Emerging trends in tax data management, visualizations and analytics

Emerging trends in tax data management, visualizations and analytics Please disable popup blocking software before viewing this webcast Original Publication Date: Wednesday October 18, 2017 CPE Credit is not available for viewing archived programs

Speakers Chris Jarski Managing Director Tax Function Optimization +1 678-515-2315 chris.jarski@us.gt.com Mark Pociask Senior Manager Tax Reporting Advisory +1 312-602-8086 mark.pociask@us.gt.com Grant Thornton LLP. All rights reserved. 2

Learning objectives 1 Evaluate key challenges in using Excel that reduce efficiency and increase risk 2 3 4 Demonstrate how ONESOURCE Data Flow and Workpapers can be used as a Tax Data Hub allowing for the smart re-leveraging of data and calculations throughout the tax lifecycle Demonstrate how DOMO can reduce professional fees, penalties and interest and improve overall resolution effort with Global Tax Authority Controversy analytics and visualizations Describe how to use RPM (Rapid Prototype Method) implementation to quickly start to convert cumbersome Excel tasks Grant Thornton LLP. All rights reserved. 3

Session overview and agenda As tax professionals, many of the tools we continue to use, like Excel, don't seem to help us as much as they did years ago. Recent advancements in data repository, analytics and visualization technologies provide powerful new opportunities to complement the work we currently do in Excel, and produce meaningful insights from our data In this webinar, we will cover an overview of data management best practices, evaluate ONESOURCE and DOMO software tools and walkthrough use case examples to demonstrate how these capabilities can be beneficial for your tax department Grant Thornton LLP. All rights reserved. 4

Where are you in the tax function optimization transformation journey? Four key areas for tax function optimization include: 1 Data 2 Technology 3 People 4 Controls If you would like a copy of the Transformation Journey Continuum, please send me an email at chris.jarski@us.gt.com Embedded analytics in data source systems and enterprise tools (automated validations and exception reports) Centralized access rights to data Drill down capabilities Data Technology People Controls Rules based workflows Tax strategy aligned with Board Emphasis on detective analytics risk management policy Portals integrated with internal and external stakeholders Online global centralized data and calendar Business leaders aware of tax matters Integrated function adapts to change Trigger analytics to control tax risk and optimize planning Integrated controls within workflows Data Technology People Controls Enterprise level portals Strategic use of business partners Self-service reporting from enterprise core data systems Use of some data analytics replacing manual analytic work papers and procedures ERP, GL, forecasting or consolidation tools are tax aware for all stages of tax cycles Single version of the truth data used across tax functions Ad hoc data retrieval Automated dashboard feeds Some workflow automation Controls are inherent within applications Tax data warehouse integrated w/ enterprise systems Spreadsheet and system integration Objective tax performance goals aligned with enterprise goals Value focus Work is preemptive and forward thinking Documented processes/approvals Work shifted and scoped to leave time for analytic activities Data Technology People Controls Automated information delivery Formalized alignment of tax, Preventative controls finance and business units Quality people in key roles Succession / turnover planning in place Detective controls with granularity sufficient to evidence and test Data Technology People Controls Tax accesses some GL, consolidation, or planning tools Tax database or warehouse has automated feeds but is separate from accounting / finance Data bases differ between tax areas Tax operates in a silo, lacking enterprise data, systems and knowledge Defined tax roles Qualify focus Controls focused on detective reviews Manual document management procedures for version control Data Technology People Controls Significant manual processes Independent tax groups (e.g. Lack of automated and Compliance, planning, etc.) standardized workflow; Use of spreadsheets to gather, manipulate, store and retrieve data Use of email to collect data and documents and oversee status Standalone tax functional technology solutions Manual reporting Work is reactive and compliance focused Lack of access controls and segregation of duties Finance and Tax Function Integration Level Five Tax Function Operational Excellence Level Four Enterprise Data and Knowledge Level Three Silo Tax Data and Knowledge Level Two Isolated Tax Organization Level One Grant Thornton LLP. All rights reserved. 5

Where are You in the Data Transformation Journey? (cont'd) Data Embedded analytics in data source systems and enterprise tools (automated validations and exception reports) Centralized access rights to data Drill down capabilities Data Self-service reporting from enterprise core data systems Use of some data analytics replacing manual analytic work papers and procedures Data ERP, GL, forecasting or consolidation tools are tax aware for all stages of tax cycles Single version of the truth data used across tax functions Ad hoc data retrieval Data Tax database or warehouse has automated feeds but is separate from accounting / finance Data bases differ between tax areas Finance and Tax Function Integration Level Five Tax Function Operational Excellence Level Four Enterprise Data and Knowledge Level Three Silo Tax Data and Knowledge Level Two Tax Function Optimization Continuum Data Use of spreadsheets to gather, manipulate, store and retrieve data Use of email to collect data and documents and oversee status Isolated Tax Organization Level One Grant Thornton LLP. All rights reserved. 6

An overview of data best practices Access to data More reliable access to standardized, relevant and quality data ERP initiatives to tax sensitize data and reporting Data collection tools integrated with tax and finance applications Centralized access rights to data with drill-down capability Greater use of data warehouses One version and access to the truth Create central information hubs for common use Data management strategy to support the entire tax life cycle Dedicated tax data hubs licensed from a third party vendor and / or accessed from an accounting firm as part of a co-sourcing arrangement Tax aligned and sensitized Remove duplications and siloed processes Embedded analytics in data source systems and enterprise tools (automated validation and exception reports) Increase in prescriptive, detective and predictive analytics due to change in regulatory and legislative landscape Governance focus on only what's necessary and ensure that relevancy is maintained Grant Thornton LLP. All rights reserved. 7

Challenges with workpapers Lack of integration with tax systems, general ledger and other upstream systems Copy and paste data from other sources.. over and over Broken links Manual entry Poor version control Poor review & sign-off Poor reporting and analytics File storage: Can t find anything! Grant Thornton LLP. All rights reserved. 8

But maybe we should not blame workpapers The need for discovery and definition Business Objective(s) The strategic goals & initiatives to fix the tax problem & achieve the desired outcome. A key tax issue that must be addressed to improve tax operations and financial performance efficiency or effectiveness. Tax Problem Tax Intelligence Business Outcome The desired end result or expected difference that is created by the proposed changes or strategic actions. Business Measure(s) The metrics & other data used to monitor the performance & achievement of the strategic goals. Grant Thornton LLP. All rights reserved. 9

Create a value statement for each initiative We will do [A] Business Objective What strategic goal or initiative is it tied to? to improve [B] Business Problem What problem will it address? as measured by [C] Business Measure(s) What key metrics will gauge performance? which is worth $[D] Business Outcome What monetary benefit will it generate? Grant Thornton LLP. All rights reserved. 10

A few tools to enhance workpapers After a clear and concise data strategy within your workpapers, learn and leverage add-in tools within Excel whenever possible Some of these tools include: ONESOURCE DataFlow and Workpapers CorpTax Office Oracle Hyperion SmartView Grant Thornton LLP. All rights reserved. 11

Introduction to ONESOURCE DataFlow What is DataFlow? Web-based data collection tool used in lieu of traditional tax package process to improve: Process Control Data Security Compliance Automation Key benefits Leverages Excel capability to design data collection workbook Easy to collect data by many users and track status Stores data provided in secure data warehouse (ONESOURCE DataFlow repository) Ability to extract data Integration with other ONESOURCE solutions Grant Thornton LLP. All rights reserved. 12

Introduction to ONESOURCE DataFlow Integration with other ONESOURCE applications: ONESOURCE Income Tax ONESOURCE Tax Provision Estimated Payments Uncertain Tax Positions Transfer Pricing Grant Thornton LLP. All rights reserved. 13

Introduction to ONESOURCE DataFlow 1) Existing or new Excel tax package 2) Convert to Forms Flow template 3) Data Request sent to Data Providers 4) Data is saved into DataFlow Repository 5) Data can be sent to other sources Start with an existing Excel tax package Or createa new Excel tax package Using the ONESOURCE FormsFlow Designer, you can convert your template into a FormsFlo w Template Can be prepopulated with data such as the trial balance, rollforward amounts and data from other sources Requests automatically sent Template is protected except for data entry cells Data is saved into database by Excel range name and request index values Other DataFlow templates Extractions/ Reports ONESOURCE Applications Grant Thornton LLP. All rights reserved. 14

DataFlow use case - Tax controversy management Challenges: Prior process included volumes of emails, PDFs, Excel worksheets, Word documents, etc. Tax Problem: Track global exposure for tax controversy including domestic and foreign operations in multiple languages and currencies Inconsistent formats and level of data Labor intensive process to consolidate these various formats into a global summary Data was very summarized which provided only limited visibility into audit progress and key metrics No consistent timeframe or process for collecting data and reporting it to Corporate Tax Grant Thornton LLP. All rights reserved. 15

Tax controversy management - DataFlow benefits 1. Streamlines creating the collection requests 2. Provides visibility into progress 3. Provides built-in Dashboard for key metrics 4. Template is tailored to each countries requirements using Hide Row and Hide Sheet functions 5. Supporting notes and supporting documents can be attached to the DataFlow requests 6. Stores discrete period data for period-over-period analytics 7. Data can be extracted and used in Tableau reporting unique for country, region and corporate level of detail 8. Data is automatically rolled over from period-to-period Grant Thornton LLP. All rights reserved. 16

Tax controversy management - DataFlow benefits (cont'd) Country Benefits: Added Controls Workflow capabilities for in country tasks and document management Eliminate versioning risk when working with outdated data Regional & Corporate Tax Benefits: Single Repository for Audit data and Reporting Improve Global Tax Transparency Regional Audit Reporting Capability Eliminate current manual validation process On demand interaction and maintenance of historical data Grant Thornton LLP. All rights reserved. 17

Email Notification: Automated email sent to designated individuals when first assigned; followup emails can be sent based on status vs. due date Customizable subject and message User clicks link to launch the application and Excel to complete the request Automated message sent when request is complete Grant Thornton LLP. All rights reserved. 19

DataFlow Requests: User launches application and sees status of all DataFlow requests assigned to them Preparer can open their requests to edit them Can attach additional support, add notes, and change status DataFlow requests can be linked to "workflows" if desired Grant Thornton LLP. All rights reserved. 20

DataFlow Requests: User fills out a standardized template in Excel Certain information is prepopulated based on the preparer editing the template (in this case "Brazil" is pre-filled based on user accessing the template) Instruction tab guides user through the process Grant Thornton LLP. All rights reserved. 21

Template Features: Automation built into template drives what content is viewable to each user (ex: selecting "YES" for the "Data Entry Exam 2" row unhides an additional tab) Each preparer could use as many (or as few) tabs as needed, i.e. "Brazil" preparer might need only two exam tabs, but perhaps "United States" preparer needs all five exam tabs Summary tabs provide quick snapshot and can be used for validation to ensure data request is completed Grant Thornton LLP. All rights reserved. 22

Template Features (continued): Request is standardized: columns/rows are fixed, formulas are locked, only light blue cells can be edited Data validation used to limit entries: drop down boxes have preselected values, date/number/text fields can maintain their formatting and limit types of inputs Entire request can be made dynamic, ex: field names can be in local country language depending on which country/user editing template Grant Thornton LLP. All rights reserved. 23

Storing the Data: Inputs (light blue cells) are saved to database If template is re-opened by preparer, last saved data is retrieved from database and user resumes from last submit Completed data can be "extracted" by administrator and summarized for reporting and analysis, or exported to other applications Grant Thornton LLP. All rights reserved. 25

What's in your data? Patterns. Trends. And Associations. You can leverage all of these with a data strategy. And at a depth and ease of adaptability to changing business and regulatory conditions that's not achievable using traditional spreadsheet tools Using smart, efficient data governance along with tax operations that integrate and leverage data daily, you will: Automate processes Gain insights Improve performance Here are a few examples Grant Thornton LLP. All rights reserved. 26

What's in your data? (cont'd) Automate processes No data chasing, no cutting/pasting/sorting/filtering to get to data that you can use and understand quickly and with less risk for error Gain insights You can get the key drivers affecting ETR by entity, filing group, state or some other metric compared to last quarter and year within a few mouse clicks Improve performance Thinking about the potential benefit of a state technology investment credit? You can have access to all the data you need to quickly calculate and discuss what the company will gain from tax planning initiatives or regulatory changes Grant Thornton LLP. All rights reserved. 27

So why do we like spreadsheets so much? Ease of use and flexibility; and More than 80% of business intelligence project fail because of these three reasons: Continued use of old technology Complex system integrations Poor User Experience And this is further complicated because we live in a world of too few Decision Enablers Grant Thornton LLP. All rights reserved. 28

Decision makers versus decision enablers CEO Sales Marketing Finance Tax Customer Service Manufacturing 200 decision makers Only 6 decision enablers

Decision makers versus decision enablers CEO Sales Marketing Finance Tax Manufacturing Customer Service What if 200 decision makers became 200 decision enablers!

Path to achieve automated tax intelligence for everyone Optimize: Discover insights that drive better decisions and operationally adapt to leverage better performance going-forward Grant Thornton LLP. All rights reserved. 36

Data Sources Data Connection Automation, Cleansing, Analytics & Storage Tax Lifecycle Deliverables Tax Decision Making Optimization

Accelerate! - 6 Months to achieve automated tax intelligence for everyone is 5.5 too long Status quo is painstaking and patient promising ROI in a year or two Status Go acts today to deliver value tomorrow quick wins abound Visioning workshop Use case workshop Business value workshop Scoping workshop Accelerator workshops Develop a vision for transformation Time: 2-4 hours Deliverables: Design; thinking, potential initiative identification and scoring; recommendations and action plan Prioritize use cases Time: ½ day (depending on number of use cases) Deliverables: Detailed, specific use case; use case prioritization and scoring; conceptual roadmap to execute Business value definition Time: ½ day (depending on number of use cases) Deliverables: Value assessment for leadership and budget approval Define scope and requirements Time: ½ day (depending on number of use cases) Deliverables: Project scoping; role definition; statement of work development Grant Thornton LLP. All rights reserved. 46

A complex systems and data environment needs a simple approach Rapid prototype method Status quo threatens obsolescence; says you're either Elon Musk or a dinosaur Status Go values pragmatism and joins you for the journey, roadmap in hand Grant Thornton's Tax Data, Analytics and Visualization Rapid Prototype Method (RPM) Explore and Define Collect, Prepare and Transform Data Model / Evaluate Data and Analytics Realize Value, Consume and Generate Insights Continuous Improvement Explore current state and define objectives for success Connect to data sources and cleanse the data Concisely store data and automate analytics to allow management by exception Creatively visualize important metrics that allow for smart, quick decisions Constantly refine as systems, organizational needs, and tax regulations change Grant Thornton LLP. All rights reserved. 47

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