The FEC and its Alignment with OECD Standards
France, like others, enforces a standardized financial reporting framework to streamline data from companies under its jurisdiction. It’s called “Fichier des écritures comptables”, or FEC for short.
France introduced the FEC in 2014, aligning with OECD standards for economic cooperation and development. The body established guidelines for SAF-T, a method for reliably exchanging standardized electronic accounting data.
While the FEC deviates slightly from the OECD standard, – the underlying requirements are similar. FEC differs from SAF-T by mandating companies to align financials with the French-defined national chart of accounts.
FEC compliance mandates reporting on payable accounts, receivables, inventory, and fixed assets, alongside general ledger balances and supporting journals.
Challenges in Creating a Universal Chart for Tax Compliance
Let’s focus on GL reporting: Companies prefer a meaningful chart of accounts for better business understanding from a management perspective. They create accounts for revenue, expenses, assets, and liabilities as needed for effective management reporting.
Later, when it comes time to report to tax authorities, that chart of accounts doesn’t necessarily work well. Companies must map their journals to a specific French chart of accounts as required by FEC reporting regulations. That leaves companies with the task of mapping and translating their account structure into a tax-specific statutory chart.
Management’s chart of accounts may not align with tax authorities’ statutory chart due to various reasons. Operating in multiple countries with unique tax reporting requirements makes creating a universal chart challenging. For instance, the UK plans to emulate France’s “Making Tax Digital” initiative, extending it to corporate income tax.
Statutory reporting may necessitate mapping and formatting financial results differently for various tax authorities, possibly involving reclassifying expenses or omitting disallowed items. Adjustments to conform to US-GAAP, IFRS, or country-specific standards are good examples of this.
Mapping and adjusting can be burdensome when done only once, and it puts the company at risk of non-compliance.
Doing it multiple times, though, is extraordinarily time-consuming. It also involves much higher levels of compliance risk because the likelihood of errors increases exponentially.
Mondial helps multinational enterprises solve this problem. Our platform unifies record-keeping across group companies, extracting detailed transaction data from various companies, despite different ERP systems. It furnishes a sole truth, enabling finance teams to align with statutory charts, execute multi-GAAP adjustments, and conduct currency revaluations. That leads to fast, accurate reports for any country, any accounting standard, any currency, and any time period. From any ERP system.
If you’re struggling with statutory reporting compliance, schedule a conversation with one of our financial reporting experts. In 30 minutes, we can help you determine whether Mondial may be the right fit for your organization.
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