As the business world continually progresses towards utilising computers for more and more of its dealings it is important to be aware of the need to ensure the safe and accurate recording of all electronic files, including the details of electronic transactions.

Many businesses now use what is known as electronic commerce. They undertake electronic transactions, communicate by email and move funds via electronic payment systems or internet banking. Businesses and their advisers need to be aware of the implications for their record- keeping obligations under income tax law.

For record keeping purposes, electronic transactions are no different to other business transactions. Recording the date, amount and nature of a transaction is a minimum requirement for electronic records.

When making the transition from hard copy or traditional record-keeping to an electronic format, it is essential to adapt current practices in line with the newly introduced medium as paper and electronic formats pose different risks.

LOST, DAMAGED OR CORRUPTED RECORDS
Whether records are kept in electronic or hard copy format, the main issue for taxpayers is ensuring that records or not altered or lost.

Just as paper-based records are at risk of damage from the elements, electronic records can also be damaged or degraded.

Electronic records such as those that are prepared using electronic accounting systems can, over time, be degraded to the point that the records can no longer be reconstructed. Such damage can result from inadvertent destruction, manipulation, tampering, alteration or loss.

REMOTE STORAGE AND THIRD PARTY PREPARATION
For increased safety, it is recommended that you store electronic records in a place other than where they were prepared. In some cases, this remote storage may be in another country. There is an emerging trend towards the outsourcing of some business functions such as invoicing, reporting and preparation of accounts or working papers. This practice can see these tasks carried out in a separate location to the place of business or even in another country.

When choosing to outsource such activities you must be confident that you can have easy access to, and retrieval of, your records as the need arises. If opting to utilise third party data entry or remote-record storage it is important that you know: 

• Where your electronics records are created
• Who has control of these records
• How the records are being maintained by the third party (if relevant), and
• How they may be retrieved if they are required

 ACCESSING RECORDS
You need to ensure that all of your records, whether they are held by you and/or other parties are readily accessible. It is an important security procedure that if your business is initiating electronic transactions you keep adequate transaction records and do not rely solely on third-party records.

SYSTEM CONTROLS
When operating an electronic business system it is also important to safeguard the security and integrity of your records using system controls. System controls that are commonly expected to be in place include: 

• Access controls
• Input and output controls
• Processing controls and
• Back-up controls 

The level of sophistication of the computerised accounting system that each individual business requires is based on the size of the business and its specific requirements. The ultimate goal of all system controls and electronic record-keeping procedures is to ensure that electronic records are secure and accurate.