PDF/Electronic Invoices 2584

  • Hi Guys,
    I am curious if there are any particular issues with regard to the payment of electronic invoices?
    My view is that provided there is a three way match - they are fine to pay, however I am interested to see way other businesses treat electronic invoices from a SOx perspective.
    Sorry if this seems like a silly question, but I receive about 5 questions a week about this very subject.
    Long time reader, seldom poster…

  • Both PDF and paper invoices can be forged, so the form of the invoice does not make a difference.
    The control objectives remain the same: only pay for quantities of goods or services that have been actually received and not invoiced yet and at prices that were agreed at the time of the order.
    An automatic or a manual process depends on whether your system can do a three-way-match and block of invoices that do not pass the match and whether purchase orders and goods/service receipts are entered in the system. In addition the user access to purchase orders, goods/services receipts and invoices should be segregated or you will need compensating reviews by independent persons.

  • Great, we have excellent SOD controls in place and you have confirmed my initial thoughts.
    Thanks for that. 🙂

  • Agree with gmerkl on this.
    However, I would add that although not a SOX issue some tax authorites do not accept electronic invoices and will inisist on you keeping originals.

  • The previous posts to the question identified the key issues.
    As for requirement by the applicable tax authority, I’ve copied some research results below with regard to retention of records by an INDIVIDUAL in connection with the tax filing requirements applicable in the USA.
    For CORPORATE entities, the record retention requirements might be different. As Denis notes, ‘some’ tax authorities might not accept electronic invoices and require originals.

    Does the IRS accept digital receipts?
    Yes. According to ruling Rev. Proc. 97-22, the IRS allows ONE to prepare, record, transfer, index, store, preserve, retrieve, and reproduce books and records by either electronically imaging hard copy documents to an electronic storage media, or transferring computerized books and records to an electronic storage media that allows them to be viewed or reproduced without using the original program.
    Can I throw away my receipts once I have captured an acceptable image?
    Yes. According to ruling Rev. Proc. 97-22, the IRS permits the destruction of the original hard copy books and records and the deletion of original computerized records after a taxpayer completes testing of the storage system.

    In short, you should maintain the documents (paper or electronic) to support the retention requirements of the applicable tax authority.

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