board also said that the ACCA has already implemented some significant changes into its final audit examination and these will be reviewed to establish whether the exam is now sufficiently challenging.

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Image: final exam by dcJohn

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Big Four accused of dereliction of duty

The Big Four’s domination of the audit market came under threat last week when the House of Lords recommended a detailed Office of Fair Trading investigation.

This investigation would be the first time the Big Four have been investigated since a full scale competition investigation was discounted in 2002, following the collapse of Arthur Andersen.

The regulators also came under fire as the House of Lords committee slammed both groups for dereliction of duty and said the breakdown of communications between regulators and auditors compounded the financial crisis.

Box-ticking International Financial Reporting Standards were in the limelight and the Lords recommended that caution should once again become the guiding principle of audit.

The economic affairs committee has now published its report on the eight-month investigation into the UK audit market. The inquiry said that large firms are limited in their choice of auditors because of the oligopoly of the Big Four. Last year, they conducted the audit of all but one of the FTSE 100 organisations and these large companies tend to stick with the same auditor for an average 48 years.

The report went on to point out that there is a risk of one of the firms dropping out of the audit market and this would lead to an unacceptable level of market concentration.

The committee recommends, amongst other things, that companies in the FTSE 350 must put their audit contract out to tender every five years and that external auditors are banned from giving internal advisory services and advice to the risk committees of firms they audit.

© 2010 All rights reserved. Reproduction in whole or in part without permission is prohibited.

Image: September is the time of baseball magic by kevindooley

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