Publié le 10 mars 2015 | par Nathalie Mourlot0
2014: if your accounting is kept on ERP software or abroad, watch the upcoming French computerised tax inspection!
(Article initially written and published on December 15th 2013)
Starting 2014, even firms or branches which accounting is kept abroad will have to present their accounting under a dematerialized format, during tax inspections led by the French Administration.
Book entries meeting the “French Gaap” will have to be presented. The most famous accounting software in France, in particular those used by chartered accountants, will in general meet this requirement, thanks to their extraction modules. This requirement is added to those already existing and applying to the basic process of book entries and to the documentation related to procedures.
File extraction is the new requirement, but it is not the only one.
Many have forgotten that book entries must already meet the French rules related to the official French Chart of Accounts, sequential recording (itemization of each operation with its book entry and own date, and the accounts list with their conditions of use). The official French Chart of Accounts « PCG » also requires the use of the French language.
Watch the specific software and ERP developed internally, especially when accounting is kept abroad!
Naturally, with an ERP developed internally in France, by a French team, or through successive modules, we may suppose that these requirements will be more easily mastered by professionals. Until now, for accounting kept abroad, how important the stake was – serious breaches can lead to the refusal of accounting and automatic taxation -, French controllers were often indulgent as long as the documents presented and the explanations given were understandable.
Controllers have often accepted that basic recordings not kept under the French rules, were completed by end book entries and a « mapping » (cross-reference table between charts of accounts) leading to a French presentation. But now, French Administration is looking for each book entry to be directly presented according to the French rules, which is different from the pragmatic behavior described above. Even if it means asking for the whole information from a system, why stop in the middle of the path?
What about if your firm keeps internally its basic accounting and outsources the preparation of its financial statements to a chartered accountant?
In this case, the book entries are not recorded in your IT system by the chartered accountant. Consequently, the problem is not solved! Let me explain.
Since 2012, accounts’ “compilation”, inspired to a large degree by a US practice, consists for a chartered accountant in using the accounting kept by his client in order to issue financial statements meeting the French rules. It concerns entities belonging to the consolidation perimeter of audited groups and meets a real need, particularly for international groups owning subsidiaries in France.
This process is very simple. But, as opposed to the obligation of accounts “presentation” that can be done from an accounting kept internally by the firm, account’s “compilation” leaves the firm totally responsible for the produced data.
If his engagement consists in a “presentation” of the accounts, a chartered accountant will ask you first guarantee on your accounting and IT organization.
Thus, in both cases, this is your software that must be adequate …
What you must do now
Even in the case where your chartered accountant does the final step of compilation or presentation, we advise you to check with your software provider. Ask him if the extraction module allows to communicate to the controller a book keeping file meeting the requirements applying to a tax inspection led by the French Administration. And not only for 2013 and the following years, but also for 2012 and 2011, which will not be prescribed in 2014.
If your software has been internally developed, you will have to involve your IT team, and do not underestimate such a process.
If your accounting is kept abroad:
On top of the step above, we also advise you to check with your accounting team that the French rules regarding bookkeeping for each entry are met (use of the official French Chart of Accounts, path of revision based on a general ledger and supporting documentation of systems). Explain to them that it is more than extracting figures according to their local method.
As the use of French language can be asked, it is always possible to translate the supporting documentation related to the systems and procedures, but keep in mind that translating a general ledger while integrating it into a dematerialized file may amount to a lot of work.
If accounting must also be kept under other rules than the French ones – for the group needs for instance, try to find out confirmation that your software allows to manage several accounting plans in parallel and to use specific entries ledger, generating directly the extraction of documents meeting the « French Gaap ».
If the basic bookkeeping is done by a chartered accountant on his own software:
Then, your chartered accountant will master all these issues; you may of course ask him to confirm that his program meets the new requirements of the French Tax Administration.