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Tax Basis Balance Sheet Analysis

An approach for continuous improvement in financial reporting for income taxes


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The preparation of tax basis balance sheets as part of a robust process for deferred tax accounting has emerged in recent years as a leading practice for improving financial reporting for income taxes. Contributing to this trend is the fact that income taxes continue to be a leading cause of material weaknesses. Tax provisions have become ever more complex as tax departments work with tax laws around the world and comply with U.S. and international income tax accounting standards. The complexities are compounded by increased scrutiny of tax return filings and tax accounting by corporate stakeholders, external auditors, and regulators.

A balance sheet-focused analysis of deferred tax items, when properly implemented and maintained, can provide enhanced efficiency and accuracy through improved tax accounting processes. When incorporated into ongoing tax processes using an existing or planned tax technology tool, a tax basis balance sheet approach can provide enhanced efficiency and accuracy in tax accounting calculations and can assist in responding to the specific responsibilities of managing financial reporting risk.

Deloitte's Tax Management Consulting group, with more than 800 professionals with tax technical, tax accounting, tax process improvement, and technology skills, has significant experience assisting companies perform the tax analysis necessary to support tax basis balance sheet approach.

Download the PDF to learn more about our approach to tax basis balance sheet analysis.

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