Internationale Dynamiek en Digitale Handtekeningen

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Christiaan Vd Valk - Trustweaver

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  • Many companies struggle to reconciliate their push towards consolidation of global business processes with the fact that the laws for such business processes are all local. In fact, such laws are increasingly local because there are so many of them and often they regulate topics (taxes, security, privacy) that are sensitive and for which it is hard enough to create a national consensus. It would be expensive and risky to try and integrate such local compliance throughout a large corporate’s typical complex multi-layered IT environment: because laws keep changing and there are so many of them to keep track of, just the change management required to keep such a system stable would be very expensive.
  • So many companies are caught between a rock and a hard place; either they face sanctions for non-compliance in multiple countries, or they set up a system that is practically unmanageable. TrustWeaver offers a solution to this dilemma for e-invoicing: we allow B2B applications to source compliance services directly from an “on demand” solution which minimizes the “compliance footprint” on the underlying information system. This is what we call compliance management outsourcing.
  • Internationale Dynamiek en Digitale Handtekeningen

    1. 1. E-invoicing compliance and auditability
    2. 2. B2B automation is leaving kindergarten Growing up requires a move from engine room to board room Not just obey public rules, integrate them
    3. 3. Incomplete liberalization is treacherous <ul><li>Imagine: </li></ul><ul><ul><li>No speed limits </li></ul></ul><ul><ul><li>No traffic lights </li></ul></ul><ul><ul><li>No road signs </li></ul></ul><ul><ul><li>No seatbelts </li></ul></ul><ul><ul><li>No fines for mobile phone use… </li></ul></ul><ul><li>… you can only be fined for “irresponsible behaviour”…as defined by whomever’s on duty. </li></ul>
    4. 4. Mentality change <ul><li>Whom does auditability benefit most? </li></ul><ul><li>Form requirement mindset kills responsible thinking, has created reticence to audit facilitation. </li></ul><ul><ul><li>This hurts you more than the taxman. </li></ul></ul><ul><ul><li>Remember: the tax administration is always right. The burden of proof is in principle yours (not all countries have abbb). </li></ul></ul>
    5. 5. Current strategies on both sides of the equation <ul><li>Businesses: </li></ul><ul><ul><li>Piecemeal </li></ul></ul><ul><ul><li>Ad hoc </li></ul></ul><ul><ul><li>Stop gap </li></ul></ul><ul><ul><li>Expensive & unsustainable </li></ul></ul><ul><li>Governments </li></ul><ul><ul><li>Ill-informed </li></ul></ul><ul><ul><li>Badly coordinated (national and international) </li></ul></ul><ul><ul><li>Expensive & unsustainable </li></ul></ul><ul><li>Neither side is showing much vision to get to a working model </li></ul><ul><li>This will increasingly hamper innovation and e-business growth </li></ul><ul><li>Acceleration of real optimization models e.g. cloud computing is putting incredible strain on the old polarized public policy model </li></ul>
    6. 6. Describe good business measures for e-invoicing Ask an informed business person (or tax consultant): Describe good business measures for e-invoicing Ask tax administrations:
    7. 7. <ul><li>The challenge to businesses is knowing what’s truly in the red zones so they can be sure to implement something at an acceptable risk level. </li></ul>
    8. 8. <ul><li>Evidence management/auditability not yet very intuitive for businesses </li></ul><ul><li>Years of work have gone into defining good joint best practices </li></ul><ul><li>Will the law follow? </li></ul>
    9. 9. Functional requirements Form/method requirements
    10. 10. Typical multinational invoice setup 5-25% cross-border, Mostly multi-domestic Often 20-60% intercompany
    11. 11. Adjacent legal areas
    12. 13. The evidence dimension: control options Always a mix of two fundamentally different ways of providing evidence, at opposite ends of the spectrum. EDI/other E-signatures historian/ detective Corroborate, substantiate claims: documentation, audit trails, e-discovery…. mathematician 1+1=2 Process-driven Technology-driven
    13. 14. Buyer Supplier Data-level Process-level (point-to-point) AES SSL m.a. SSL AS2
    14. 15. Evidence space
    15. 17. In house systems Systems management outsourcing – several contracts/legal persons, low degree of change Simple hosting – few contracts/legal persons, usually stable Application management outsourcing – several contracts/legal persons, low degree of change ASP/process management outsourcing – many contracts/legal persons, significant turnover On Demand evidence management <ul><li>Single thin layer across diverse systems, processes, contracts </li></ul><ul><li>Single evidence concept based on modern trust technologies </li></ul><ul><li>Binds evidence in process, contract and data level mix covering whole life cycle </li></ul><ul><li>Single audit view, anytime and anywhere </li></ul><ul><li>Designed for modern dynamic multiparty environments with low process cohesiveness/audit trails </li></ul>The Cloud – innumerable contracts/legal persons, high turnover/ad hoc relationships, loosely coupled components
    16. 18. Regulators and law enforcement are closing in on - but not necessarily understanding - you Do you understand them?
    17. 19. Business automation Consolidation Compliance Scattering & multiplying $
    18. 20. Build it in But keep it out
    19. 21. Focus of VAT law in relation to e-invoicing Global e-invoicing compliance Process management Record retention Audit facilitation
    20. 22. The importance of VAT Approximately 30% of all taxes, which represent over 30% of GDP in OECD countries
    21. 23. Cost of invoicing compliance in the EU
    22. 24. Value stack Base controls using good electronic signatures AES QES Localization Long-term auditable formats, audit page, Compliance Map Punchout to process policies, third party certifications Supply side, assuming volumes +200,000/year No demonstrable control: administrative fines & VAT risk for buyer (Process alternatives: documentation, audit trails, reproducible matching) No compliance with Directive option for MS QES: administrative fines & Potentially VAT risk for buyer No compliance with explicit local form requirements: administrative fines & potentially VAT risk for buyer (Could be undone in court, ECJ in final instance) Impact of evidence position on audit time: Cut back on audit process & VAT expert time spent Strengthen internal controls Speed up rollout Provide excellent service to trading partners
    23. 25. The score 1=very expensive for business – 5=reasonably inexpensive
    24. 26. Archiving: multiple but often similar national standards

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