Setting up a PAF involves several steps, here they are:
1. Status of your invoicing process
The first step is to conduct a comprehensive internal audit to gain a holistic view of your invoicing process. This audit examines each step of the invoicing flow, including both upstream (PO creation) and downstream (payments and reconciliations) internal processes. Document all stakeholders involved and the systems used to fully understand the existing process.
2. Mapping of billing flows
Next, it is necessary to map the invoicing flows related to purchases and sales. This mapping allows you to identify all the documents associated with the control system, including the flows, the control procedures at each stage of the invoice lifecycle, and the various stakeholders involved.
The goal is to clearly visualize invoicing flows and identify key control points, in order to guarantee the traceability and integrity of invoices.
3. Drafting of PAF documentation
Drafting the PAF documentation is a crucial step in demonstrating to the tax british student data authorities that the controls in place are effective. This documentation must detail the business process, all invoicing steps, as well as the terms of storage and access to invoices. The objective is to ensure that internal controls are real and effective, and to allow the tax authorities to have easy access to them in the event of an audit. The requirements vary depending on the size of the company:
For very small businesses (VSEs) , it is possible to demonstrate orally the link between invoices and commercial documents;
Small and medium-sized enterprises (SMEs) must provide summary documentation;
Large companies must provide detailed, paperless documentation. This documentation includes mapping of IT applications, file structures used, data storage and archiving procedures, and error correction processes.
The aim here is to enable the tax authorities to verify that all invoices are authentic, legible and complete, and that the controls implemented by the company are real and effective.