The Cost of non-compliance: Financial and Reputational Consequences - Wells Fargo
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The Cost of Non-Compliance:
Financial and Reputational Consequences
19 November 2014
Presented by: Louise Li
Key Issues
1. Are companies ready?
2. How do we educate business stakeholders?
3. What approach is required to deal with additional
international transparency requirements ?
Are Companies Ready?
Answer - Probably not
What do they need to be ready for?
• Change in profile
• Integration
• Operating in new jurisdictions
• Addressing risks identified in the due diligence
• Tax risks
Tax Risks
1. Real risks
1. Threats on the horizon
2. Risks not involving taxpayments
Planning for risk needs insight & judgement
Tax Risk – Reputational Risk
• Risk– Has the law been broken– Has the company acted unfairly– Mergers
• Readiness– Risk analysis– Assess tax benefit– Policies and procedures
• Reaction– Containment– Planned response– Advance planning
Tax Risk - What is the Source of
Reputational Damage
It takes 20 years to build a reputation and 5 minutes
to ruin it. If you think about that, you’ll do things differently ( Warren Buffet)
Tax Risk - Reputational Risk
Readiness and Reaction
Readiness• Perform risk analysis• Assess tax benefitReaction• Policies and procedures• Containment• Think of response• Advance planning• Recovery
Reputational Risk –
Key Takeaways• We are alert to yesterday’s risk but we must
understand the risks we are facing today and tomorrow
• Have coordinated internal procedures in place that have been tested
• Prepare now. Don’t wait for the external stakeholders to ask those awkward questions
• Have a global response to local issues• Understand the media. There are multiple risks
and hence multiple ways to address them
How Do We Educate
Business Stakeholders?
• How risks get identified
• How risk exposures are assessed
• How risks can be mitigated in short and medium term
• How risks are reported
• Forums for reporting
International Transparency
• The austerity measures of tax authorities have driven the interest in tax
• It is not going way
• It is an international, not local, issue
• Companies need to seize the initiative
• Consider where to report
Transparency
Question - Why is transparency the new buzz word in governance and what is its impact?
Answer - Fair tax debate
Group Tax Strategy
Conclusion
Companies need a strategic approach to tax risk to allow them to focus on future risks and opportunities that could arise.
This is a group wide responsibility and not just with the tax department.
Our internal and external audience is changing as is the data required and the form of communication.
We need to take the initiative now.
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