Today, many of the organizations are striving to reduce the quantity of paper used in business processes. This is particularly relevant in financial services, where paper intensive processes present challenges to meet stringent regulatory requirements for timely processing and access of documents. Going digital for financial reporting has become a global trend. With the intention to keep pace with the developments in technology, the Bureau of Internal Revenue (BIR), Philippines recently issued an amendatory regulation on the preservation of books of accounts and other accounting records. BIR had issued a revenue regulation report last year requiring taxpayers to preserve their books of accounts for a period of ten years. The period of ten years was fixed either from the deadline to file the return or, if filed after the deadline, from the date of the actual filing of the return. However, under the new revenue regulation, certain amendments have been made on the 10-year period of preservation of book of accounts and accounting records. Within the five years reckoned from the filing deadline or date of actual filing of the return, whichever is later, taxpayers now have the option to retain only an electronic copy of the books of accounts, subsidiary books and other accounting records. Thereafter, the taxpayer can retain digitally converted financial documents maintained under an Electronic Storage System (ESS). The new revenue regulations have specified various requirements for the new ESS. Features of the Proposed Electronic Storage System (ESS) * Reasonable controls to ensure the integrity, accuracy, and reliability of the system * Adequate mechanisms to prevent and detect unauthorized creation, addition, alteration, deletion or deterioration of electronically stored documents via the system * Regular evaluations of the ESS through inspection and quality assurance program * A retrieval system should be maintained by indexing the scanned documents. The indexing system should allow easy retrieval of relevant books of accounts, subsidiary ledgers, and other accounting ledgers. * The ESS should have the ability to reproduce legible and readable hard copies of the electronically stored documents It has been decided to implement the 10-year plan for the preservation of book of accounts and accounting records in two stages – hard copies for the first five years and electronic copies for the next five years. Digital preservation of accounting records is widespread. In America, the creation of the U.S. Securities and Exchange Commission (SEC), has improved the growth of financial reporting in digital format (in relation to the amount of data available, and its format has been evolving too). As per a 2013 report, about 12,000 companies submit their financial to SEC using the structured digital format XBRL and over 5,000 mutual funds submit their financial reports to the SEC digitally. Also, around 9,000 banks submit their financial statements to the Federal Deposit Insurance Corporation (FDIC) in digital format. All these figures reveal that the importance of digital conversion of financial records. Developing robust, reliable, predictable, repeatable, scalable, secure, auditable solutions is crucial to encourage digital financial reporting businesses
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