More Resources Needed to Address Corporate Tax Risks

Corporate tax departments appear to need additional resources to effectively address tax risks in today’s highly regulated environment, according to results from a recent survey by Tax Executives Institute (TEI) and KPMG LLP.

“Tax has been a source of material weaknesses as reported under Sarbanes-Oxley 404,” Brad Brown, KPMG’s national Tax leader for Sarbanes-Oxley Section 404, said in a prepared statement announcing the results. “There appears to be a disconnect between the resources allocated to tax departments and the requirements of regulatory compliance.”


Advertisement


All Aboard the High-Velocity 2006 FRx Express! FRx Software has the engine fired up again to travel nationwide with timely training and expert guidance! Microsoft FRx and Microsoft Forecaster users, potential users and resellers don’t miss this FREE*, half-day event!

Once you’re on board, the FRx Software experts will help you gain tremendous insight into Microsoft FRx and Microsoft Forecaster. You’ll have the opportunity to hear customer perspectives and network with prospects plus pack in useful tips, and see the features and benefits of FRx Software’s financial analytic applications. Register now!


FRx Software Home Product Information
Training & Consulting Product Demo
Webcast Customer Testimonial Video



The results, announced Wednesday, reveal a particular need in the area of information technology. Supporting this conclusion is the survey’s key finding that a majority of tax departments still rely heavily on manual tax-control processes, leaving them vulnerable to inaccuracies and reporting errors. Among the nearly 300 tax directors surveyed at TEI’s Midyear Conference, held in March in Washington D.C., 57 percent report that three-quarters of their tax-risk control processes are currently manual. Another 32 percent report more than half of their processes are manual.

“Continued reliance on manual processes clearly raises risks for tax departments in an increasingly regulated business environment,” Timothey McCormally, executive director of TEI said in a prepared statement regarding the survey. “The Survey confirms that tax departments need more resources to respond to the growing demands being placed upon them.”

Brown concurs, saying: “Tax departments tell us they want to update their tax control processes so that they can transform the business-unit-based financial information they currently receive into the legal-entity-based information they need for tax reporting purposes. Their focus is on enhancing their ability to deliver timely and accurate information internally and externally.”

Among the survey’s other key findings:

  • More than half of the respondents cited tax technical and computational issues as the top risk areas to which they devote most of their time and resources.
  • Seventy-four percent of survey respondents said they believed that the level of ‘coordination’ between their departments and their external auditor has increased compared to two years ago, while only 24 percent reported that it ‘stayed about the same.’

“Companies have made strides in providing support for their internal tax functions but more needs to be done,” TEI’s McCormally said. “As external demands increase – whether from the SEC or FASB for more transparency in financial statement reporting of tax liabilities or from the IRS and the States for reconciliation of book and tax results or e-filing of corporate tax returns – tax directors’ responsibilities and profiles will continue to increase. In this environment, it is critical for senior management to determine that tax departments receive their support for additional resources and have a seat at the table whenever tax interests are involved.”

“In the current environment, the entire organization can benefit if corporate senior managements provide their tax departments with additional support such as IT solutions, increased headcount, and skill training,” Brown concludes.

You may like these other stories...

We've all been there. Trying to make our work-lives more efficient, transfer knowledge to newer team members, and leverage our practices. Sometimes it works, and sometimes, well, the result is embarrassing at best.Here...
From May 20-23, the Association for Accounting Marketing (AAM) held its annual conference. Frequent contributor Sally Glick picked up some ideas that she will be sharing with us in the coming days, as she has done in...
Success, for a practitioner in a busy CPA firm, requires the ability to handle multiple tasks effectively. To get everything done, CPAs typically track their agenda with a "to do" list or other open-item systems to...

Upcoming CPE Webinars

Jul 24
In this presentation Excel expert David Ringstrom, CPA revisits the Excel feature you should be using, but probably aren't. The Table feature offers the ability to both boost the integrity of your spreadsheets, but reduce maintenance as well.
Jul 31
In this session Excel expert David Ringstrom helps beginners get up to speed in Microsoft Excel. However, even experienced Excel users will learn some new tricks, particularly when David discusses under-utilized aspects of Excel.
Aug 5
This webcast will focus on accounting and disclosure policies for various types of consolidations and business combinations.