Compliance pillar

Audit Evidence, Procurement Controls, and E-Invoicing

Practical fundamentals for proving control effectiveness, hardening source-to-pay, and satisfying structured e-invoicing mandates without slowing the business.

Aligned to COSO and ISO 37301 governance expectations, mapped to SOX 302/404 assertions, DORA ICT risk oversight, GDPR accountability, and VAT e-invoicing regimes such as Italy’s SDI, Mexico’s CFDI, and Peppol networks.

Audit evidence program

Build traceable evidence chains that survive walkthroughs, re-performance, and external audit sampling.

Evidence design

  • Link every key control to an authoritative evidence location (system-of-record query, report ID, or log export) with retention aligned to statutory requirements—generally 7 years for SOX and finance records.
  • Use immutable storage for evidence exports (write-once cloud object locks) to prevent post-hoc edits and to satisfy auditor integrity checks.
  • Standardize management assertions by control: completeness, accuracy, occurrence, and restricted access. Require operators to sign off on these assertions during quarterly certifications.
  • Preserve reviewer decisions (timestamp, approver, criteria) inside workflow tools rather than email to keep the audit trail centralized.

Testing and coverage

  • Run quarterly operating-effectiveness tests with statistically valid samples; expand to 100% population testing when system logs support automated evidence pulls.
  • Track control deviations by severity and remediation SLA, with root cause tags (configuration drift, training, access design, vendor failure).
  • Maintain a bridge between ITGCs and application controls so changes in IAM, logging, or change management automatically trigger re-testing of dependent business controls.
  • Document compensating controls for any temporary gaps and set clear sunset dates to avoid reliance turning permanent.

Evidence integrity safeguards

Enforce least privilege on reporting roles, rotate API credentials used for evidence extraction, and log all report parameter changes. Require SOC 1 or SOC 2 Type II coverage for third-party systems generating evidence relied upon for SOX or regulatory filings.

Procurement control stack

Embed preventative controls in source-to-pay to reduce fraud, enforce policy, and keep vendor master data auditable.

Vendor onboarding

  • Require independent validation of banking details (out-of-band callback, micro-deposit verification) before first payment.
  • Collect tax identifiers and beneficial ownership where required (e.g., W-9/W-8BEN-E in the US, VAT IDs in the EU) and cross-check against sanctioned-entity lists.
  • Use role-based segregation so the requester cannot approve both vendor creation and first purchase order.

Approvals and SoD

  • Set approval thresholds tied to spend category and risk; require multi-level approval for sole-source or related-party vendors.
  • Implement three-way match (PO, goods receipt, invoice) for inventory and services with receipt milestones.
  • Keep SoD conflict matrices current across ERP and ticketing systems to prevent the same user from creating vendors, issuing POs, and releasing payments.

Contract and invoice controls

  • Track contract lifecycle with mandatory metadata: term, renewal notice dates, SLAs, data processing clauses, and security addenda.
  • Apply price and quantity tolerances on invoices; route exceptions to procurement with evidence of review notes before payment release.
  • Centralize record-to-report interfaces so accruals, prepayments, and reversals are supported by reconciliations and documented journal approvals.

Operational metrics

Monitor cycle times (request-to-PO, invoice-to-pay), duplicate invoice prevention rate, percentage of spend under contract, and exception rate on three-way match. Align thresholds with COSO control effectiveness and SOX materiality.

E-invoicing mandates and digital reporting

Stay ahead of real-time tax reporting rules and interoperability frameworks that dictate invoice formats, delivery networks, and retention.

Frameworks and formats

  • Peppol BIS/UBL: common syntax for B2G and growing B2B use across the EU, Singapore, Australia, and New Zealand. Ensure access points are certified and support response messages (order, invoice, credit note).
  • Clearance models: Italy’s SDI, Mexico’s CFDI, and Brazil’s NFe require pre- or post-clearance validation with government signatures; store returned stamps and UUIDs alongside ERP transactions.
  • Digital reporting: The EU’s VAT in the Digital Age (ViDA) proposal pushes structured e-invoices and near-real-time intra-EU B2B reporting; design APIs to handle country-specific latency and archive obligations.

Readiness controls

  • Maintain a jurisdiction inventory covering invoice schema version, archiving duration, and required fields (buyer VAT ID, payment terms, item tax rates).
  • Map ERP tax engines to local rules with documented tax codes per country, ensuring rounding rules and currency conversions match authority guidance.
  • Enforce business continuity: queue invoices when clearance networks are unavailable, replay with original unique identifiers, and log timestamps to prove timely submission.
  • Run data quality checks on VAT codes, unit of measure, and legal entity mappings before transmission to reduce rejections and penalties.

Compliance guardrails

Align invoice numbering and storage with local tax authority rules, keep bilingual invoice outputs where required, and evidence supplier consent when switching from paper or PDF to structured electronic formats.

Operating model and cadence

Operationalize the fundamentals with clear ownership and predictable oversight.

Ownership

  • Assign control owners with deputies for every key control; publish RACI across finance, procurement, tax, and IT.
  • Require quarterly certifications from owners and executive sponsors covering control performance, exceptions, and planned remediation.
  • Use a change advisory board for ERP, invoice network, or tax engine updates with pre-implementation control impact assessments.

Cadence

  • Monthly: reconcile vendor master changes, review duplicate invoice alerts, validate e-invoice transmission success rates.
  • Quarterly: refresh risk and control matrices, re-perform a subset of key controls, and test disaster-recovery submissions to clearance or Peppol networks.
  • Annually: update policy documents, refresh sanctioned-party screening providers, and validate retention rules per jurisdiction.

Reporting

  • Provide audit committees with trending on control deviations, invoice rejection rates, and vendor onboarding cycle times.
  • Keep board-level dashboards concise: overall control effectiveness, top remediation themes, and regulatory horizon items (e.g., ViDA timelines, new local clearance mandates).
  • Align service-level objectives for evidence production (e.g., 48-hour turnaround for samples) to reduce audit overruns.