Tax Calculation & Compliance

Print Version

Corporate tax departments depend heavily on spreadsheet-based processes for data collection, manipulation and computations. These often lack controls and pose significant financial and reputational risks. As a result, in recent years there has been a push for corporations to migrate from spreadsheet-based tax calculation and reporting to off-the-shelf software packages.

However, migration to tax software has created or exposed additional issues:

  • Tax-sensitized information must still be gathered in spreadsheets from multiple legal entities.
  • While standard tax software covers the main tax statutes of key jurisdictions, it does not cover many countries. Nor does it address the issues of specific business sectors (e.g. GAAP to Statutory to Tax; FERC Reporting; SSAP 10R). While customization can solve these problems it can be very expensive to implement and maintain.
  • Not all calculations are covered within standard tax software (e.g. Tax Basis Balance Sheet, Journal Entries, depreciation reports, 10k disclosure).

Hence most businesses now use a mix of both spreadsheets and packaged tax software to complete the full tax cycle. This means that the original objectives for the tax software have only been partially met – leaving gaps in governance and risk, with control dependent on inefficient manual workarounds. The new challenge for tax departments is how to bring the same levels of data governance, risk management and efficiency to those spreadsheet operations that were not eliminated by the standard corporate taxation software.

ClusterSeven provides a complete solution to mitigate these risks:

  • A full audit trail of all information in a workbook down to the cell level
  • On-demand risk checks of spreadsheets via the internet/intranet
  • Alerts on new activity (e.g. Macro changes) – or lack of expected activity
  • Visual map of all connections feeding a specific spreadsheet, including ones from GL systems and Software Solutions.
  • Integration with document management and workflow (e.g. SharePoint)
  • Integrated spreadsheet security and monitoring
Print Version

“Problems have been identified with the flow of information from spreadsheets to risk systems, financial statements and regulatory computations. FINRA has observed instances where multiple departments within a firm use spreadsheets that lack controls to protect the integrity of the data when the spreadsheet moves among departments…..... Examiners will review the controls that are in place by firms to ensure the data integrity and completeness of spreadsheets”

FINRA 2010

“Once end users began working with the application, the insight and control over the spreadsheet environment made users realize that they wanted and needed this control”

IDC Case Study