In Phase I of the PKF Model – tax compliance analysis – which we described in our last newsletter, a rough analysis is performed of the standard modules for the (German) Principles of Proper Keeping and Retention of Accounts, Records and Documents in Electronic Form as well as Access to Data (abbreviated in German to GoBD), including documentation relating to pro-cedures and processes, VAT, payroll tax/social security, tax on earnings and deferred taxes, international tax law and transfer prices. The result of Phase I is a decision as to which modules are going to be analysed in detail in Phase II (please see the May issue of our newsletter for a complete overview). Phase II, first of all, consists of an analysis of the extent to which there are controls and measures for the individual risks in the selected modules in order to reduce the amount of a potential loss as well as the probability of these risks occurring. In the following section we outline how documentation relating to procedures and processes should be organised for the GoBD module in order to ensure tax compliance in this respect. Process documentation is particularly important here as, for almost all businesses, it forms the basis for the other Tax CMS modules.

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