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Meeting the Challenge of Data Retention and Tax Compliance with DART

by Theo Zimmermann | SAPinsider

July 1, 2001

by Theo Zimmermann, SAP America, and David E. Nelson, SAP Labs SAPinsider - 2001 (Volume 2), July (Issue 3)
 

Data archiving plays an essential part in the management of an R/3 system. The benefits of archiving were explained in the Jan/Feb/Mar 2001 issue of SAP Insider.1 R/3 users in the U.S. realized early on that archiving presents a challenge for compliance with data retention regulations as issued by the Internal Revenue Service (IRS). As a result, the Americas' SAP Users' Group (ASUG) formed a Tax Interest Group and lobbied SAP for a solution.

     The most recent data retention regulations are codified in IRS Rev. Proc. 98-25.2 Specifically, corporate taxpayers are required to retain all relevant data as long as it may be material to support a tax return. Taxpayers must provide such data at an auditor's request in a sequential file format, and the data must include transaction-level detail, as well as information needed to explain all codes that are used.

     Once R/3 data has been archived, meeting these requirements becomes a challenge. Data is spread among different archiving objects; other data that may be needed resides in the online R/3 database. To solve this problem, the ASUG Tax Interest Group and SAP jointly developed specifications and a design for the application that became the Data Retention Tool (DART).

DART Features

DART provides the following tools:

  • Data Extraction Tool: This tool reads and copies data into external flat files (base extracts). Data is selected by fiscal year, period, and company code. DART extracts data starting with financial documents, then extracts all related source documents from the Logistics modules, all related documents in Controlling and Fixed Asset Accounting, and finally all supporting master and configuration data. Base extracts include administrative and self-descriptive information to make them completely self-contained. Such extracts can be queried from any R/3 system where DART is installed, independent of R/3 release.
  • Extract Browser Tool: This is used to browse data within a base extract.
  • View Query Tool: Users can define views that link data from different sources. View queries can be run against one or multiple base extracts in order to produce files that satisfy auditors' requests for data. These files are simple column-delimited text files.
  • Archive Retrieval Tool: This tool retrieves archived data into a DART-specific staging area for later extraction by the extraction tool.
  • Extract and File Management Tools: DART provides a log of base extracts and view query files, and allows all files produced by DART to be moved to long-term storage (e.g., optical) using Archive Link. Also included in these tools is an online worksheet to estimate file sizes and runtimes.
  • Customer Extensions: Extensions allow users to add more data to DART extracts in order to meet company-specific audit requirements.

DART Implementation

DART has to be installed as an add-on in R/3 3.0D through 4.5B. As of Release 4.6, DART is fully integrated in the core R/3 system.

After the technical installation, a DART implementation requires the following steps:

  • Estimate data storage requirements and reserve sufficient disk space.
  • Decide on a strategy for long-term file storage. For some general guidelines, see IRS Rev. Proc. 98-25.
  • Evaluate your configuration needs. The tax department should determine whether the standard DART configuration retrieves all data that is needed for audit support. While the ASUG Tax Interest Group made a decision as to what data a typical R/3 user needs, this is not a legal guarantee of completeness and each corporate taxpayer has to use his or her own judgment. Some corporate taxpayers have entered into record retention agreements with the IRS that specify in detail what data needs to be retained.
  • Define and execute view queries to create data views so that taxpayers can determine what data auditors will ask for.
  • Fine-tune the DART and R/3 configuration parameters, if necessary, especially if very large data volumes are extracted.

DART and the IRS

     DART was released in April 1998. The IRS became interested in the DART module and campaigned for information about it and R/3 in general. SAP provided a two-day seminar to selected IRS agents, covering the basic concepts of R/3 and DART. Today, DART has been used by R/3 customers' U.S. and U.S.-controlled corporations as the primary tool for successfully meeting audit requirements. Other countries are considering the use of rules similar to the stringent IRS regulations, and R/3 users in those countries are adopting DART.

For Further Details

     For more information on DART installation, see OSS note 99914. If you are interested in DART training, SAP offers the course BC680, "Data Retention Tool." For details, visit www.sap.com/education.

     ASUG also offers an opportunity to learn more about DART on its discussion boards for ASUG members at www.asug.com.


David E. Nelson works for SAP America, Inc., as Product Manager for U.S. Taxation, responsible for the roll-in of tax development requirements, and the roll-out of tax-related products. He can be reached at david.e.nelson@sap.com.

Theo Zimmermann is a Development Manager in the area of taxation within GBU Financials at SAP Labs, Inc. He can be reached at theo.zimmermann@sap.com.


1 See "Data and Document Archiving for SAP R/3: Mission-Critical, Yet Easier Than You Think" in the Jan/Feb/Mar issue of SAP Insider (Vol.2, No.1).

2 For more information from the IRS on IRS Rev. Proc. 98-25, visit www.revenueprocedures.com

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