Invoicing system review

The related risk is therefore significant. In the course of tax audits, the invoices issued and received are generally subject to a detailed examination, and even minor omissions or errors can result in serious penalties.

What requirements must a company’s invoicing system fulfil?

• the issued invoices must contain the mandatory elements set forth in the VAT Act;
• the performance date of each transaction must be determined in accordance with the legal requirements, taking any special rules into account, as in the case of advance payment, periodic settlement or reverse charge transactions;
• when converting invoices issued in foreign currency to HUF, the appropriate exchange rate must be used for the purposes of both the accounting and the VAT analytics;
• it is necessary to ensure that the appropriate invoice is issued in the event of subsequent discounts, refunds and quantity discounts;
• special attention must be paid when issuing cancellation and modification invoices;
• the real-time invoice reporting obligation must be fulfilled using the specific data structure required by the tax authority;
• the invoicing program must also have a so-called data export function;
• if an electronic invoice is issued or received, the rules of digital archiving must also be followed.

Non-compliance with the above requirements may in some cases result in the assessment of the maximum amount of default fine (500 000 HUF) per in voice. Furthermore, if VAT is deducted based on an invoice with incorrect data, the tax authority may even levy a tax penalty in addition to the tax shortfall. Consequently,
an appropriate invoicing system and the related internal control processes can eliminate serious risks. Based on our experience, certain invoicing programs used by companies are often not flexible enough and do not comply with the domestic invoicing regulations, which gives even more importance to the development of appropriate internal control processes.

To whom do we recommend our services?

• those who issue a large number of sales invoices on a daily/weekly basis and/or receive significant number of invoices from their suppliers;
• those who carry out different types of transactions, both domestic and international ones;
• those who use an invoicing program that does not comply with domestic invoicing requirements;
• those who often face problems during the real-time data disclosure;
• those who have already suffered significant penalties during a tax audit due to findings related to VAT and invoicing;
• those who are unsure whether their archiving system for electronic invoices is appropriate.

How can Forvis Mazars help you?

Forvis Mazars provides support in the review of your invoicing system within the framework of our tax advisory services. We help you to identify systembased errors and risks, and we also propose the most effective ways to eliminate or mitigate them.
An invoicing system review might cover several areas. However, the scope of the service could be tailored to your exact needs, therefore it might only cover the areas considered critical.

Our invoicing system review service includes the following tasks:

• the review of a sample invoice for each type of the selected sales transactions;
• examination of invoice amendment and cancellation practices;
• checking the exchange rates used when converting invoices issued in foreign currencies;
• sampling checks of purchase invoices, especially for transactions subject to special VAT deduction rules;
• a review of the VAT analytics and return for a selected sample period, including a sampling check of recapitulative statements;
• invoice xml consulting, tax support for the IT development of online data disclosure for invoicing programs, preparation of sample invoice xml files based on sample invoices;
• checking the compliance of the online invoice reporting system; evaluating error messages;
• providing an opinion on the archiving system for electronic invoices based on the requirements of digital archiving; proposing improvements to the system;
• if required, we prepare internal guidelines and a policy in order to set up appropriate invoicing and internal control practices.

Should you have any questions on the invoicing system review, we are ready to help.