How can your current enterprise IT tools transform how you operate tax?

Transcription

1 How can your current enterprise IT tools transform how you operate tax?

2 Disclaimer EY refers to the global organization, and may refer to one or more, of the member firms of Ernst & Young Global Limited, each of which is a separate legal entity. Ernst & Young LLP is a client-serving member firm of Ernst & Young Global Limited operating in the US. This presentation is 2018 Ernst & Young LLP. All Rights Reserved. No part of this document may be reproduced, transmitted or otherwise distributed in any form or by any means, electronic or mechanical, including by photocopying, facsimile transmission, recording, rekeying, or using any information storage and retrieval system, without written permission from Ernst & Young LLP. Any reproduction, transmission or distribution of this form or any of the material herein is prohibited and is in violation of US and international law. Ernst & Young LLP expressly disclaims any liability in connection with use of this presentation or its contents by any third party. Views expressed in this presentation are those of the speakers and do not necessarily represent the views of Ernst & Young LLP. This presentation is provided solely for the purpose of enhancing knowledge on tax matters. It does not provide tax advice to any taxpayer because it does not take into account any specific taxpayer s facts and circumstances. These slides are for educational purposes only and are not intended, and should not be relied upon, as accounting advice. Page 1

3 Today s presenters Kevin Schnell Executive Director, Tax Technology and Transformation, Ernst & Young LLP Erika Aderholz Senior Manager, Tax Technology and Transformation, Ernst & Young LLP Marc Borstein Partner, Tax Technology and Transformation, Ernst & Young LLP Page 3

4 Your current enterprise IT tools can transform how you operate tax How can a robot help me with my provision process? Is there something I can use to pull together my state apportionment data? Are there reports and visualizations in my enterprise resource planning (ERP) system I can use? How does finance manage all that data and create analytics? What tools can help me manage my process better? We will explore how tax departments are quickly discovering that technology already existing in the broader enterprise can be leveraged to drive efficiencies, create new tax insights and allow tax to be a valued business partner. Page 4

5 Case study Workflow and document management The challenge 01 A potential solution 03 Tracking the progress of 200+ state/local returns is time consuming and manual. There is very little visibility into the status of the returns, what jurisdictions are under audit and what information has been provided to local authorities. Shared drive is cluttered and there is little certainty as to which documents are final. The typical approach 02 Tracking the status of obligations or jurisdictions under audit is typically done via a spreadsheet, which requires manual updates and is often not up to date. Shared drives, local hard drives or is used to store document and workpapers. Microsoft SharePoint Real-time status monitoring Workflow enable any process, including: Compliance processes for federal, state, local, sales and use, etc. Tax accounting procedures Special projects Audits/information document requests (IDRs)/notices Create checklists, controls and sign-offs of key tasks and deliverables Distribute, monitor and collect survey/tax packages Enable document management: Enforce version control Identify final deliverables/information provided Page 5

6 Case study Managing/visualizing data for state apportionment, sales and use and provision The challenge 01 A potential solution 03 Collecting and preparing data was time consuming and highly manual since information for state apportionment and sales and use comes from many different sources. Aggregating data was difficult and created risk due to complex spreadsheet formulas and lookups. Review process is complicated due to volume of data and lack of comparative analysis across entities and states. The typical approach 02 Data extracts from disparate systems are aggregated into spreadsheets and manually manipulated for several weeks in order to get to a data set that can be leveraged for the state apportionment calculation. Review is typically limited to the data in the spreadsheet and lacks prior year data comparisons. PowerApp, Alteryx, PowerBI, Tableau Connect directly to upstream data sources to collect data real time Automate the highly manual and time-consuming process of aggregating, modifying, cleaning, copying, pasting and reconciling disparate data sources Manage and control state apportionment logic and other business logic centrally to account for regulatory changes Transform and build relationships among data sets, improving and automating reporting, calculation and analysis Enable a more efficient, targeted review process by easily comparing current year and prior year and visualizing trends and anomalies in data Prepare data for upload to tax software Page 6

7 Case study Leverage existing ERP reporting strategies The challenge 01 A potential solution 03 Tax needs information from the ERP systems but often doesn't have access to those systems or doesn't even know what systems exist. Tax knows what data it needs, but it doesn't know the right ERP terminology to ask for. Redundant data is being gathered many times across tax. Tax gets data from the ERP but spends a significant amount of time reconciling data back to financial statements. The typical approach 02 All ERP systems have some type of reporting, either within the ERP itself, or as a separate reporting platform. Tax users leverage those tools and work with the data as it exists in source systems and as both finance and IT understand the data, thereby maintaining context. There is less emphasis on transformations and storage of source system data, more focus on understanding the data. Takes advantage of advanced tax tool capabilities for the integration, acquisition and storage of financial data, requiring less of a need for separate tax storage. Multiple tax functional areas request slightly different versions of the same data from finance/it, which is received in spreadsheets and/or pasted into s, often without context of the original financial source. Tax builds its own repositories and data warehouses of often unreconciled financial data. Page 7

8 Case study Enhance your ERP for tax The challenge 01 A potential solution 03 Many enterprise systems have limited functionality that directly addresses tax requirements. Tax often doesn t have the understanding of what improvements could be made within the ERP. Business processes often leave a gap in addressing tax requirements and may involve significant process changes to fix. The typical approach 02 Tax departments develop workarounds to information received from ERP systems, often developing extensive spreadsheet or other custom applications that are hard to maintain. When ERP systems are upgraded or business processes change, the tax workarounds break. Work with IT team to focus on the areas where the ERP has tax functionality that is underutilized and/or not implemented; for example, tax books for fixed assets are often not implemented correctly and/or maintained annually. Work with business teams to communicate business processes that impact tax, sometimes minor changes in a business process can improve information for tax; e.g., making sure all related parties are included on intercompany transactions will help tax identify proper tax treatment. Many ERP partners are developing specific-purpose tax applications that can be connected directly to your ERP to bridge a gap in the ERP functionality, e.g., utilities to convert accounting records into government specified formats for digital tax filings, state apportionment applications, profit monitoring applications for transfer price setting. Page 8

9 Today s focus on RPA Emulating human execution across platforms Today, humans are often the vehicle to move data across platforms. Actions might include: Logging into a system Downloading information Formatting changes Reconciliations Pushing data to the next system (Repeating the process again and again) With robotic automation (RPA), the virtual software process performs the activities of its human predecessor much faster while also improving job satisfaction by refocusing the effort on higher-value activities like true tax planning and analysis. ERP Bot Tax system Content system (e.g., SharePoint) Fully documented and controlled execution Tax analysis Bot done in a fraction of the time Page 9

10 Automation hotspots for the tax function Common activities where bots help to drive value Filing and e-filing (majority of areas) Data collection and manipulation (all areas) 7 1 Retention and rollover (all areas) Printing to PDFs/audit-ready file creation (all areas) 6 5 Automation hotspots Support workpaper development (majority of areas) Calculations and form production (majority of areas) Review and analysis (all areas) Business/functional areas Sales and use VAT/GST Property tax Customs and trade Work Opportunity Tax Credits State income tax Federal tax Tax accounting and reporting Transfer pricing International taxes Individual tax compliance Withholding taxes Tax processes that involve high-volume, repetitive tasks and recurring deadlines are ideal for bot implementation. Page 10

11 Case study Tax provision reporting The challenge 01 A potential solution 03 Numerous tax provision reports generated from ONESOURCE Tax Provision (OTP) are used by tax departments during the period close cycle. Data frequently changes, so the reports must be rerun. Delay in getting the reports to the department has an adverse effect on meeting the critical close cycle deadline. The typical approach 02 During critical quarterly and annual close periods, tax professionals constantly need to run and format reports during the review of the provision, interim provision and estimated payment data. This is time consuming, and the reports are prone to errors, if they are done manually. Use Blue Prism RPA tool to generate tax provision reports from ONESOURCE Tax Provision Followed the key steps below: Log into OTP Generate tax provision reports from OTP Combine and format reports into a single Excel provision workbook Notify user via once workbook is posted to document repository and ready for review Review provision workbook Page 11

12 Case study Sales and use tax The challenge 01 A potential solution 03 Numerous indirect tax audits per year result in US tax personnel spending 900+ hours/year in invoice extraction tasks, including extracting information from multiple systems, aggregating reports, setting up workpapers, reconciling data and formatting input data for importing data into another system. The typical approach 02 Repetitive and often requiring hundreds to thousands of invoices per audit in a short period of time Manually intensive and time consuming, as users navigate multiple systems to extract invoice and PO images Easy to standardize and trigger upon request Requires little human judgment Significant decrease in manual effort Increased capacity for review and value-adding analysis Reduced external labor cost Standardized process Submit list of invoice numbers needed for extraction to document repository Format workbook for document retrieval Download invoices, purchase orders, supporting documents and review for use tax accrued Update workbook for documents retrieved and information verified Submit retrieved images and report to repository notifying human user for review Review output report for any errors recorded and submit to tax authority Page 12

13 Technology matrix Enterprise IT tools to transform tax Technology Potential uses in tax Licenses typically owned Level of effort to implement Typical cost to implement Other information/typical use cases SharePoint Workflow, process management, process insights, document management, calendaring, data collection/surveys, evidence of controls Yes Medium for 1 2 processes Medium for 1 2 processes Process management for tax accounting, compliance, audit/controversy, planning, etc. Provide insight into process status and identify potential bottlenecks Store proof of task/review sign-offs to show evidence of controls Document management to prevent version control issues, collaborate on documents, store final versions Distribute surveys/information requests across tax and aggregate data automatically SAP Business Objects Business intelligence and analytics, performance management, planning, reporting, query and analysis, and enterprise information management If SAP is the ERP solution utilized across the enterprise, it is likely that SAP Business Objects is owned and should be used in conjunction with SAP. Medium for a baseline set of analytics Medium for a baseline set of analytics Directly integrates with SAP Can be leveraged by tax to create dashboards and reports leveraging data from SAP and BPC Likely would require a project with IT to create reports and analytics Enables business users to have a common look and feel when accessing and analyzing data stored in relational databases Power BI Business intelligence and analytics tool, connect to various data sources, simplify data prep, enable ad hoc analysis and create a self service reporting environment for tax It is likely that licenses for a visualization tool exist in the enterprise, and Power BI is a cloud-based, subscriptionbased Microsoft product. Low Medium for a baseline set of analytics Create dashboards and visualization to enable review of tax data Connects to all types of data sources, including Excel Enables self-service reporting through natural language querying in tax, limiting the need to engage with IT Enables tax to create custom dashboards and reports and share them across tax View dashboards from phone, receive updates as data changes Embed interactive data visuals in presentations QlikView Business intelligence and analytics tool, allows users to rapidly build and deploy analytic apps without the need for professional development skills, easily accessible It is likely that licenses for a visualization tool exist in the enterprise. QlikView has desktop version and cloudbased set of tools. Low Medium for a baseline set of analytics Create dashboards and visualization to enable review of tax data Enables tax to create custom dashboards and reports and share them across tax Functionality to add annotations, improve context, and establish a record for how decisions were made Easily accessible: Search and interact with dynamic dashboards and analytics from any device Enables self-service reporting in tax, limiting the need to engage with IT Level of effort to implement Typical cost ranges High Greater than 500 hours Medium hours Low Less than 100 hours Extensive Greater than $200k High $100 $200k Medium $20 $100k Low Less than $20k Page 13

14 Technology matrix Enterprise IT tools to transform tax Technology Potential uses in tax Licenses typically owned Level of effort to implement Typical cost to implement Other information/typical use cases Tableau Business intelligence and analytics tool, connects to hundreds of data sources, produces interactive data visualization products It is likely that licenses for a visualization tool exist in the enterprise. Tableau has desktop version and cloud-based set of tools. Low Medium for a baseline set of analytics Create dashboards and visualization to enable review of tax data Enables tax to create custom dashboards and reports and share them across tax Filter data dynamically, split trends across different categories Presents data on any device, in a way that allows the user to spot visual patterns quickly that reveal everyday opportunities Enables self-service reporting in tax, limiting the need to engage with IT Alteryx A data blending tool that allows data from spreadsheets, data warehouses and the cloud to be blended via a no-code-based workflow, reducing the time needed to prepare data for use and analysis Alteryx is a relatively new tool to the market and likely not yet licensed. It is a subscriptionbased product with an annual license. Medium Medium Allows tax to create repeatable workflows that blend data from any source and prep the data for further analysis and use, reducing the need to manually move and aggregate data from disparate sources No coding required to build the workflow, which reduces or eliminates the need to engage with IT Data blended and aggregated to then be visualized by tools like Tableau, PowerBI, QlikView, etc. Once workflows are created, easily rerun every period to prepare data Microsoft PowerApps with PowerQuery, PowerPivot PowerApps: ability to build webbased apps PowerQuery: easy way to connect to source systems and access data PowerPivot: creation of data models and calculations Together create an online app to collect, store and manage data in an Excel environment PowerApps is a cloud-based, subscription-based Microsoft product. If Office 365 is in use in the enterprise, then PowerApps is available to leverage. PowerQuery is available in Excel PowerPivot is available in 2010, 2013 and 2016 versions of Excel. Medium Medium to high Provides a mechanism to access, aggregate and store data from many disparate sources to create calculations and reports Can refresh dataas needed by tax PowerPivot/PowerQuery used in conjunction with PowerApps to provide online access to reports across tax Should require limited engagement from IT should be required, since common Excel functions are leveraged to create reports/analytics Can leverage PowerBI to further analyze and visualize data Level of effort to implement Typical cost ranges High Greater than 500 hours Medium hours Low Less than 100 hours Extensive Greater than $200k High $100 $200k Medium $20 $100k Low Less than $20k Page 14

15 Technology matrix Enterprise IT tools to transform tax Technology Potential uses in tax Licenses typically owned Level of effort to implement Typical cost to implement Other information/typical use cases Robotics RPA is the use of a software robot (a program) that replicates the actions of a human being interacting with the user interface of a computer system. RPA runs repetitive, rule-based processes. Robotics is becoming increasingly more prolific across all industries and business functions. It is likely that RPA software is owned. Medium to create a proof of value for a key process Medium to create a proof of value for a key process Automate manual activities within the tax function to allow resources to focus on more value-added task, such as planning and analytics Examples of processes automated by RPA include: Submitting e-filings to government websites Move filings and documentation to content management systems, such as SharePoint Log into disparate source systems and download data Reformat and standardize data for import into tax software Print PDFs, etc. ERPs ERPs are foundational to the business, but are often configured without consideration of tax's needs and requirements. Many ERPs are moving to a cloud-based model. ERPs typically have reporting and data warehouse components that can be leveraged by tax. Yes Configuration of an ERP for tax s requirements varies widely, but small adjustments to accounts or upstream business process changes can be accomplished with little effort or cost. Configuration of an ERP for tax s requirements varies widely, but small adjustments to accounts or upstream business process changes can be accomplished with little effort or cost. Some ERPs have tax reporting solutions that integrate directly with the broader financial reporting process. Fixed assets is the most common functionality for direct taxes that can be implemented with support from IT. Close interaction with IT can help tax become aware of ERP changes or transformations that may benefit tax. Obtaining legal entity financials is the most basic requirement of ERP systems, which is often overlooked when implemented. Indirect tax often requires implementation of bolt-on tax solutions for tax determination. Tax sensitization of the chart of accounts can be accomplished with little change to business processes and little cost/effort. Many ERP systems can now be extended with purpose-built custom applications for specific tax purposes, e.g., transfer pricing. Level of effort to implement Typical cost ranges High Greater than 500 hours Medium hours Low Less than 100 hours Extensive Greater than $200k High $100 $200k Medium $20 $100k Low Less than $20k Page 15

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18 EY Assurance Tax Transactions Advisory About EY EY is a global leader in assurance, tax, transaction and advisory services. The insights and quality services we deliver help build trust and confidence in the capital markets and in economies the world over. We develop outstanding leaders who team to deliver on our promises to all of our stakeholders. In so doing, we play a critical role in building a better working world for our people, for our clients and for our communities. EY refers to the global organization, and may refer to one or more, of the member firms of Ernst & Young Global Limited, each of which is a separate legal entity. Ernst & Young Global Limited, a UK company limited by guarantee, does not provide services to clients. For more information about our organization, please visit ey.com. Ernst & Young LLP is a client-serving member firm of Ernst & Young Global Limited operating in the US Ernst & Young LLP. All Rights Reserved ED None This material has been prepared for general informational purposes only and is not intended to be relied upon as accounting, tax or other professional advice. Please refer to your advisors for specific advice. ey.com