In other news, FERF published today a study entitled Trends in Income Tax Reporting Automation. The study, conducted by FERF Research Associate Thomas Thompson, Jr. consisted of interviews of senior financial executives about their own tax automation experiences.
"We heard that there are challenges to automating income tax reporting,” said Thompson. “Nevertheless, automation is emerging as the standard for companies that are committed to improving transparency and internal control.” On the other side of the coin, many executives commented that the primary obstacles to tax automation are time and budget, along with traditional “change management” issues.
Some of the benefits of tax automation noted in the study include:
- Reduced tax cycle time;
- Less effort and more accuracy associated with tax data collection and transaction entries;
- Increased process visibility and control;
- Greater regulatory compliance and process standardization;
- Increased financial transparency and comprehensive audit trails;
- Fewer deficiencies identified by reviews under Sarbanes-Oxley Section 404; and
- Freeing up of resources for more higher-value tasks, such as tax planning, modeling and analysis.
Daniel S. Jones, Managing Director of DS Jones & Company, a management consulting firm based in Connecticut, pointed out that a client with offices in 40 countries had a decentralized process where local tax executives and controllers handled their own reporting. “They were previously using Excel spreadsheet, but errors were fairly routine, and previous attempts to standardize were not successful.” After hiring a new Tax Director, the company decided to automate. This helped them standardize and ensure regulatory compliance, produced more accurate financial reporting and reduced process cycle time, allowing more time to do analysis.
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