FEC instructions for use: never fear a tax audit again!

As part of the digitization of practices, there is that of tax audits. Companies have various obligations to meet. One of these is the generation of an FEC, a computerized file listing all accounting entries, to be sent to the tax authorities in the event of an audit.

But what exactly is the FEC, what is its purpose and how can it be generated in full compliance? When and how do you submit it to the tax authorities?

We answer all your questions, so that the FEC becomes a simple formality.

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What is the FEC?

What is the FEC used for?

The FEC( fichier des écritures comptables) is a computerized document containing all the entries in your company's accounting system relating to its commercial activity.

As part of your dematerialized bookkeeping, you may be subject to control by the tax authorities. The Direction générale des finances publiques (DGFiP) may send you :

• a notice of accounting verification (control on your company's website),
• or a notice of accounting examination (remote control),

to which you must respond with the FEC. This file must transcribe all accounting journal entries for the fiscal years indicated in the notice you received.

☝️ It must also meet precise standards, in force since January 1, 2014 and updated on January 1, 2017.

Information required on the FEC

The accounting entries file must show all existing journals, including retained earnings and inventories, i.e. :

• depreciation entries,
• fixed asset disposal entries,
• depreciation entries,
• inventory entries,
• provision entries,
• adjustment operations.

To help you understand better, here is a list of the specific, standardized fields that must appear in your accounting entries file:

Other fields can be added, such as payment date and payment method.

💡 Good to know: In the case of unknown data, it is important to leave the fields empty in your FEC file. Do not fill them with zeros or spaces.

Example of an FEC file

Here's an example of an FEC file:

FEC: accounting requirements for compliance

Which companies are concerned by the FEC?

The FEC applies to all companies subject to a real tax regime, i.e. those :

• subject to IS (Impôt sur les Sociétés) or IR (Impôt sur le Revenu),
• BIC (Bénéfices Industriels et Commerciaux),
• BNC (Non-Commercial Profits),
• or agricultural.

☝️ Micro-entrepreneurs are the only players exempt from the accounting file requirement: they have no accounting obligations.

What are the penalties?

When a company fails to submit its FEC, it is liable to a €5,000 fine.

And in the event of non-compliant submission of the FEC, the company is liable to pay 10% of the fees charged to the taxpayer. This 10% is reduced to a minimum of €5,000.

When and how do I submit my accounting file?

• In the case of an on-site audit, the accounting file must be provided to the auditor during the on-site visit in electronic format, on a physical medium: USB key, external hard drive, DVD or CD.
  
• In the case of a remote audit, the company sends the FEC to the auditor within 15 days of receiving the notice of examination, either electronically or by registered mail, on a USB key for example.

ℹ️️ The tax authorities have three months in which to verify the FEC, and decide whether or not an adjustment is necessary. In the event of rectification, a fine is levied.

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Tips for producing a standard FEC

• Generate the FEC at the end of each financial year, at the same time as you file your tax return, whether you are required to do so or not. As the deadlines in the event of an audit are fairly short, you'll have this stress less.
  
  
• Test the conformity of your FEC, i.e. analyze your file before the audit or examination by the auditor. Tools are available for this purpose:
• The DGFiP offers a free software download, Test Compta Demat, to check the validity of your FEC and its compliance with the standards codified in Article A.47 A-1 of the French Tax Procedures Book.
  
  
• The FEC can also be scanned by accounting control software such as Alto 2 to highlight any anomalies. It is important to adhere strictly to the required format, to avoid any risk of fines for non-conformity of the file.
  
  
• Some accounting and ERP software packages allow you to use a " fog mode" for internal checks. How does this work? Produce "provisional" accounting by entering "provisional" records (and thus extracting an FEC). This is a good way for the company to check for and correct accounting anomalies at an early stage.
  
• Make sure you comply with all the possible requirements inherent in the CFCI (Contrôle Fiscale des Comptabilités Informatisées ):
  • information system documentation,
  • identification of critical flows,
  • data retention, etc.
    
• If you do your own bookkeeping, make sure that your accounting tool is capable of generating the FEC on first request, or that your chartered accountant generates it if necessary. Suitable solutions include:
  • Sage 50cloud Ciel, which complies with legal requirements, is dedicated to VSEs and SMEs. The solution enables you to control computerized accounting, generate the FEC and comply with the law against VAT fraud.
  
  
  

To err is human, so entrust your accounting to the right software!

And spend the time you save developing your business, meeting your customers and using your employees' potential for value-generating tasks.