Real-Time Audits in Mexico: Key Finance and IT Considerations

Steve Sprague
July 13, 2016

With the success of Mexico’s CFDI e-invoicing mandate, the country is once again setting a new standard for global tax compliance as it implemenst real-time electronic audits in September 2016. Mexico’s tax authority will now be able to immediately identify errors or discrepancies in tax liability calculations, and conduct immediate, automated audits as a result of its inevitable extension of e-invoicing and e-reporting initiatives.

Mexico is expected to move just under 10% of its audits to this automated process this year, with the end goal of conducting all audits in this manner. This means that companies doing business in Mexico need to be more focused than ever on eliminating errors in their e-invoicing, accounts payable and financial reporting processes. Penalties for errors and discrepancies range from hefty fines to operational shut downs – directly impacting business performance.

The risks of these electronic audits impact multiple business functions, from shipping and logistics to HR, but none more so than finance and IT. Check out our latest downloads series for tips on Mexico:

Finance Challenges: How to Prepare for an Electronic Audit in Mexico

IT Challenges: How to Implement Financial Reporting in Mexico

Here’s a peek:

Key considerations for finance: 

  • Several key audit trigger points should be a primary focus, including sales, purchases, travel and expenses, and payroll.
  • Audit defense also needs to be a priority. Companies should automate processes and ensure that all transactions and financial reports are properly linked to protect and defend against an audit.
  • All data must be validated – it’s not enough to simply meet the government’s standardized formats; the data must be 100% accurate.
  • Don’t rely on amparo. Amparo is not a lifetime protection for the companies that were granted legal stays in electronic accounting filings.

Key considerations for IT:

  • IT teams provide the key to reducing error risk, protecting against audits and providing critical validations, making their role critical to compliance.
  • Regulatory compliance must be managed within a company’s ERP to eliminate potential holes and the risk of manipulation, yet significant global template customizations are necessary to meet local legislative requirements.
  • SAP and corresponding OSS notes alone don’t protect against real-time audits.
  • Eliminating manual work must be a priority, as manual data entry and verifications are error prone and therefore key audit triggers.

To learn more about protecting against Mexico’s electronic audits, download our tip sheets for Finance and IT roles.  

 

 

Sign up for Email Updates

Stay up to date with the latest tax and compliance updates that may impact your business.

Author

Steve Sprague

Steve Sprague serves as General Manager for international products at Sovos. His electronic invoicing and Business-to-Government reporting expertise stems from nearly 20 years of experience in the industry, with the last 10 years focused on the compliance regimes across Latin America and Europe. Steve manages International go-to-market strategy and field enablement which has led to the firm’s double-digit revenue/sales growth in the last three years.
Share This Post
Share on facebook
Share on twitter
Share on linkedin
Share on email

Tax Information Reporting
April 15, 2021
Managing Form 1099-NEC Reporting After Publication 1220

Form 1099-NEC changes in 2020 Since the IRS released Publication 1220, announcing that Form 1099-NEC—for nonemployee compensation—would not be included in the Combined Federal/State Filing (CF/SF) program starting tax year 2020, 37 states have implemented direct state reporting requirements for new Form 1099-NEC.  Though there are 32 states that participate in the CF/SF program, the […]

North America Unclaimed Property
April 15, 2021
Delaware Unclaimed Property VDA Notices

Delaware VDA Responses Due Monday, April 19, 2021 If you received one of the recent unclaimed property DE VDA invitations sent February 19, 2021 your response is due Monday, April 19, 2021. Holders that received an invitation and do not respond by April 19th will be referred to State Escheator for audit examination. Double check […]

North America Unclaimed Property
April 14, 2021
When Are Unclaimed Property Reports Due and Other FAQs

When are unclaimed property reports due? This is a fairly common question asked by holders that are new to the escheat reporting process, or not as well versed in the intricacies of escheatment reporting. Fortunately, Sovos has provided answers to some of the most frequently asked escheat reporting questions to help your organization survive unclaimed […]

North America Unclaimed Property
April 14, 2021
Unclaimed Property Landscape for the Life Insurance Industry

Most unclaimed property professionals are familiar with the story of Verus Analytics, LLC’s (“Verus”)[1] appearance on the contract audit “field of play” some ten years ago, as it cut a swath across the life insurance industry with audits focused on the industry’s failure to report and remit unclaimed life insurance proceeds based on the insurers […]

Brazil E-Invoicing Compliance Tax Compliance
April 13, 2021
E-invoice Data Reveals the Impact of COVID-19 on Brazil’s Economy

Increased visibility into, and control over, taxpayer financial and trade data is the key benefit highlighted by governments that have introduced continuous transaction controls (CTC) regimes. Its importance cannot be overstated. Transactional data cleared by or exchanged through a tax administration authorised platform becomes the new source of truth for tax authorities to assess the […]