The New Danish Bookkeeping Act

Abstract

This thesis is motivated by the new Danish Bookkeeping Act, which was adopted on May the 24th 2022. The most significant change in the new act includes the fact that companies are now required to keep their books in digital bookkeeping systems and to store their accounting records digitally within these systems. A central element of the political agreement was the introduction of automatic reporting. The purpose of automatic reporting was to reduce the administrative burdens of Danish companies by automating and digitalizing their processes. By enforcing this the government expects to achieve the largest reduction in administrative burdens to date. To realize this potential the Bookkeeping Act had to include basic rules on the use of digital bookkeeping systems and fundamental requirements to be met by these systems. This applies particularly to invoice management and reporting to public authorities, which have previously posed challenges for companies. The new Bookkeeping Act requires companies to ensure that their chosen digital system complies with the requirements of the law, and that their processes and workflows are structured to support proper digital bookkeeping and compliant storage of accounting records in accordance with the law. Based on the above, this thesis attempted to investigate: “How does the implementation of the new Danish Bookkeping Act affect Danish companies in terms of financial, administrative and technological adjustments?”. The project found that the implementation of the new Bookkeeping Act has led to administrative, technological, and financial changes for the companies, depending on their prior level of digitalization and choice of bookkeeping system. Most of the companies experienced financial adjustments, particularly investments in new systems, upgrades, and external consultancy. Administratively, changes have primarily concerned control, storage of accounting records, and automation, while the most common technological adjustment was the digitalization of physical accounting records. The project also found that some companies continue to use non-registered systems, mainly due to organizational factors and a desire to maintain existing workflows. The choice of system had an impact on the adjustments, with companies using non-registered systems more frequently reporting financial burdens and need for external support. The project concludes that the implementation of the Bookkeeping Act has resulted in financial, administrative, and technological challenges for companies. Many have experienced additional costs, changes to internal workflows, and increased demands for documentation and resources. From a technological perspective, the transition has required system adjustments and ongoing maintenance. At the same time, several companies have experienced benefits, particularly through reduced manual processes enabled by digital bookkeeping systems. However, financial gains have only been realized to a limited extent, as many companies assess that the reduction in costs do not yet outweigh the implementation costs, and the full potential of the systems has not yet been fully utilized. Based on the project, these financial gains are expected to be realized gradually over time.