Red Moon Solutions free eBook: The New Face of Tax Data Management

1. Created By:

2. Written By: Kelley Lear Managing Director Red Moon Solutions

3. With Change Comes Uncertainty With Enron, SOX, capital market crises, financial institutions collapsing, we are now in an era of increased regulatory controls, heightened transparency, tighter deadlines and shifting focus within tax departments. Tax executives have three options when it comes to changes: ignore them, seek to fight or embrace them and plan for the future. Most tax executives will spend time fighting and ignoring before realizing that in order to survive they must embrace change. Understanding the drivers of change may not be as interesting at this point as to what leading tax departments are planning to do about them. The ones that will be successful will be those that plan and ACT.

4. Climate of Corporate Tax: Coping with Change In the past, many tax departments were focused on adding value to their companies. Lack of focus on operational issues is the beginning of the story: For some, this culminated in tax planning that was much too aggressive. For many it meant that their energy was focused on managing cash taxes and earnings rather than operations.

5. Climate of Corporate Tax: Coping with Change While many companies chose to invest in financial systems, the needs of the tax function within these companies were often overlooked. Tax departments were either never brought to the table, or they were brought in after the fact, leaving significant deficiencies in data access and quality. Investments in tax technology were limited and a web of complex Excel spreadsheets were almost always the exclusive tools for tax work including provisions. Regardless, making life easier for tax and the concept of internal controls did not seem to apply to a tax department.

6. Climate of Corporate Tax: Coping with Change Due to a constantly changing environment, many tax functions are struggling to meet all of the demands imposed on their departments, with challenges including: • Primary focus on tax accounting rather than tax planning • Resource shortages – especially tax accounting expertise • Increased manual reconciliation and data manipulation in Excel. • High overtime/low morale • Poor internal controls • Delayed closing processes and tighter turnarounds • Less collaboration between tax and other business units • Poor data quality and access • Outdated technology • Inefficient processes

7. Climate of Corporate Tax: Coping with Change Embracing change: Where one sees challenges, some proactive tax executives see opportunities. Many executives are taking advantage of today’s environment to push for a widened and strategic view of the actions needed to truly fix the source of their problems: People, Processes and Technology.

10. Work on one piece of your process at a time—keeping it manageable.

12. Fixed Assets Management & Property Tax Management Applications

13. Portals

14. Document Management

15. Workflow

16. Audit Rooms

17. Tax Calendars

18. Tax Credits and Planning

19. Business Intelligence (BI) and Business Performance Management (BPM)

20. Where people, process and technology meet Embracing change: Accuracy and Efficiencies Many leading companies reached the conclusion that their biggest obstacles to achieving operational improvements are data quality and access issues. Tax sensitization of the data and reconciling—due to myriad post-closing top-side journal entries—will make the calmest of tax professionals want to pull out their hair. What should you do, as a tax professional?

23. Chart of accounts (tax sensitizing) and accounting practices associated with booking to those accounts.

24. Level of detail being tracked (consider feeder systems/subsystems and consolidation tools).

25. Legal entity mapping instead of just financial and management entities.

28. Utilize a tax document repository with workflow

29. Tax specific data categorization and taxonomy

30. Track & search across audit projects/cycles, IDRs, RARs, NOPAs, documents, tasks, messages

32. Plan realistic implementations to utilize the fully features of these solutions:

33. Embedded workflow

34. Assignment of tasks to tax professionals

35. Transparency of progress on tasks and capacity of tax department

37. Centralized communication & messaging

38. Publish Tax department specific content

41. Keep data flow transparent.

42. Embed SOX processes into workflow.

44. Summary Tax management in companies today is ever more exciting and full of opportunity: Streamlined Processes New SaaS Technology (Cloud Computing) Tighter and more transparent controls Access to more data at the detail you need it Greater communication Happy employees

45. Start Improving Today! Start using the new face of tax management to your advantage—learn how Red Moon Solutions can improve your processes today!

46. References The following publications were used as references: Tax Management in Companies, Tax Reference Library No 44, December 2008, PriceWaterhouseCoopers Tax operational strategy and execution - can tax departments keep pace? – Deloitte, 2009 Image Credits: Martina Rathgens, AndyRob, alancleaver_2000, Dan Zen, PixelAddict