Proof of posting

Proof of posting
See also

Proof of posting is an accounting document confirming that transactions recorded in the company's books or records are properly documented. It may manifest itself e. g. through a received VAT invoice, bill or receipt. This makes it possible, among other things, to document relevant costs or revenues (on the basis of which the company's income is earned). Therefore, it may happen that the tax authorities initiate an audit to verify the correctness of settlements for accounting and tax purposes. Such a challenge may result in an increase in the tax base, or even in the imposition of an appropriate financial penalty for unreliable bookkeeping. Therefore, obtaining appropriate proof of posting documents is essential for running a business.

Types of proof of posting

As it was mentioned in the introduction, the following forms of proof of posting are distinguished:

  • invoice;
  • the bill;
  • receipt.

Each of the above-mentioned documents is intended to prove that a specific transaction has been carried out. However, the invoice will be used mainly in trade between traders (with some exceptions when a non-business individual requests that an invoice be issued to him/her). On the other hand, the bill is often issued by an independent contractor, who performed his duties on the basis of an order agreement or a managerial contract. On the other hand, the most common accounting document is a receipt, which documents registered sales to individuals who do not run a business. Each of the documents concerned shall contain, inter alia, the following information:

  • information about the amount paid;
  • at least one entity involved in the transaction (seller)
  • the seller's details;
  • the designation of the goods sold.

The aim of this is primarily to map as closely as possible the economic operation carried out.

Negligence in proof of posting

One of the most serious negligence in documenting economic operations is the acceptance of invoices documenting an event that did not occur in reality. This is a tort in the form of unreliable bookkeeping, but also a fiscal offence in the area of issuing fictitious invoices and participating in a tax carousel [1]. However, in terms of receipts, it very often happened in catering services that waiters issued so-called receipts. That is, the ones that haven't yet been recorded on the register. This allows obtaining revenues that are not shown and therefore also not taxed. This is particularly detrimental to national budgets, as it causes significant damage to company tax revenues [2]. It often happens that entrepreneurs use proof of posting as a tool to extort VAT refunds or reduce the tax base in the area of income taxes. This is a measure that has now been sanctioned by severe fines or imprisonment. Therefore, states are trying to counteract this practice. One of such activities is the introduction of security institutions which oblige taxpayers to keep electronic records of registered sales or invoice sales in electronic form with a permanent data link to the server of tax authorities [3].

Footnotes

  1. Bhasin M., 2012, p.16-20
  2. Harris D., 2019, p. 226-231
  3. Segal S. Y., 2016, p. 45-64

References

Author: Karolina Kopecińska