Following up on our previously announced series of articles on the legal aspects of digitization, we continue with an article on electronic accounting and its advantages, disadvantages, and practical implications.
The growing number of electronic accounting records has also prompted the Slovak legislature to digitize or electronicize accounting through the adoption of an amendment to Act No. 431/2002 Coll. on Accounting (hereinafter also referred to as the “Accounting Act”) effective as of January 1, 2022, namely Act No. 456/2021 Coll., amending and supplementing Act No. 431/2002 Coll. on Accounting, as amended.
The Accounting Act stipulates that an accounting entity’s accounting documentation consists of the sum of all accounting records created pursuant to Section 4(5) of the Accounting Act.
Under the new legal framework, an accounting record may be created in either paper or electronic form, with both forms being legally equivalent (however, creating an electronic form is only one option; accounting may still be maintained in the traditional paper form). An electronic accounting record is defined as an accounting record (e.g., invoice, tax return, bank statement, etc.) created:
- in electronic format and received or made available in electronic format, where the electronic format is determined by the creator of the accounting record or is determined based on an agreement with the recipient of the accounting record,
- by certified conversion or scanning, sent electronically, where it may constitute an attachment to an email,
- in electronic format for the internal purposes of the accounting entity.
The accounting entity is required to ensure the authenticity of origin, integrity of content, and legibility of the accounting record from the moment of its creation or from the moment of receipt or disclosure of the accounting record until the end of the period specified in Section 35(3) of the Accounting Act, and this obligation also applies to the transfer of an accounting record to another person.
The authenticity of the origin of the accounting record is ensured if the accounting entity that is the creator is able to prove that it actually created the accounting record and the accounting entity that is the recipient is able to prove that the received accounting record is from the creator. The integrity of the content of an accounting record is ensured if, upon transmission or disclosure of the accounting record or its transformation within the accounting entity, there has been no change in the content of the facts recorded by the accounting record. The legibility of an accounting record is ensured if the content of the accounting record is legible to the human eye. When ensuring the legibility of an accounting record, the accounting entity is required to maintain the integrity of its content.
If an electronic accounting record is sent or otherwise made available to another person, the use of the electronic accounting record is subject to a written agreement between the parties involved or the recipient’s consent. Consent is deemed to have been given by the information regarding the acceptance of the accounting record, which also includes the actual payment of the requested amount based on the sent electronic invoice.
When signing an electronic accounting record, a handwritten signature, a qualified electronic signature, or a similar verifiable signature record replacing a handwritten signature in electronic form may be used, provided it enables the unambiguous and verifiable identification of the person who created the signature record.
The transformation of an accounting record refers to a change in the form of the accounting record during its processing within the accounting entity, while the integrity of the accounting record’s content remains preserved. A change in the form of an accounting record is a change from a paper form of an accounting record to an electronic form of an accounting record or a change from an electronic form of an accounting record to a paper form of an accounting record. An accounting entity may transform an accounting record only if the accounting record is verifiable. In accordance with the chosen method of storing accounting records, an accounting entity may transform an accounting record that has not yet been transformed, and is required to store the accounting record in the form resulting from the transformation.
An accounting entity that does not store accounting records in electronic form may transform an accounting record from electronic form to paper form by means of a certified conversion in accordance with specific regulations or in a manner prescribed by the Accounting Act, provided that the accounting record does not contain a qualified electronic signature or a qualified electronic seal.
When transforming an accounting record by scanning it into a file format in raster graphic form, the accounting entity shall ensure:
- the completeness of the accounting record in its original form and in its new form
- the content and visual consistency of the accounting record in its new form with its original form,
- the legibility of the entire surface of the accounting record in its new form
- the integrity of the content of the accounting record.
The transformation of an accounting record from paper form to electronic form may be performed by certified conversion or by scanning into a file format in raster graphic form (PDF, PNG, JPG, TIFF, etc.). An electronic accounting record may be converted to paper form by means of a guaranteed conversion or, if the electronic accounting record does not contain a qualified electronic signature or a qualified electronic seal, it may simply be printed while preserving the integrity and legibility of the content.
As of January 1, 2022, accounting documents must be filed with the Register of Financial Statements only in electronic form that enables automated data processing. Failure to file accounting documents in electronic form is punishable by law as an administrative offense.
The introduction of electronic accounting has various consequences that may be viewed as either negative or positive depending on the accounting entity’s subjective perspective. However, there is general agreement that eliminating the handling of paper documents benefits the environment (specifically paper, printers, printer ink, binders, file folders, and other necessary office supplies, including the physical space required for archiving paper documents and the need to secure this space from third parties). On the other hand, however, it is necessary to provide the accounting entity with the means to handle and archive electronic accounting records and ensure overall cybersecurity of the data—software, data storage, antivirus protection, costs for electricity and equipment cooling, and, moreover, it is also necessary to consider training and educating competent personnel when implementing electronic accounting. This results in costs for the accounting entity in the form of software solutions for accounting entities (often customized), various cloud storage solutions for archiving accounting records, as well as costs for training or educational courses. In general, we can also conclude that electronic accounting is safer in terms of its physical storage (it cannot simply be lost, nor can it be destroyed, e.g., by fire or floods), as its existence—even on physical devices—is guaranteed by multiple layers of protection. On the other hand, however, there is a risk of misuse by third parties in the event that its software protection is breached. Furthermore, electronic accounting facilitates work with accounting documents, as the system can “retrieve” the documents—including their details (e.g., invoice number, date, supplier, customer, etc.) and thus eliminates the risk of obvious errors when typing, reading, or otherwise working with electronic accounting records.
Transferring these obligations to an electronic environment thus simplifies administrative work in accounting, and the added value is that it also has a positive impact on the environment.
