What is the reliable audit trail? Obligations, examples and sanctions

What is the reliable audit trail?

The reliable audit trail is an internal control requirement for companies. They must be able to demonstrate that they have a documented audit trail that chronologically traces all the steps and associated controls from the origin of the invoice to its retention.

It involves a set of measures and procedures established by companies to ensure traceability between issued invoices and deliveries of goods or billed services (in accordance with Article 289, V of the General Tax Code).

The reliable audit trail: obligations for companies

These measures must ensure the accuracy of operations and allow the company implementing them to ensure that:

• The information on the invoice is complete, accurate, and has not been modified.
• The invoice is sent to the right person at the right time.
• The invoice is not processed or recorded twice.
• All mandatory details are present on the invoice.
• The invoice corresponds to a real transaction on the economic, accounting, and financial levels, and that all transactions are taken into account chronologically.
• Operations are processed in accordance with current legislation.
• Significant risks, whether operational (such as a failure of the invoicing computer system generating incorrect invoices) or financial (such as an invoicing computer system producing invoices with an erroneous amount), are identified and controlled.

The reliable audit trail: concrete example

The audit trail should allow:

• To chronologically reconstruct the entire invoicing process, from its origin (for example, the purchase order) to the invoice, by linking all relevant documents in this process.
• To ensure that the issued or received invoice reflects the actual operation by establishing a link between the invoice and the delivery of goods or the provision of services that justifies it.
• To justify each operation with an original document, so as to be able to continuously trace back to the invoice, and vice versa.

The audit trail can consist of documents established by the company itself (such as quotes or purchase orders) or by third parties (such as account extracts).

The appropriate level of controls to be put in place depends on the size of the company, the nature of its activity, its information systems, and the volume of invoices it issues and receives. In very small businesses, a manual comparison of invoices with commercial documents (such as quotes, purchase orders, delivery notes, and payment justifications) may be sufficient.

The absence of a reliable audit trail: sanctions

The absence or insufficiency of these internal controls can have the following consequences:

• At the issuer of the invoice, these controls are subject to verification by the tax authorities (under Articles 13 D and 13 E of the Tax Procedures Code), and their absence or insufficiency may call into question the right to VAT deduction for the invoice recipient.
• At the invoice recipient, the absence or insufficiency of these controls automatically results in the denial of deduction.

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