Our Commitment to Sharing Best Practices

Best Practice: People
Best practices that relate to the individuals in a tax department revolve around the clear definition of roles and responsibilities and the ability to be analytical self-starters. Tax department personnel need to have clearly defined roles and the ability to share knowledge across all groups. They need to be proactive in initiating strategic tax ideas, and able to identify and communicate potential issues early. If tax department employees are to focus on strategic ideas, they must have the requisite skills and appropriate, timely information. Finally, the department should recognize and reward substantial contributions. Tying compensation and rewards to individual and departmental performance is a best practice in motivating the staff and maintaining a focus on the goals of the tax department.

Deloitte Tax solution: We assist companies in defining strategic direction and organizational structure, developing strategies to communicate that direction, and allocating departmental resources to meet goals. We also assist senior-level tax executives in clarifying their objectives and improvement priorities and aligning them with larger corporate goals before undertaking a significant process redesign and organizational change.

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Best Practice: Information
World-class tax departments recognize the need for easy access to information and collaboration in considering ideas. In a best-practice environment, access to financial information is available electronically, through the financial systems, in as close to real time as possible. Financial systems generate reporting with an appropriate degree of detail to be used as the starting point for preparing tax returns and forecasting tax expense.

Deloitte Tax solution: We work closely with tax departments to help develop solutions for obtaining information electronically. Our professionals are not only experienced in tax principles, but also in working with most common financial reporting packages. They can assist the tax department and the financial reporting groups in determining alternative methods for obtaining information electronically. We develop comprehensive solutions for tax departments to help capture critical financial information and make it accessible in the accounting system. For information that is not available from the financial systems, data collection should be streamlined and automated. In addition, financial information must be accessible and retrievable to tax authorities during an examination. TMAS, working with our Tax Controversy Group, also assists clients in meeting the record-retention requirements of the IRS.

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Best Practice: Process
A world-class tax department has fully integrated the compliance cycle from beginning to end. Accurate information is available on a timely basis and is only touched once during the cycle. Tax provision work is fully integrated in the compliance cycle so that the tax returns are essentially completed when the year-end tax provision calculation is finished. Issues are identified throughout the year and resolved, not postponed until the financial records are closed. Information is received by the tax department through feeds from the financial systems. All calculations are made through systems, not in one-off fashion. The entire process is documented, and includes an inclusive list of tasks and assignments. This information is also available to perform “what-if” calculations and to update for adjustments that have been agreed on by the IRS. Processes are continuously reevaluated to determine whether further improvements can be made.

Deloitte Tax solution: We assist corporate tax departments in initiating and implementing tailored redesign programs that enable improvement in internal processes. The goal is greater overall efficiency. We design and implement tax process improvements that leverage technology to shift the compliance focus from data generation to review and analysis. We start by documenting existing processes and identifying significant areas of inefficiency. Working closely with tax department personnel, we identify ways to change the processes to drive out this inefficiency. With appropriate documentation and training, we orient our approach toward knowledge and capability transfer to help ensure that the department has the resources and tools to continuously improve tax processes once the initial redesign project is complete.

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Best Practice: Technology
Technology is a key driver in a tax department’s ability to implement best practices. The manner in which the department uses technology and the underlying tools determine the degree of integration and automation that a tax department can achieve. A world-class tax department accesses tax-sensitive information through financial and accounting systems. That information feeds into the tax computation software not just once a year, but quarterly, or even monthly. This technology is then used for tax provisions, SFAS 109, tax returns, estimates and extensions, and “what-if” calculations. All information is maintained in a database that is readily available to all tax professionals. A best-practice tax department can automate approximately 90 percent of its book-tax differences with little manual intervention. This enables the department to have a tax return substantially completed once the tax provision is finished.

Deloitte Tax solution: Our professionals assist tax departments in developing and implementing a software solution for the automation of their compliance functions. Through these services, clients have significantly reduced the time they allocate to compliance, increased the accuracy of estimated payments, and augmented planning efforts through the availability of better information. We also can assist in process redesign with respect to tax and financial packages.

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Best Practice: Knowledge Management
Intellectual capital is the most valuable asset of a tax department, and the ability to share and manage information and ideas in a free-flowing manner is a best practice. Historical transaction information and related memoranda are easily accessible and used both for audit support and as tools for advice on potential transactions. A Web-based solution for knowledge management is another best practice. This approach allows tax professionals throughout an organization to have access to information, and it also allows the information that has been entered to be tracked and used easily.

Deloitte Tax solution: Our professionals can assist tax departments in evaluating various software alternatives for online storage and retrieval of information or leveraging technology already in use. We have designed Web-based solutions for data collection and assisted in analyzing software for knowledge management. For example, we have developed specific solutions to address sales and use tax exemptions, information document requests and responses, and planning projects.

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