Since 01.01.2002, the tax authorities have been legally entitled to access taxpayers' digitally stored records as part of a tax audit. The fiscal authorities have set out how they envisage this access in a decree, "Principles for data access and auditability of digitally stored data" (GDPdU), and a catalogue of questions and answers on the subject.
http://www.bundesfinanzministerium.de/Aktuelles/Aktuelles-.378.13727/.htm

What can the tax authorities do?

The tax authorities have acquired 14,000 licences to the audit software IDEA from the firm of AUDICON GmbH (www.audicon.net) with a view to gradually equipping tax auditors with this software and training them to use it. Audicon is developing macros in cooperation with the Federal Ministry of Finance so that standardised audit routines can be carried out as part of every examination. The aim is to make tax audits quicker and more thorough.

The tax authorities are authorised, either independently, themselves, or with the assistance of the tax payers, to inspect the EDP system insofar as fiscally relevant data is generated digitally in it. Further, the tax authorities may remove this data on data carriers in order to subject it to the audit routines with IDEA.

What do you have to do?

First, you must store your fiscally relevant data from the beginning of 2002 for 10 years in such a way that the tax authorities can access it: purely optical storage or paper printouts are no longer sufficient. That means you must make your EDP systems suitably able to archive data.

Your EDP system must be able to separate the fiscally relevant from the irrelevant and possibly legally protected data. If your EDP system comprises more than the financial and payroll accounting, now is the time to act. The tax authorities have not laid down finally which digitally generated data they designate as fiscally relevant. This is work you must do.

What can we do?

Our services:

• " We can carry out a simulated tax audit with your fiscally relevant data before the tax auditor comes to you. That will allow you to spot sources of errors and eliminate them.
• " We discuss with you which data are in fact fiscally relevant and how you can achieve plannable transparency so that, during a tax audit, you know what the tax auditor knows.
• " In cooperation with EDP specialists, we adapt your existing EDP system as well as your business processes to the new requirements. We do this in close cooperation with team.softworx ag (www.tsxag.com).

How do you stand to benefit?

You ought to get more out of these efforts than just an easy conscience because you have complied with your tax duties!

Your added value lies in the fact that you can avoid expensive mistakes which lead to additional taxes in the tax audit. Another advantage is that the adjustments to your EDP system can include the introduction or upgrading of a management information system (MIS). Such systems are steadily growing in importance to SMEs because the banks are attaching more significance to early warning systems as part of their loan financing (cf. Basel II Accord). But not only that: an effective MIS also reduces the personal liability risk of the partners and directors.