Tax provision and Tax return
Tax & AccountingCorporate30/06/2021 8:00:00 AM

Does your tax software solution fully integrate the tax provision and tax return?

The advantages of connecting finance, tax provision and tax compliance systems

It’s not news that the working environment of the tax professional is challenging. A shifting regulatory environment, the attentions of increasingly active and better resourced tax authorities and demands from the Board of Directors and C-Suite that you’re on top of it all, means the tax function faces increased scrutiny and a growing workload. 

To increase efficiency and accuracy, tax teams have attempted to enhance their systems and better connect processes. But many remain at the mercy of finance and tax 'disconnects’, missing data points, errors in calculations, mistakes in formulas, and a constant need to review and reconcile. This is because many organisations still rely on spreadsheets, ‘bolt on’ ERP tax solutions or ‘point’ solutions that solve for individual elements of the tax reporting and compliance process, but don’t necessarily work together as an integrated whole.

The current environment requires moving beyond spreadsheets and point solutions to a single, integrated tax platform. One that connects source finance solutions to tax provisioning and tax compliance. A platform that acts as your tax data ‘hub’, automating your tax reporting processes and flowing data into your income tax return, across all tax territories. A platform that delivers efficiency, increased auditability, and allows for greater collaboration and control.

Integrating tax reporting and compliance processes with the broader financial network

Integration enables the tax function to retrieve data once, apply it initially to the provision process, and then feed the resulting calculations seamlessly into the tax return. 

Connectivity between source finance systems, tax provision and tax compliance processes leads to:

  • faster results by removing duplication and double handling of data.
  • greater accuracy and visibility of your tax position.
  • increased integrity in the tax return preparation process.
  • a global view of your tax positions in real-time.

This allows tax teams to move beyond the role of the data gatherer to strategic business partner. Capacity is released to focus on extracting valuable insight from the data gathered throughout the tax provisioning and tax compliance process.

Yet the integration of the tax function processes to meet tax reporting and compliance obligations remains burdened with numerous point solutions and databases stitched together to act as a ‘platform’.

Many organisations still use point solutions to output their tax compliance and reporting, linking them together using inconsistent and unstable spreadsheets to gather data and generate calculations. In an attempt to minimise errors and prove the auditability of the tax position, these manual processes must then rely on human intervention to interpret, review and line-by-line reconcile the results

Tax systems integrated ‘in name only’ do not just negatively impact the organisation’s efficiency and controls. Regulators and tax authorities, who expect tax outcomes to be readily reconcilable to statutory financial positions, increasingly take a dim of view of processes with multiple human touchpoints - while holding a favourable view of the greater use of technology to apply business rules consistently across financial and tax data.

For example, most ‘non-integrated’ systems cannot automatically complete the journey from tax provision to the tax return and then calculate prior period adjustments to true up the tax provisioning position to the final tax return. Users are forced to manually extract the trial balance from their financial systems, cleanse the data, and then reformat into a spreadsheet - every time they need to load the data into their various point solutions.

Moreover, as point solutions are designed for specific purposes, the calculation approach becomes inconsistent. For example, the tax compliance solution doesn’t also calculate the tax accounting outcome. This makes for a time-consuming and potentially error-prone process that can create reconciliation issues down the track and more questions from auditors.

The fully integrated end-to-end tax platform

This contrasts with a fully integrated end-to-end tax platform, like CCH Integrator, which offers the ability to manage tax provision and tax return processes in one inter-connected software platform.

An integrated platform serves as a hub for your organisation’s global tax data, providing a single source of truth for tax calculations to:

  • automate ongoing tax reporting processes and seamlessly allow the preparation of your income tax return following sign-off.
  • flexibly extract outputs in a variety of standardised or end user-configured reports for reconciliation with other financial systems.
  • allow automated upload of trial balances for your entire entity structure via easy integration with any ERP system.
  • fully automate tax journals for automatic population back into the ERP system.
  • automatically calculate prior period adjustments trueing up the tax provision and tax return workbooks.

In the case of CCH Integrator, in-application audit trail, drill through and reconciliations, as well as default reporting capabilities, provide you a clear and granular breakdown of all the underlying tax positions and journal adjustments in your prior period adjustment calculation. Applying a full tax balance sheet approach under IAS 12, CCH Integrator clearly identifies the journals booked to each of your entity’s tax account balances. This provides for a completely transparent and streamlined review process to ensure you (and the auditors) are comfortable the prior period adjustment calculations are complete and correct and you can easily prove to the tax authority how your tax position reconciles to your statutory financial position. 

Control over the capture and calculation of your tax reporting and compliance deliverables frees up the tax team to make informed strategic decisions and achieve superior tax governance and risk management to meet the ever-increasing demands of tax authorities around the world.

Start your journey to integrated tax reporting and compliance with CCH Integrator

CCH Integrator is an end-to-end tax platform integrating tax accounting, compliance, and statutory reporting activities with real-time web-based access. It easily adapts to your needs regardless of location, process, people or data format.

To help you with this decision, we’ve come up with five key questions to ask about tax technology before investing in a new solution. Once equipped with this knowledge, you and your team can get ready to take advantage of a solution that promises efficiency, increased auditability, and allows for greater collaboration and control.

In this guide, you will learn the importance of a tax software solution that:

  • Fully integrates the tax provision and tax return.
  • Produces a full tax balance sheet.
  • Configures easily to meet your organisation’s changing needs.
  • Provides timely, effective customer support after implementation.
  • Automatically produces your tax provision.