Hyperion Tax Provision Challenges
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Challenges and trends in tax reporting and planning How HTP can enhance your tax accounting close and consolidation process Implementation Overview - an Oil & Gas industry case study Facilitating global web based data collection for the provision and tax account reconciliation Working with core data such as Legal Entity structures and tax sensitive chart of accounts, currency translation, Stat to GAAP reporting. Creating efficiency of the close and audit of the tax provision.
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Hyperion Tax Provision Challenges
- 2. Copyright © 2014, Oracle and/or its affiliates. All rights reserved. | Hyperion Tax Provision September 25, 2014 Oracle Confidential – Internal/Restricted/Highly Restricted 2
- 3. Copyright © 2014, Oracle and/or its affiliates. All rights reserved. | Introductions STEPHEN HILL Application Sales Manager Mobile: 1.403.390.2133 stephen.m.hill@oracle.com 401 9th Avenue S.W. Calgary, AB T2P 3C5 3 JESSICA DOWNES, CPA,MST Principal Solutions Consultant Mobile: 1.708.204.4755 Jessica.downes@oracle.com Willis Tower 233 South Wacker Drive Chicago, IL 60606 TOM SARETSKY, CMA Business Development Manager Mobile: +1. 949.266.7510 tsaretsky@ranzal.com edgewater.com Mobile: +1. 949.291.8704 cteske@ranzal.com edgewater.com CHRIS TESKE, PMP PRINCIPAL ARCHITECT
- 4. Copyright © 2014, Oracle and/or its affiliates. All rights reserved. | Hyperion Tax Provision Bring Finance & Tax Together Purpose-Built / Out-of-Box: a Tax Provision solution that is built on the Hyperion Financial Close Suite: 1. Data Collection - automated & manual 2. Tax Provision Calculation - IFRS & US GAAP 3. Tax Reporting - out-of-box tax reports & ad-hoc Owned by Tax - Leverage your existing investment in Hyperion, but both Tax & Finance retain the flexibility they need Integrates with Tax Compliance - Enhances & integrates with tax compliance software Rapid Implementation & Ease of use: the technology & expertise is already in the Finance organization ERP: Oracle JDE SAP Sub- Ledger Others Transactions Assurance Reporting Metadata Management Data Quality Management & Financial Reporting SmartView Financial Close Management BI – Finance Dashboard Tax Provision Financial Consolidation Shared DNA
- 5. Copyright © 2014, Oracle and/or its affiliates. All rights reserved. | Hyperion Tax Provision Tax & Finance Share the same DNA Financial Close Tax Close Trial Balance Submit Schedules Review & Approve Submit Schedules Review & Approve Consolidate Consolidate Consolidating Adjustments Day 0 Financial Statements Tax Journal Entry & Tax Note Trial Balance By Legal Entity Data - Metadata - People - Controls Close G/L Disclosure & Filing
- 6. Copyright © 2014, Oracle and/or its affiliates. All rights reserved. | Financial & Tax Close Consolidation Process – Typical Challenges Copyright © 2013, Deloitte Tax LLP . All rights reserved.
- 7. Copyright © 2014, Oracle and/or its affiliates. All rights reserved. | Demo Oracle Confidential – Internal/Restricted/Highly Restricted 7
- 8. Copyright © 2014, Oracle and/or its affiliates. All rights reserved. | Hyperion Tax Provision About Edgewater Ranzal 17+ Years 700+ clients 1300+ projects Focus Services People Methodology Customers Partnership
- 9. Copyright © 2014, Oracle and/or its affiliates. All rights reserved. | Hyperion Tax Provision HTP Case Study: Cenovus Energy Inc • An “Upstream” Oil Exploration company based in: Calgary, AB • Maintains a large Oracle Hyperion Footprint • Organization is innovative in nature and one of the first live implementations of Hyperion Tax. Searching for a Tax Solution • With a comprehensive tax provisioning process; existing “filing” based commercial products were unable to meet provisioning needs: • Thomson Reuters (OneSource) • CorpTax (Provision) • LongView (Tax) • Vertex • CCH (TaxPrep) • Company also reviewed the option to create a “custom application” solution and conceded that would require a significant build effort • Introduced to Hyperion Tax Provisioning (HTP), after several demos and discussions decided their best option was HTP • The Oracle Hyperion HTP team are seasoned veterans in both tax processes as well as the technology
- 10. Copyright © 2014, Oracle and/or its affiliates. All rights reserved. | Hyperion Tax Provision HTP Case Study: IFRS for Canadian Companies 1. Hyperion Tax Provisioning (HTP) is a purpose built Tax Provisioning application with the following history: In February of 2013, Oracle released the application offering: Hyperion Tax Provisioning (HTP) – Version: 11.1.2.2 (primarily for US GAAP) In July of 2013, Version: 11.1.2.3.100 (included IFRS enhancements) was released The current version, 11.1.2.3.501 (addressed IFRS requirements for Canadian Customers) was released in February of 2014 • Canadian Partnership Calculation and Allocation • U.S. Consolidated (Unitary) Filing Data Grouping • Canadian legal entity grouping (CVE LE & CEMSL LE) • Deferred Tax Proof (including State level data) • Changing Base Scenario for Opening Balances • Consolidated ETR Grouping • Deferred Tax Expense and Current Tax Expense Reporting
- 11. Copyright © 2014, Oracle and/or its affiliates. All rights reserved. | Hyperion Tax Provision HTP Case Study: Project Setup • Standard Waterfall Approach: • Requirements • Design • Build • Test • Roll Out • As part of the Early Adopter Program had direct access to Program and Development Staff • Were able to provide feedback and commercially viable suggestions were incorporated in the release schedule
- 12. Copyright © 2014, Oracle and/or its affiliates. All rights reserved. | Hyperion Tax Provision HTP Case Study: Requirements The “As is” and “To Be” Process Review: • Decomposed Current Processes to understand it in a way that it can be incorporated into HTP Data Structure (“As Is”) • Next modify the “As Is” into a “To Be” format incorporating requested process changes (functional and design to the HTP format):
- 13. Copyright © 2014, Oracle and/or its affiliates. All rights reserved. | Hyperion Tax Provision HTP Case Study: Design Rules Design: Meta and Trial Balance Data Design: Mapping of “To Be” Requirements to HTP Functionality:
- 14. Copyright © 2014, Oracle and/or its affiliates. All rights reserved. | Hyperion Tax Provision HTP Case Study: Build • Build out Functional Process Flows (Task Lists / Data Forms as required to): • Update Global Assumptions (assuming Tax Rate Updates) • Update with Trial Balance Data • Perform Tax Automation • Address: Current Provision • Address: Deferred Provision and Deferred Tax Roll Forward • Final Provision Reporting (including TARF) • Tax Journal Entry • Tax Footnote/ Extract for Filing Solution • Return to Accrual
- 15. Copyright © 2014, Oracle and/or its affiliates. All rights reserved. | Hyperion Tax Provision HTP Case Study: Test • User Acceptance Test (UAT) consisted of End User Involvement and scripting replicating previous cycles: • Prior Year Actual • Prior Year Budget • Outlook: 02/10 • Outlook: 03/09 • Q1/Q2 • Monthly • Build out of Technical Document Deliverables:
- 16. Copyright © 2014, Oracle and/or its affiliates. All rights reserved. | Hyperion Tax Provision HTP Case Study: Roll Out • Environmental Migration • Perform: • Technical Hand Over Training • End User Training • Ran in Parallel to confirm functionality / configurations nominal
- 17. Copyright © 2014, Oracle and/or its affiliates. All rights reserved. | Hyperion Tax Provision Project Success • Go Live: June 28, 2014 • On: Time, Budget and Scope • To Date, zero production defects have been reported • Cycle Data Load (end to end system administrator function: 45 minutes) • Automation and Current Provision (Tax Advisor readiness: 5 minutes) • Advisor Adjustments (this is where additional time savings are being made), an overall two day process is reduced to two hours with no concern for disparate data
Editor's Notes
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- Bring Finance & Tax Together Until now, there was no easy way to integrate the tax provision with the financial consolidation. But, this all changes with the introduction of Hyperion Tax Provision. Hyperion Tax Provision represents the first in a series of products to better integrate tax reporting into the broader financial reporting process. An integrated system for the Tax & Finance close means that you are leveraging your exiting investment & reducing risk - Hyperion Tax Provision leverages your existing investment in HFM and the Financial Close Suite by using the same tools for data collection, consolidation, and reporting to bring you an integrated Tax Provision solution. For example, leveraging the same meta-data and data will eliminate double work, significantly reduces the likelihood of tax and finance being out-of-synch, and eliminate bottlenecks during the close – allowing your organization to close faster and more confidently. Hyperion Tax Provision is a comprehensive solution for the global consolidated tax provision. This includes: Data Collection: Automated – any data that can be sourced from HFM, the general ledger, or sub-ledgers can be automatically available to the tax provision Manual - The solutions includes a suite of web forms to collect tax provision details (incl. Current Tax, Temporary Difference Rollforward, tax losses & credits,etc) Tax Provision Calculation: Addressing both IFRS and US GAAP Federal, State/Provincial, & International Tax Reporting Suite of out-of-box tax reports (incl. Current Tax, Deferred Tax, Effective Tax Rate Reconciliation, etc) ALLoutput is compliant with ALL reporting Standards. This also includes the same great reporting tools used by finance (such as Smart View & Financial Reporting) Owned by Tax Shows the authonomy by Tax from Finance. Enhances & Integrates with Tax Compliance: The solution includes features to improve and streamline data preparation for your tax compliance process. So, regardless of your preferred compliance vendor, data can be imported from the tax return at a touch of a button to support the Prior Year Adjustment / true-up. Furthermore, year end trial balances can be adjusted for tax filing in the system of record and passed along to your Tax Compliance package to prime your year-end tax return process. Rapid Implementation: Out-of-the box data entry forms, calculation logic, and reports that allow you to get up and running quickly This includes an engine for automation of permanent & temporary differences from source accounting data And lastly, there are easy-to-use, purpose-built wizards to setup and maintain the tax system In conclusion… Bringing finance and tax together results in unparalleled Transparency & Reporting. The same reporting tools that you already use for financial reporting are now available for analysis of the Tax Provision. Unlike an excel-based approach, or solutions from tax compliance vendors, this allows your entire finance team complete transparency from book numbers to tax numbers and vice versa. This reduces risk, improves efficiency.
- Purpose of Slide: There may be audience members from finance that are not intimately familiar with Tax Reporting, and there may be tax people who are not intimately familiar with the financial close. So, this slide highlights the similarity in process between the Tax Close & the Finance Close... Both process possess the same DNA… This means that tax does not need to “re-invent the wheel” for the tax provision because there are significant synergies that can be realized from the existing finance process. Talking Points: Every reporting period there are two closes that take place simultaneously within the enterprise (finance close & tax close) Both processes utilize the same data & metadata, involve many of the same people, run on the same calendar/timeline, and ultimately go to the same place (e.g. SEC filing) Why use two different technologies for processes that share so much in common? Tax can benefit by leverage existing technology & process. And, finance wins because there is a more streamlined and transparent financial & tax reporting process. The Finance close: Starts with trial balance data from the ledger Finance collects manual “schedules” (e.g. balance sheet rollforwards, A/R Aging, pension details, etc) Review & approval of all data (e.g. using process control in HFM) Consolidation, translation, & intercompany Post consolidating adjustments Generate final disclosures … tax has a very similar process resulting in synergies between the tax & finance close. The Tax Close: Starts with the same book data from the ERP (e.g. trial balance by legal entity) Tax can leverage the same data assurance process Tax does not need to maintain metadata (e.g. legal entities & chart of accounts) Collects manual tax data in schedules (e.g. permanent & temporary differences) from the same users submitting schedules for the finance close (e.g. the regional controllers submitting data to Finance are the same regional controllers submitting tax provision data to the corporate tax department). Furthermore, the regional controllers are no longer obliged to reconcile data between two different systems. Their finance & tax submission can be done in one place - from one tool. The review & Approval can leverage the same workflow process (e.g. process control). This ensure a much great integrity in internal controls Tax can aggregates, consolidate, and applies foreign currency conversion in the same manner as finance. FX is a particularly important area where stand-alone tax provision solutions struggle. HTP uses the same FX engine as HFM Calculates the Tax Journal Entry that needs to be consumed by the Financial Close (one of the last steps in the finance close). This is a traditional bottleneck in the close. A tax journal entry process that is more integrated streamlines the overall close process Lastly, the finance & tax disclosure is all coming from the same source In summary, tax can leverage data and metadata as finance, regional controllers only need to use one tool for both finance and tax, and finance and tax can leverage the same internal controls (e.g. workflow, common data assurance, common reporting, etc)