Vinu Prasannan

currently in D 365 FO >  India legal entity > Tax module > Set up > Sales tax > GST reference number sequence group > there is option to update only one number sequence for source “accounts receivable ” and reference “ Debit/Credit note ” .

This in turn is causing difficulties during audits to identify the source of a Credit Note.

Expected result : India legal entity > Tax module > Set up > Sales tax > GST reference number sequence group > there should be 2 options for defining source “accounts receivable ” with reference “ Debit/Credit note for sales order ” and reference “ Debit/Credit note for Free Text Invoice ”

Overview:

In the current setup under Accounts Payable > Parameters > Invoice link > Invoice the “Reject duplicate invoice” parameter is designed to prevent reuse of the same invoice number. However, the behavior appears to be limited in scope and could benefit from more granular control.

Suggested Enhancement:

Introduce two distinct toggle options under the “Invoice number used” field in Accounts Payable parameters form to provide better control over duplicate invoice validation as detailed below :

1. Reject Duplicates for Same Vendor toggle

• Functionality: Prevents reuse of the same invoice number for a single vendor.
• Example: If invoice number "Inv1" is used for vendor ABC, the system should block reuse of "Inv1" for ABC again. The same invoice number "Inv1" can be used for vendor XYZ.

2. Reject Duplicates Across Legal Entity toggle

• Functionality: Prevents reuse of the same invoice number across all vendors within the legal entity.
• Example: If invoice number "Inv1" is used for vendor ABC, the system should block reuse of "Inv1" for any other vendor, such as XYZ, within the same legal entity.

Benefits:

• Enhances data integrity and audit compliance.
• Addresses customer concerns regarding invoice duplication across vendors.
• Provides flexibility to align with varying business policies.

Issue Summary:

When a user adds a charge code to a purchase order line, the system throws the following error:-"Charges and Thai withholding tax are not supported in this version"

Expected Behavior:

The system should support Thailand withholding tax functionality for charge codes applied to purchase order lines, in alignment with local compliance requirements.

Current Status:

• This issue has been raised with the Product Group (PG) team.
• It has been identified as a by-design behavior.
• Reference: Hotfix Request :863333

Request:

We kindly request the Product Group to consider enabling support for Thailand withholding tax on charges in purchase order lines in future releases of Dynamics 365 Finance and Operations.

This enhancement is critical for ensuring compliance with Thai tax regulations and improving system usability for customers operating in Thailand.

1) What is this compliance requirement for India? 

a)      Section 143(3) of the Companies Act, 2013 provides various matters on which auditors are required to report in their auditor’s report. Clause (j) of Section 143(3) states that auditor’s report shall also state such other matters as may be prescribed. Rule 11 of the Companies (Audit and Auditors) Rules, 2014 specifies such other matters that are to be reported by the auditor.

b)      The Ministry of Corporate Affairs (MCA) vide its notification No. GSR 206(E) dated March 24, 2021 has issued the “Companies (Audit and Auditors) Amendment Rules, 2021” read with sub-section 3 of Section 143 of the Companies Act, 2013 (hereinafter referred as “the Act”) introducing new Rule 11(e), new Rule 11(f) and new Rule 11(g) and deleting Rule 11(d). Rule 11(g) is reproduced below: “Whether the company, in respect of financial years commencing on or after the 1st April, 2022, has used such accounting software for maintaining its books of account which has a feature of recording audit trail (edit log) facility and the same has been operated throughout the year for all transactions recorded in the software and the audit trail feature has not been tampered with and the audit trail has been preserved by the company as per the statutory requirements for record retention.”

c)      Globally, no similar reporting obligation exists for the auditors and accordingly there is no international guidance available on the subject. In March 2023,Auditing and Assurance Standards Board (AASB) of ICAI issued the “Implementation Guide on Reporting under Rule 11(g) of the Companies (Audit and Auditors) Rules, 2014” (“The Implementation Guide”) to provide guidance to the members on this new reporting requirement.This implementation guide talks about database audit trail as under

As per this new compliance requirement auditors would need to ensure that company management assumes primary responsibility to ensure that audit trail is enabled at the database level for logging any direct data changes

2)      Impact of this Non-compliance with MCA/ICAI guideline

a)      Globally, no similar reporting obligation exists for the auditors and accordingly there is no international guidance available on the subject. Therefore, auditors will rely on ICAI guidelines to assess compliance.

b)      Customer’s Company audit reports are being qualified when the underlying reason stems from a perceived gap in Microsoft's SOC report / documentation concerning ICAI guideline requirements.

3) Request to product team: Inclusion of a Database Audit Trail capability in Dynamics 365 Finance and Operations. This feature should enable logging of any direct / indirect data changes made at the database level, ensuring enhanced security, compliance, and traceability.

1) What is this compliance requirement for India? 

A)      Section 143(3) of the Companies Act, 2013 provides various matters on which auditors are required to report in their auditor’s report. Clause (j) of Section 143(3) states that auditor’s report shall also state such other matters as may be prescribed. Rule 11 of the Companies (Audit and Auditors) Rules, 2014 specifies such other matters that are to be reported by the auditor.

B)      The Ministry of Corporate Affairs (MCA) vide its notification No. GSR 206(E) dated March 24, 2021 has issued the “Companies (Audit and Auditors) Amendment Rules, 2021” read with sub-section 3 of Section 143 of the Companies Act, 2013 (hereinafter referred as “the Act”) introducing new Rule 11(e), new Rule 11(f) and new Rule 11(g) and deleting Rule 11(d). Rule 11(g) is reproduced below: “Whether the company, in respect of financial years commencing on or after the 1st April, 2022, has used such accounting software for maintaining its books of account which has a feature of recording audit trail (edit log) facility and the same has been operated throughout the year for all transactions recorded in the software and the audit trail feature has not been tampered with and the audit trail has been preserved by the company as per the statutory requirements for record retention.”

C)      Globally, no similar reporting obligation exists for the auditors and accordingly there is no international guidance available on the subject. In March 2023,Auditing and Assurance Standards Board (AASB) of ICAI issued the “Implementation Guide on Reporting under Rule 11(g) of the Companies (Audit and Auditors) Rules, 2014” (“The Implementation Guide”) to provide guidance to the members on this new reporting requirement. This implementation guide talks about database audit trail as detailed below

Audit Approach: As part of the audit approach, the auditor would need to ensure that the management assumes the primary responsibility to:

a) Identify the records and transactions that constitute books of account under section 2(13) of the Act;

b) Identify the applications, software i.e., IT environment including web-portals, databases, interfaces, data warehouses, data lakes, cloud infrastructure, or any other IT component used for processing and or storing data for creation and maintenance of books of account

c) ensure such software have the audit trail feature

d) ensure that the audit trail captures changes to each and every transaction of books of account; information that needs to be captured may include the following:

# when changes were made,

# who made those changes,

# what data was changed,

e) ensure that the audit trail feature is always enabled (not disabled)

f) ensure that the audit trail is enabled at the database level (if applicable) for logging any direct data changes

g) ensure that the audit trail is appropriately protected from any modification;  

As per this new compliance requirement auditors would need to ensure that company management assumes primary responsibility to ensure that audit trail is enabled at the database level for logging any direct data changes

2)      Impact of this Non-compliance with MCA/ICAI guideline

a)      Globally, no similar reporting obligation exists for the auditors and accordingly there is no international guidance available on the subject. Therefore, auditors will rely on ICAI guidelines to assess compliance.

b)      Customer’s Company audit reports are being qualified when the underlying reason stems from a perceived gap in Microsoft's SOC report / documentation concerning ICAI guideline requirements.

3) Request to product team: Inclusion of a Database Audit Trail capability in Dynamics 365 Finance and Operations. This feature should enable logging of any direct / indirect data changes made at the database level, ensuring enhanced security, compliance, and traceability.