The topic Procedural documentation is always relevant. In theory, at least. Yet many clients either ignore it or mercilessly underestimate it. As a result, law firms have no choice but to keep following up on it. Many tax advisers simply drop the subject at some point. The Fürth-based tax firm Müller Blum, however, is tackling the issue Procedural and process documentation highly successful. Tax assistant Julian Stettner told us on „hsp live at 11“ what sets them apart and what day-to-day life with their clients is like.

Julian Stettner has been working at Müller Blum for about half a year. The topic of documentation came his way quite unexpectedly and spontaneously. However, he soon realised that this field can be very exciting. This is also why he has included the topic in his PhD research at the University of Bamberg. His employer specialises in IT consultancy and tax procedural consultancy. The fact that procedural documentation plays such an important role in this context suggests it has potential that many clients have not yet recognised.

Even before joining Müller Blum, Julian had already spent a great deal of time exploring the topic of digitalisation. When he learnt that a law firm just round the corner was thoroughly digitally minded, he knew straight away that he wanted to apply there. He stresses, however, that the subject of case documentation was completely new to him.

The first question for Julian centres on digitalisation: what is his approach to digitalising processes? Is it „digital above all else“ – or only if it brings about an immediate improvement? Julian immediately thinks of the business owners who are absolutely unwilling to change their processes. “We’ve always done it this way” has now become something of a meme in the digital world. At the moment, Julian is working with a particularly large number of e-commerce companies. These businesses deal with vast amounts of data. For these clients, accounting or tax advice without digitalisation would be impossible.

Placing orders in practice

Host Paul wants to know more specifically: there is one scenario where a client approaches the firm with the aim of creating added value for themselves through digitalisation. This includes saving time, reducing costs, and so on. Paul sees the other scenario as originating from the firm itself. For example, when documents from the client arrive at the firm in a way that causes an unnecessary amount of work. In that case, the firm would approach the client in order to reduce the workload on its own part. How do these approaches play out in Julian’s day-to-day work?

Julian replies that digitalisation or process optimisation always begins with a discussion with the client. During this discussion, the existing processes are examined. If the client is a new acquisition, Julian starts by looking at the financial accounts. From the data, he works out what has been done so far. A concept is then drawn up, taking technical possibilities into account. The main focus is on streamlining or simplifying existing processes. It is then up to the client to implement the process optimisation. So far, Julian has never encountered a situation where a client has declined the advice. If the client decides to go ahead with the implementation, the Procedure documentation prepared. This is used to check whether, and to what extent, the client has implemented the measures.

From theoretical optimisation to controlled practice

What does such a check involve? Julian explains that there are various control mechanisms and methods. One example is the document check. The client is asked to check their documents on DATEV Unternehmen Online. DATEV provides a tool for document verification. However, it is also possible to change the status of the document and then move it to a folder labelled „Documents checked“. If the firm then prepares the financial accounts and finds that the document folder is empty, it knows that the client has not carried out this process. Julian works exclusively with small and medium-sized enterprises, so the processes are preferably checked manually. For large corporations, automated verification mechanisms can also be implemented.

Paul has heard elsewhere about a company that does not put its documentation into practice. Although comprehensive and complete procedural documentation has been drawn up, it simply sits in a drawer so that GoBD-compliant procedural documentation can be produced in the event of a tax audit. Julian has already hinted that his clients are guided in a completely different way. He emphasises at this point that putting the documentation into practice benefits the client.

Tax audit requirements are changing

Furthermore, the expert notes that the mere existence of procedural documentation does not in itself absolve a company of liability. Procedural documentation can also be rejected. In this context, it does not help that there is no clear legal requirement to produce such documentation. Julian then asks Paul for his perspective on this. Paul answers the question by drawing a comparison with the situation regarding transfer pricing documentation. This is required when a company exchanges goods and services with other companies. Experience suggests that, during tax audits, the documentation is the first thing to be scrutinised. If there is a formal deficiency, an estimate is made.

We are not quite there yet when it comes to procedural documentation. However, it is to be expected that, in this area too, the tax audit will initially focus on the documentation. If this is missing or inadequate, it is not worth the auditor’s while to examine the data. After all, without knowledge of the processes and responsibilities, the data cannot be assessed properly. This is how Paul assesses the situation. Furthermore, as a tax adviser, he would insist on procedural documentation in order to understand all of the client’s processes. He would also insist on the data being made available in a properly organised digital format. Paul mentions this in light of the shortage of skilled workers and the efficiency of a practice.

Overcoming unfounded reservations, creating added value

The existence of a Procedural documentation makes work easier for everyone involved. The client can optimise their processes. Handover and deputising are made considerably easier. A tax audit does not cause panic. For the practice, documentation means that data is received in a clear and organised manner, and can be interpreted and assessed. And for the tax auditors, it means the Process documentation makes the work much easier.

Julian believes that the reluctance towards the documentation stems from the perceived complexity. There are templates available online that are extremely extensive. However, the scope of the documentation depends on the complexity and size of a company. And with the right programme, which offers an integrated creation tool, documentation can be created easily.