The Institute of Public Auditors in Germany (IDW e.V.) creates auditing standards (In German: Prüfungsstandard, abbreviated (PS). As a software audit, the IDW PS 880 provides information on whether, for example, the archiving software used complies with the “Principles of proper management and archiving of books, records, and documents in electronic form” (GoBD).
The IDW auditing standard PS 880 is just one of many standards that IDW is responsible for (see here). But the institute’s work extends beyond auditing standards. IDW designates its publications with the general term “pronouncements.” An overview of the different types of IDW pronouncements can be found here. These standards are developed in cooperation between IDW, auditors, and software vendors.
As you are certainly aware, GoBD compliance by the software used is a key requirement for accounting. This is precisely where the topic of audit-proof “archiving” has a central role to play. Let’s break the concept down in detail.
IDW PS 880 as attestation of the GoBD conformity of software products
IDW PS 880 was published in 2010 and provides a comprehensive methodology for auditing software products. It enables auditors to evaluate the usability of the software according to defined criteria (especially according to GoBD criteria) and to confirm this for the archiving software by means of a certificate.
Compliance with the GoBD principles is now required by the tax authorities in Germany. Keeping archiving procedures GoBD-compliant is therefore one of the mandatory duties of taxable companies and organizations of all sizes and industries. Non-compliance may result in penalties and fines. PS 880 provides companies and auditors with a comprehensive and generally accepted method for reviewing software to ensure that it meets the GoBD requirements. The resulting certificate verifies the GoBD compliance of the software.
How does an IDW PS 880 audit work?
The standard includes various audit criteria that determine whether the software product under audit fundamentally ensures proper accounting. The objective of an PS 880 audit of the software system is thus to assess with reasonable certainty whether the accounting-relevant functions of the software components are suitable and, when properly applied, comply with the principles of proper accounting in the use of electronic archiving procedures. In addition, compliance with applicable tax law requirements must also be verified.
For this purpose, the audited software product is assessed at a company that uses the software. As a rule, the IDW PS 880 audit covers the following areas:
- Completeness, currency and informative nature of the process documentation
- Software development procedures, including software maintenance, testing, and approval
- Adequacy of the program functions necessary for the intended purpose of the software
- Proper technical implementation of the program functions judged to be adequate (functional test)
The IDW audit criteria are designed to identify whether the software under audit generally meets the GoBD requirements and properly carries out the company’s financial accounting.
What is IDW PS 880 not able to verify?
The fact of the matter is that the IDW audit cannot determine how the respective software is actually used in everyday business. The following stumbling blocks stand in the way here:
- User errors and operating mistakes can occur at any time.
- These errors can in turn result in further errors, impairing the correctness of the accounting and thereby.
- limiting the extent to which the archiving is truly audit-proof as well as the compliance with GoBD standards.
Only under the assumption of proper application does the IDW PS 880 audit have significance as a software certification.
Eyes open when selecting software: look for an IDW PS 880 certificate
In summary, IDW PS 880 is an important auditing standard for companies. If you want to make sure that software products fundamentally meet the GoBD requirements, you should pay attention to the IDW PS 880 certificate. This way, you can confidently remain calm the next time you face an audit. For easy archive, this certification has been part of the process since 2006; the last recertification took place in 2021.