A single international operation may appear simultaneously in the company’s accounting, the foreign exchange records, the foreign exchange exogenous information, the financial statements and various tax obligations.

A payment abroad, an external debt operation, an international investment or a movement in a compensation account usually give rise to reports to different authorities and registration obligations within the organization.

For this reason, one of the situations that most frequently arises during internal audits, external audits, due diligence processes, information requests or audit proceedings is differences between the information reported by the company’s different areas.

Foreign exchange exogenous information and other reporting obligations

Foreign exchange exogenous information usually contains operations that also appear in the accounting, the financial statements, the foreign exchange records and various tax obligations.

For this reason, it is advisable to periodically validate that the reported information remains consistent across the different sources used by the organization.

Differences in dates, concepts, exchange rates or recognition criteria usually explain a large part of the inconsistencies identified during reviews.

Payments abroad: one of the main sources of differences

Payments made to suppliers, creditors, related parties or service providers abroad usually simultaneously give rise to foreign exchange obligations, accounting records and tax effects.

In these cases it is common to review the correspondence between:

• The payments actually made.
• The associated foreign exchange records.
• The accounting records.
• The supporting documents for the operation.
• The tax obligations derived from those payments.

Differences between these sources often become one of the first points of review when an authority requests information related to international operations.

Compensation accounts and consistency of the reported information

Companies that use compensation accounts report information periodically to the Banco de la República and, in addition, may reflect those operations in other reporting obligations.

For this reason, it is advisable to verify that there is consistency between:

• The account movements.
• The reports filed with the Banco de la República.
• The foreign exchange exogenous information.
• The accounting records.
• The supporting documents associated with each operation.

The absence of periodic reconciliations usually gives rise to differences that later require clarifications, adjustments or additional validations.

External debt and financial information

External loans give rise to foreign exchange reporting obligations and produce financial effects within the organization.

The disbursements, repayments, interest and balances reported should be consistent with the company’s financial information and with the foreign exchange records associated with the operation.

Differences between the two sources are usually identified during internal reviews or information requests.

International investments and updating of records

International investments also give rise to registration and updating obligations before the competent authorities.

For this reason, it is advisable to verify that the information relating to the registered investment, the updates made with the Banco de la República, the accounting records and the financial statements are consistent with each other.

Differences between these records usually give rise to requests for clarification or subsequent adjustments.

A review worth carrying out before an authority requests it

Inconsistencies are not always due to material errors. In many cases they correspond to differences in criteria, records made by different areas, the absence of periodic reconciliations or a lack of coordination between the finance, tax and foreign trade areas.

For this reason, companies with international operations usually incorporate periodic reviews that make it possible to identify differences before they are detected during an audit, an information request or an audit proceeding.

Consistency between the foreign exchange records, the financial information and the tax obligations continues to be one of the main points of review for companies that carry out international operations.