Defining reporting requirements
A global business had issues associated with inconsistent timing and quality of tax reporting from subsidiaries and minimal visibility of overseas tax profiles and risks.
KPMG worked with the business to help define their specific reporting requirements by tailoring our technology, Tax Reporting Cube, to the specific needs of the business, which provided seamless integration with their general ledgers.
- Automation of entire process from data collection to global management of high level risk areas to accounting disclosure notes
- Robust framework for capturing permanent and temporary differences
- Audit trail and drill down reporting
- Tax function now spending time reviewing, understanding and planning
Full tax support for US GAAP to IFRS conversion and price purchase accounting exercise
A tax client of KPMG UK, which is an IFRS reporter, acquired a US GAAP reporter in a significant transaction. The client performed the majority of the accounting work in-house, but identified two tax key elements where they needed external support.
Firstly, the conversion of the US GAAP results of the target to IFRS and, secondly, the identification and calculation of the deferred tax impact of the purchase price fair value allocation exercise (KPMG Corporate Finance performed the valuation work itself).
There were significant areas of judgement within these work streams which have a material impact on the financial statements. Both purchaser and target are audited by other Big 4 firms.
What KPMG did:
- Prepared detailed workings to identify, quantify and explain the tax adjustments arising on conversion from US GAAP to IFRS for the last three years
- Found the required information for these adjustments directly from the acquisition target
- Liaised directly with clients’ auditors to ensure the rationale for each tax adjustment was explained allowing an efficient and expedient audit process
- Identified the subjective tax areas of the purchase price fair value allocation exercise before any valuation work was done so the support for valuations did not have reanalysed at a later date
- Delivered the allocation of purchase price report with simultaneous valuation and deferred tax analysis
Benefits for the client:
- Streamlined process where information is sourced directly from the target, analysed and explained to the auditors
- Combined international tax, IFRS and US GAAP expertise
- One firm approach where the deferred tax issues are fully aligned with the valuation work performed