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Imagine designing a tax compliance process for a new company from the ground up. How would you measure success? Many Tax functions grapple with existing processes and cannot visualize what processes could look like if starting fresh. Consider approaching next year’s compliance season by envisioning what’s possible without limits then working towards a tailored solution that fits the business’ priorities including lowering risk, increasing efficiency and effectiveness, and realizing strategic value.
For many years, Tax functions could only marvel at the thought of automatically doing certain tasks. But new technology is making the impossible possible. The most notable example is self service automation, which can transform the way we think about tax compliance processes, particularly those relating to tax reform. Let’s explore.
...minimize or even eliminate manual data input
Data has been one of the biggest pain points during this compliance season. The process for gathering data can be cumbersome and manual processes are often required to obtain calculation-ready data. We may have learned where and how to access the data, but a clean data extraction process doesn’t exist for most Tax functions.
Extract, Transform, Load (ETL) tools provide a possible solution. ETL solutions could be designed to extract data from disparate sources and aggregate it into the format required to complete tax reform calculations. Audit functionality can be built-in for validation and review purposes. The result is real-time, calculation ready data with less risk.
...execute and re-run calculations in real-time
Navigating the complexity of tax reform calculations, especially international and state, has been a challenge indeed. There are many interdependencies between provisions, mandating the need for collaboration between various teams within Tax, and significantly increasing the resources and steps needed. However, many Tax functions are using spreadsheets or macros with a high risk of manual error, and running time-intensive calculations multiple times. The ability to share and collaborate using this type of tool is also limited.
An ETL solution that accounts for complexities and interdependencies can bring agility for the Tax function in an ever-changing tax environment. Companies can utilize one already built (such as PwC’s Beacon), or they may leverage leading practices from other Tax functions and build their own. Although significant effort in terms of research, development, and proof of concept (POC) may need to be invested upfront for the latter approach, the rewards can be harvested for years to come.
...shorten review time by presenting data in a graphical manner
Visualization tools can be embedded in the solution to enhance the review process. Reports could be developed to fit Tax function needs including calculation summaries, ‘what if’ scenarios, and period-over-period comparisons. The reports could be generated by extracting data from the ETL calculation tool. Such a solution may ease the burden of review by providing a clear view into the calculations and their interdependencies.