Global Transfer Pricing Conference

Transcription

1 Global Transfer Pricing Conference Data analytics and transformation October 2016 The new normal full TransParency

2 Today s presenters Brian T. Burt Laurent Bellay David A. Nickson PwC 2

3 Agenda 1 TP Analytics Overview 3 Case Study 2 Example Applications 4 Q&A PwC 3

4 Transfer Pricing Analytics A new service offering 1

5 Headlines Data Analytics in the News Data-informed.com IRS Implements Analytics for Compliance, Fraud Detection and Workforce Management WASHINGTON The U.S. Internal Revenue Service has launched several data analytics projects that are improving compliance, combating fraud, identifying abusive tax shelters and saving money, according to several representatives of the federal tax collection agency. The officials spoke at the Predictive Analytics World Government Conference held here on Sept. 17 and 18. CNBC Fighting tax fraud with big data PwC 5

6 Cross-Functional Solutions Corporate / Overall Enriches descriptive analytics to understand what has happened (reporting on key metrics) Improves predictive analytics to understand what is likely to happen (modeling and trend detection) Enhances prescriptive analytics (use of predictive models to determine the best course of action) Tax / Transfer Pricing Enables operational and decision-making processes, in areas such as local adherence to TP policies, detection of risk, opportunity identification, projections and scenario planning, and overall business support Additional level of transparency benefits Client s audit readiness and its ability to meet growing global tax information reporting requirements (e.g., country by country reporting) Allows for jurisdictional reporting and documentation of business activities, which is critical in managing increased tax controversies and disputes resulting from global transparency initiatives Multi-period trending and benchmarking using real-time data provide key insights into how the Tax function / TP policy is impacting the overall business Commercial Improved forecasting / scenario planning, using historical, applying current or future data to obtain retrospective, current (real time) or prospective insights Leverage framework to analyze key indicators and perform due diligence for contemplated acquisitions (e.g., country by country SKU profitability / margin, tax implications, etc.), providing insight into how the acquisitions might be best integrated into Client s global Commercial strategy PwC 6

7 Cross-Functional Solutions Current state Data is manually gathered from disparate sources without the ability to analyze cohesively Excel is the predominant tool leveraged for storing, calculating and analyzing tax data, which can be effective, but oftentimes time consuming to maintain and review Updating and reviewing calculations in complex Excel models can be time consuming and adds risk of error to the process Results of tax calculations are highly aggregated and documented in static reports (e.g., PowerPoint, Word), requiring these deliverables to also be manually updated each time data is refreshed and minimizing end user functionality to dynamically interact with reported data Leveraging data analytics & visualization Via Extract, Transform and Load (ETL) tools, data can be pulled automatically from source systems and stored centrally for efficient use Adding data and analytics solutions (e.g., SQL, Alteryx, PowerPivot) to the current Excel environment can augment the potential for automation (and reduction in time & level of effort) Data analytic tools (e.g., SQL, Alteryx, PowerPivot) can bolt on to existing Excel models or replace the use of Excel all together to increase the scalability of complex calculations (e.g., across legal entities, business units, consolidated groups) and mitigate overall risk via greater control Visualization solutions (e.g., Tableau, MicroStrategy, Qlikview) are leveraged to bolt directly onto the calculation engine(s) (e.g., SQL, Alteryx, Excel) to create web and mobile-enabled, dynamic dashboards and provide enhanced data insights, enabling end users to efficiently make strategic business decisions PwC 7

8 Sample Process Flow PwC 8

9 Data Analytics Applications 2

10 Data Analytics Client example 3

11 Agenda Company background / organizational set-up Key issues to address Process change - Phase 1 and 2 Where are we now? Question & Answer PwC 11

12 Organizational set-up - Transfer Pricing Corporate Taxation is responsible for developing Transfer Pricing policies The Legal Entity Transfer Pricing (LETP) team is responsible for administering those policies Efficiencies of a centralized team Calculations are performed on a monthly basis, one month in arrears o true-ups occur continually each month Invoiced and settled monthly via intercompany accounts Legal entity controllers review the results and process associated journal entries and payments PwC 12

13 What were the key issues to address? 14 independent excel based calculations with manual reconciliations data integrity accuracy & completeness Data collection process into excel based models consumed more than 50% of monthly resource time sensitive to minor changes in accounting hierarchies Manual cross-model allocations consumed valuable review time on reconciliation rather than analytics Excessive time being spent on backwards analysis in response to tax authorities enquiries and audits extensive time to reproduce historical view of business segments and G/L account structure Key person risk incomplete executing documentation leading to concentration of knowledge with certain individuals in tax and accounting PwC 13

14 Phase 1 Achieve automation replicate reporting Financial Data Warehouse (FDW) Integrity Consistency Completeness Inputs Mark ups, FX rates, Indirect allocations, etc Reduced and controlled manual inputs Process & Controls Reconciliation Validation Sign-offs Phase 1 Reporting package by Legal Entity Consolidated TP results Relevant Information for each Legal Entity PwC 14

15 Output Phase 2 - Enhance Data Analytics Dashboard Reporting & Analytics Stakeholders: Corporate Tax, Legal Entity Controllers PwC 15

16 Samples of BI software capabilities PwC 16

17 Where are we now? Phase 1 goal was achieving automation, gaining efficiencies, and replicating similar reporting format for local controllers Phase 2 is taking advantage of the achievements realized through automation to build and enhance data analytics and reporting through a business intelligence tool such as Spotfire. Lessons learned on reporting Have the end goal in mind - understand reporting requirements and limitations Will facilitate the development and design process Consider stakeholder requirements CbC reporting and other statutory audits Needs of corporate tax team, management and legal entity controllers PwC 17

18 Panel Q&A PwC 18

19 What did you think? At the end of the session, tap Session Survey and provide your rating on any or all survey questions. Tap submit response. PwC 19

20 Thank you This publication has been prepared for general guidance on matters of interest only, and does not constitute professional advice. You should not act upon the information contained in this publication without obtaining specific professional advice. No representation or warranty (express or implied) is given as to the accuracy or completeness of the information contained in this publication, and, to the extent permitted by law, PwC does not accept or assume any liability, responsibility or duty of care for any consequences of you or anyone else acting, or refraining to act, in reliance on the information contained in this publication or for any decision based on it PwC. All rights reserved. PwC refers to the PwC network and/or one or more of its member firms, each of which is a separate legal entity. Please see for further details. Design services 30335_PRES_09/16