Best Practices: Tax Operational Excellence

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Best Practices Tax Operational Excellence
Tax Services

• AGA/INGAA Taxation Committee
• June 27, 2005
• Patrick Trapp

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Market Insights Significant Challenges

• From a survey of 150 leading Global Tax
  Functions
• Workloads and complexity increase tax function
  resources dont.
• 45 of CFOs surveyed say, Our tax bill could be
  lower.
• Over 90 of participants say their companies have
  missed tax savings opportunities.
• Most functions want to spend more time on tax
  planning, but compliance demands win out.

• In 2005 the challenges
• just became larger

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The Growing Challenge for Tax Departments
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The Corporate Tax Function Responsibilities
Executive Leadership
Understand risk
Executive liaison to senior management
Formulate tax strategy
R I S K
B U S I N E S S U N I T A L I G N M E N T
Administrative Responsibilities
Overall project workflow mgmt.
Training andpolicies
TBD
Planning and Transactions
Reporting
Audit
Transaction advice and implementation
Global tax strategy management
Generate provisions
Generate returns, estimates and extensions
Businessdecision supportto operations
Tax Planning support
Tax Auditsupport
Legislative lobbying involvement
Tax minimization planning
Communicatetax data requirements
Identify and resolve taxdata issues
Data and Knowledge Management
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Technology Enabled Tax Function

• Traditional Model Market Insight
• We need better integration
• Timeliness of tax accounting
• Lost planning opportunities
• Limited reuse of data

• Technology Enabled Future State Insights
• Integrated, automated, self validating
• Automation to allow for real-time planning
• Improved integrity of data
• Redundancies eliminated

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Future Technology View
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Results of an Integrated Tax Environment

• Timely and flexible information access and
  analysis
• Proactive tax planning and business decision
  support
• Efficient and effective tax compliance and
  reporting
• Reduced tax examination risks and delays in
  response time
• Increased visibility and profile of Tax within
  the business
• Primary focus on the present and looking to the
  future

Integrated processes and controls that share
information as a core asset
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Tax Data Lifecycle

• Onetime data collection
• Data re-use from deliverable to deliverable
• Early finalization of amounts, audit ready
  support
• 11 month analysis, plus 1 month
• Technology for integrating data management
• and analysis across lifecycle

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Integration with Accounting and Business Units

• Systematic tracking of business units as well
  as
• legal entities
• Accounting records transactions completely and
• accurately the first time
• Regular (monthly/quarterly) tax data quality,
  consistency review for immediate feedback and
  corrective action
• Comprehensive teaming on financial reporting
  controls
• Technology for collaboration and sharing

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Orientation of tax return

• Issues-based return
• Review and report against expectation
• Project plan aspects
• Book transactions into M-3 categories
• Reportable transaction identification
• Technology for monitoring activities
• Preparation for electronic filing

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Orientation toward planning and realization of
planning results

• Future orientation of entire department
• Business unit collaboration for early
  identification of changing business unit
  circumstances
• Orient all department activities around
  expected effect
• on effective rate, cash flow, risk profile
  and business units
• Tax planning control
• Planned/anticipated data gathering to support
  planning
• Technology tools for knowledge and
  communication

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• Patrick Trapp
• Ernst Young LLP
• 312-879-2658
• patrick.trapp_at_ey.com