KPMG’s Tax & Accounting Technology Services team has built up a high level of expertise in the tax reporting technology market. Over the past five years, we have built and refined our tax reporting software solution to ensure it meets the needs of large and mid-sized companies. As the only ‘Big 4’ accounting firm to produce our own reporting software, we are involved in the implementation process every step of the way and our clients have reported a high level of satisfaction with the tool and its implementation.
The tool is an application that the Group Tax function use centrally to monitor and control the reporting process. The tax provision workings themselves are then calculated in a dedicated ‘taxpack’, enabling the easy production of entity level tax disclosures and journals. Data can be entered into the system either manually by the taxpack user, or centrally by Group Tax. The data itself is held within a database, and users ‘check out’ and ‘check in’ taxpacks to update this central body of data. The data is then automatically consolidated, allowing reports to be generated at the push of a button.
We believe that the tool can help in five key areas:
Our controlled environment gives Group Tax the comfort that calculations are consistent and correct, and that all changes are accompanied by a full audit trail. In the current environment, with increasing auditor pressure, we are seeing that legacy Excel-based systems are no longer adequate for producing tax disclosures for group accounts.
- Different user settings for different type of users, controlling access rights. Users only have access to the taxpacks to which they are allocated.
- A full audit trail of taxpacks to track where and when changes have been made to the figures on an entity-by-entity basis.
- A centralised set-up of adjustment categories (permanent, temporary), to ensure consistency across the group and aide in the transparency of data in the system.
- A warning system to ensure that updates are only made by one person at a time, ensuring consistency of data.
- Central automation of profit figures and tax adjustments to ensure reconciliation to consolidation system data.
- Clear and uniquely constructed input options, ensuring a single data entry point for any figures to reduce effort and time required by local tax.
- A dedicated webpage is available to securely transfer the taxpacks between group and local tax functions, removing the need to access the application.
An inherent problem with manual spreadsheets is the maintenance of the calculations, and the logic applied to the overall pack. Often, manual systems will not correctly calculate figures, sometimes resulting in the posting of one-sided journals or the production of incorrect results. By using our tool, you can be sure that the answers you are seeing are correct and fully maintained.
- Internal consistency checks ensure that all calculations will produce balanced and reconciled journals.
- Full tax disclosures are produced at both an entity and consolidated level, meaning that Group Tax has the latest summary of results on a real-time basis.
- Full reconciliation schedules show users how each item has been put together, ensuring consistency and accuracy. Consolidated figures contain ‘drill down’ functionality, which displays the contributing figures to allow full visibility.
- Taxpack ‘input cells’ clearly displayed with all other logic and layout being locked down to ensure the consistency of information submitted by local tax.
One of the shortcomings of manual systems is their inability to obtain real-time reporting data to further understand the ‘goings on’ within a group of companies. Our tool removes that barrier, giving head
’s of tax and CFOs access to powerful reporting data at the touch of a button.
- All reports driven from real-time data, ensuring the most up-to-date information is being reflected in the tool.
- Group consolidated reporting, allowing Group Tax to quickly and easily produce reports at any level of the group hierarchy.
- Dedicated reports, showing the movements between the opening and closing balances on various key figures for the group of entities.
- Ad-hoc reporting functionality, allowing the user to drill-down into the detail for any specific disclosure item.
One of the challenges that groups face is the need to produce tax disclosures while also having to journal the results back into their consolidation system. When this needs to be done on a legal entity level, the process can be time consuming and present a risk if items are incorrectly posted. The existence of one-sided journals is a problem faced by many groups when posting their tax reporting journal figures.
- Dedicated journal schedule to ensure that any journal created will balance, removing the possibility of one-sided journals being posted.
- Balancing accounts exist to ensure that all journals affect both current and deferred tax, as well as containing other validations to ensure that all journals are properly constructed.
- Consolidated disclosure reports available to Group Tax to enable them to review all journals centrally before posting.
- Based on the consolidation system used, reports are easily configurable to be automatically uploaded into the system from the Tax Reporting Cube.
When we talk to clients, even those who have dedicated tax reporting software, one problem that nearly always reported is the inability of their current system to usefully forecast. The ‘dataset’ functionality in the Tax Reporting Cube allows users to easily model various scenarios within the tool.
- Functionality effectively allows Group Tax to ‘copy and paste’ a period of time, enabling them to run various different scenarios.
- Reporting functionality to allow Group Tax to compare scenarios in dedicated reports.
- The Tax Reporting Cube allows you to set up multiple income types, which can be automatically populated with pre-mapped values. Tax adjustments are allocated to an income type, meaning that the Effective Tax Rate can be calculated for each income type.