Keeping books of accounts through a CAS

Keeping books of accounts through a computerized accounting system

by Alfredo Q. Merto

Books of accounts and other accounting records are among the most important documents of any business organization. This is so because books of accounts and other accounting records are the repositories, and therefore the source of information for past, present and even for future transactions. Thus, for this reason, taxpayers keep books of accounts aside from the fact that these are required by tax rules.

On the part of the government, especially for agencies responsible for implementing compliance with tax rules, requiring taxpayers to keep books of accounts is equally important. Thus, it is mandated by law that every taxpayer maintain and keep accounting records wherein all transactions and results of operations are shown and from which all taxes due to the government may be readily and accurately ascertained and determined at any time of the year.

For some taxpayers, a simplified bookkeeping record may be sufficient. These accounting records should be registered or their use approved by the Bureau of Internal Revenue. For taxpayers maintaining separate books of account and accounting records for their sales offices or branches, such books of accounts should likewise be registered with the BIR.

With the advent of technology, some taxpayers have adopted or are adopting the use of electronic systems to keep track of their business transactions. Not to be outdone, the BIR has recognized these concepts of computerized books of accounts and a computerized accounting system.

There are differences between the two, but just like the use of the manual books of account, the use of computerized books of accounts or computerized accounting systems (CAS) needs the approval of the BIR.
The BIR has put certain measures into play to check the accuracy and relevance of the computerized books of accounts and accounting records or computer generated accounting records. Accordingly, taxpayers who intend to use the CAS should secure a permit from the appropriate office of the BIR prior to use. Applications, whether at the head office or in the branches, shall be filed with the BIR national office or the revenue district offices (RDO), as the case may be, having jurisdiction over the taxpayer's head office. New permits are required in case certain components of the CAS whether in the head office or branches, are modified or changed.

While these administrative rules on the use of CAS have already been put in place years ago, it is unfortunate that some revenue officers are still unaware of this development in bookkeeping requirements. One usually encounters revenue examiners imposing penalties upon sales offices, branches or sales outlets for alleged violation of the applicable bookkeeping requirements. Taxpayers, who are equally unaware, are defenseless when shown outdated requirements by the examiners.

In a recent ruling issued by the BIR, it emphasized that there is no change in so far as the gathering of information by revenue officers for purposes of establishing a taxpayer's compliance is concerned. However, it also recognized the fact that there have been some changes in the manner/system of keeping or producing books of accounts and other accounting methods as brought about by the electronic system.

If the taxpayer uses CAS, it is easier if all the recording is to be done by the head office. In this case, the computer-generated sales register issued by the head office would suffice. Consequently, the taxpayer is not required to maintain separate manual books of accounts in their branches.

As business transactions become more and more complex, there is equally a need to make the generation of information more secure, accurate and swift. Thus, for purposes of generating and keeping accounting records, the use of the computerized accounting system has become the rule. For one, this makes it easier for taxpayers with offices located in different areas to centrally administer business transactions occurring in the main office as well as in its other offices.

Tax rules should likewise adopt these changes in accordance with the government's commitment to make tax rules work for both the government and taxpayers.

(The author is a senior tax manager at Punongbayan & Araullo, member of Grant Thornton International Ltd. For comments and inquiries, please e-mail the author or call 886-5511.)