What does the internal control system (ICS) have to do with digitalisation?
In the worst-case scenario, the topic of internal control systems can save a company. That is why the ICS should already be a top priority. However, ICS expert Viktor Rebant has deliberately placed his comprehensive, three-hour e-learning module on internal control systems within the Further Training Course: Digitalisation Consultant. But what does the internal control system have to do with digitalisation? Viktor Rebant discussed the reasons and details at length on „hsp live at 11“.
Real-world experience: ICS e-learning impresses with its depth
Viktor Rebant works as an executive advisor at Innotax GmbH. As a recognised ICS expert, he has been a frequent guest on Paul Liese’s livestream. When putting together a truly comprehensive training course on digitalisation consultancy, it therefore made sense to draw on Viktor’s expertise. However, three hours’ worth of material is no small feat, even if – as Paul points out – the entire e-learning course does not have to be completed in one go. Viktor therefore begins by explaining why he opted for this length.
It was important to him to present a complete picture of the ICS, starting with the question: What exactly is a risk? „This (module) is designed to be very close to real-world practice; that was very important to me,“ said Viktor. „So that, after completing the e-learning, you can say: I know what an ICS is in principle, I know what a risk actually is, and I know how to put things into practice – or where I need to go into more depth, and where I can stick to the basics.“
Digitalisation: a seismic shift in the industry
Yet digitalisation in the tax sector has brought about a change that is not immediately apparent. This is because it has forced tax advisers to return to their roots and grapple with record-keeping obligations. Today, there are countless interfaces through which information or data is received. However, the question arises: is the interface I’m referring to here legally sound? Without built-in checks, data could end up being processed incompletely or incorrectly.
In this context, Viktor clearly explains why the topics of internal control systems and digitalisation are closely interlinked. Nowadays, when information arrives in digital form, it must go through a digital approval process. The necessary authentication procedures are also carried out digitally. Accordingly, digital organisational units must be established to ensure that all legal obligations are met. These units can then be used during a tax audit to verify whether the company has complied with the necessary requirements.
Furthermore, Viktor emphasises that one should not even begin to tackle the subject of ICS without documentation. After all, processes can only be optimised if they are documented. And an ICS means continuous process optimisation. At this point, Viktor draws attention to the process modelling module developed by his Academy colleague, Torsten Busse-Stein.
The barrier is called fear
When Paul asks his guest about the biggest barriers law firms face when it comes to internal control systems, Viktor replies promptly. Firstly, there is a reluctance to get involved. Although this is also a tax law issue, 90 per cent of clients’ business processes are handled via an enterprise resource planning (ERP) system. And most consultants are not familiar with the application software used.
Apart from that, the software itself often poses a major problem, as, according to Viktor Rebant, it has significant shortcomings in terms of quality. For example, due to a lack of documentation or optimisation options. Furthermore, according to Viktor, there is a lack of basic knowledge regarding recording and retention obligations. Drawing on his own experience, the lecturer reports that he did not cover these topics either during his vocational training or whilst at university.
Implementation of the internal control system in the context of digitalisation
So this raises the question: how can you still make it work? This is precisely where the Tri-Learning principle of hsp continuing professional development comes in. First, the course participant works through the e-learning modules. Afterwards, the participant and the tutor move on to the practical side. This reminds Viktor of an anecdote about how he himself got to grips with the subject. In his view, the standards a tax adviser sets for their own advisory services play a major role. As application software manufacturers often leave the explanatory sections to tax advisers, Viktor got hold of the programme manuals and worked his way through them. In the end, this enabled him to tell his client exactly how to document the discounts in his software so that there would be no GoBD issues.
He has another interesting point to make on the subject of software. In his view, good software solutions have one thing in common: they enable precise administration of user rights, i.e. individual or group rights. This is fundamental to the topic of internal control systems (ICS). After all, this is the only way to technically implement the controls established at an organisational level. According to Viktor, the former would be of no use if they could be technically circumvented.
He then goes on to discuss process mining. Viktor explains that he often extracts the data from the enterprise resource planning system in advance and runs through a digital audit. This enables him to identify weaknesses straight away and tackle areas for optimisation. Regarding the time involved, Viktor notes that a consistent client structure reduces the time required as experience grows. After all, many processes within a sector are the same or similar.
Internal control systems and digitalisation as a competitive advantage
Incidentally, Viktor mentions an interesting approach. In his view, tax consultancy firms could be integrated into a client’s internal control system. This would allow tax consultancy firms to take on control functions, for example in areas such as receivables management or accounts payable, and so on. This opens up entirely new areas of business for firms that can be tapped into.
Paul then asks whether there is no alternative to the digitalisation consultancy sector for tax consultancy firms. Viktor Rebant has a very clear view on this, which he explains. In his view, process consultancy, digitalisation consultancy, software consultancy and tax consultancy are inextricably linked. Tax advisers are ideally suited to data processing. „Over the last few decades, the profession has done nothing other than record and process data,“ says Viktor. Now, quite simply, it is time for the next step. Today, tax firms receive data that has already been recorded and structured. The challenge lies in subsequently processing this data automatically whilst minimising risk as much as possible. Viktor’s clear message is: „If the tax industry misses the boat on capturing these business areas, someone else will.“
Tax advisers should capitalise on their advantage in terms of trust
A good reason why tax consultancy firms still have an edge with businesses at present: „We are the trust centre for our clients,“ says Viktor. The expert also points out that tax consultancy firms can, in this way, optimise accounting-related processes at the same time. This allows data to be recorded and processed more effectively. At the same time, the company optimises its own processes. Ideally, therefore, the tax consultancy and the client work together towards the company’s success. Furthermore, avoiding difficulties during tax audits helps prevent pitfalls within the firm, which can only be in the interests of all parties involved.
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