Whether your organization is regulated by US GAAP (ASC 740) or IFRS (IAS 12), tax provisioning and reporting is a complex, risky process. Changing tax laws, global regulatory scrutiny, and rigid reporting deadlines all contribute to a challenging environment for your corporate tax team. The emergence of COVID-19 has only exacerbated these existing tax reporting burdens while also strengthening the need for more proactive input from the tax team on corporate strategy.
Unfortunately, your team may be spending all its time on manual and administrative duties, such as maintaining spreadsheets and emailing, chasing, and querying local teams about their data submissions. This doesn’t leave much time to keep up with shifting government policies, evolving corporate goals, or the many smaller, regular operational changes that affect your calculations.
Finding ways to alleviate manual processes is one of the best ways to not only keep up, but excel in a fast-changing environment. Doing so will allow your tax team to spend more time providing strategic input from a tax perspective on how your organization can move forward during these fast-changing times.
There are good opportunities for tax teams to make provisioning and reporting more agile. Here we’ll explore:
- How to establish a framework to promote consistency in tax reporting across your organization’s entire portfolio of entities
- How in-house reporting, if set up correctly, can be more agile and easier to maintain than relying on outside consultants or the IT department
- How having one central source of data makes your job easier, even when tax complexities spike your database and processing needs
1. Establish a Framework
With COVID-19, your tax teams are likely buried under new regulations that appear daily and may relate to any number of global entities or regions. Historically, tax provisioning and reporting processes have been highly manual due to data being spread across disparate sources and the lack of a software solution purpose-built for tax needs. The best way to address shifting regulations happening all over the world is to establish a standardized framework that enables you to prepare and report on tax numbers across the whole organization. By automatically merging data sources and converting values into a standardized single source of truth, the overall framework will reliably provide consistent, consolidated numbers even when different jurisdictions are individually updated.
Such a foundation ensures that previously manual tasks relating to data collection and aggregation are eliminated, with controls put in place to prevent complications due to incorrect formulas or calculations. The structured, proactive approach also simplifies audits, laying out clear trails leading to every relevant jurisdiction’s set of rules with corresponding updates. This releases your team’s time to be spent on more valuable efforts: comparing tax data across reporting cycles, considering the implications of different scenarios in challenging times, and feeding insights into future tax planning and forecasting.
2. Own Your Own Tax Reporting
Your tax team knows your business best. While leveraging external partners for tax reporting may seem sensible, you could be adding more burden to your own team if they still need to validate the reports and resolve discrepancies. Alternatively, a self-serve system that does not rely on your IT department ensures that reporting is managed by your own financial experts who understand the data and general ledger structures. When you have total control over your reporting, you will naturally build confidence in the numbers you share with stakeholders. Your periodic and ad hoc reporting will be faster, your conclusions more nuanced, and your ultimate strategic value to the organization more apparent.
3. Scale Systems to Address Fluctuations
When tax rules change, your reporting needs to change. If your team is dependent on static spreadsheets and manual processes to make all the frequent updates we’re witnessing today, there will never be enough time in your day to see everything through. According to Ventana Research, 59 percent of organizations use static spreadsheets for tax provisioning, even though they deem the potential amount of errors a material weakness in the calculation of uncertain tax positions. If spreadsheets are used, the data itself could likely be outdated, and you run the risk of formulas breaking when someone makes an update. Your resulting trend and variance reports will then prove to be inaccurate.
Even if you feel your team is coping reasonably well with all these demands, there may be reams of extra data that your team could evaluate for strategic purposes. The best way to tap into these data sets and proactively analyze them is if your teams are all using the same systems and standards. Having one central source that consolidates critical data and provides shared access among stakeholders makes your job much easier—and even prescient—in fast-changing times.
Learn more about Intelligent Automation for Tax Provisioning