Planning and preparing for GCR Local country Identify the business entities and associated filing requirements Determine and formalise responsibility, timing and metrics for activities Design a model that anticipates and manages accelerating change — regulatory, legal entity, finance and business Operating model Identify the sourcing model required to sustain local finance and tax competencies Determine the optimal use and locations for internal and third-party service provider resources (where appropriate) Implement a Global Compliance and Reporting governance framework Processes and systems Identify opportunities for integration and efficient use of GCR data Included GCR processes in IT and systems architecture and plans Identify time-intensive processes and determine what can be standardized, automated or centralized Case Studies Visibility and control A retail company with operations throughout EMEIA noticed lack of visibility and control causing it to be reactive to local needs. By deploying a global governance model with active service management and local expertise, the company reported significantly improved quality and timeliness of returns and filings and an increase in the time available to focus on planning and other business value-adding activities. Optimizing working capital through GCR A company determined that the rationalization of its indirect tax operations in Europe could present a significant working capital opportunity. Following an analysis of its current state, it improved data collection and standardized processes. This resulted in a more robust GCR data supply chain and provided the ability to undertake focused data analytics. This in turn enabled the company to substantially reduce its working capital requirements. The company is now applying similar improvements to its supply chain operations and cross-border transactions worldwide. Leveraging an array of external providers A company with highly distributed entities recognized that its GCR processes were about to be tested when it acquired another global company. The company being acquired had no formal GCR processes or governance in place. Compliance and reporting was managed at the country level by local employees with little to no visibility or control at the group level. The company was operating in a complex tax and accounting environment with the potential for tax audits and related controversy. Employees were leaving, exposing the company to a loss of knowledge and insight. Senior executives realized that they needed to reduce risks and prepare for added complexity and workload. The company worked with a specialized GCR service to develop a blueprint that identified filing requirements along with a map of the responsible parties. Key filing risks were identified and immediately resolved without penalties. The company now has a robust GCR model in place that provides visibility and control over its statutory reporting and tax compliance obligations. Contacts Ravi Mahajan GCR India +91 22 6192 0890 [email protected] Rahul Kashikar GCR India +91 22 6192 1538 [email protected] Fiona Barnett GCR EMEIA tax Centre +44 20 7951 6867 [email protected] Accelerating compliance complexity and enforcement The global economic climate is driving: ► Companies to expand into new and emerging markets where regulation is in its infancy and subject to rapid change and where knowledgeable resource is scarce ► Regulatory authorities to focus on revenue collection and enforcement resulting in a rapid succession of policy, administration, and reporting changes ► Maximization of internal efficiencies and effectiveness — tax and finance teams are expected to reduce costs while at the same time demonstrating their ability to contribute high value-add to key business activities This increasingly complex and evolving environment for tax and accounting is driving companies to recognise the close link between statutory accounting and tax planning, provision, compliance and controversy. Record and process transactions Legal entity financial accounting Tax accounting and provisions Statutory accounting and reporting Income tax compliance Indirect tax compliance Tax planning and controversy management Governance and control We refer to the resulting end-to-end processes which are at the core of all these issues and services as Global Compliance and Reporting. Companies are asking themselves I have visibility and control over local compliance and reporting: We have formal compliance process and documentation A consistent process is being applied in each jurisdiction I can access copies of tax returns and statutory filings I am aware of actual or potential late filings I know who is accountable for local compliance: I control decision on service provider selection I can show we are getting the expected levels of service I can demonstrate the tax returns are timely and accurate Our processes are efficient and effective: We maximize use of centrally available data Financial data sensitised for effective use in tax processes The same data used across finance and tax processes We have formal plans to drive year-on-year efficiency gains We are levering our investment in our shared services capability I understand what I am paying for compliance services: I know what I am paying to external providers I know which providers we use in each country and why I understand the internal resources involved in compliance I can articulate the value derived to my stakeholders I actively track tax audit activity outside the HQ: I understand the audit process for each country I know the right resources handling these audits I can show that the consequences of audits are being minimized Global Compliance and Reporting (GCR) Balancing efficiency with control and value of businesses state they have had to consider the tax implications of centralizing business or management functions of businesses state they have had to consider the tax implications of a cost reduction program 62% 76% 77% of global growth will come from emerging markets by 2015 IMF Global Economic Outlook, October 2010 and 2010 Ernst & Young transfer pricing survey Implications on global businesses Ernst & Young Assurance | Tax | Transactions | Advisory About Ernst & Young Ernst & Young is a global leader in assurance, tax, transaction and advisory services. Worldwide, our 152,000 people are united by our shared values and an unwavering commitment to quality. We make a difference by helping our people, our clients and our wider communities achieve their potential. Ernst & Young refers to the global organization of member firms of Ernst & Young Global Limited, each of which is a separate legal entity. Ernst & Young Global Limited, a UK company limited by guarantee, does not provide services to clients. For more information about our organization, please visit www.ey.com. © 2012 EYGM Limited. All Rights Reserved. EYG no. XX0000 In line with Ernst & Young’s commitment to minimize its impact on the environment, this document has been printed on paper with a high recycled content. This publication contains information in summary form and is therefore intended for general guidance only. It is not intended to be a substitute for detailed research or the exercise of professional judgment. Neither EYGM Limited nor any other member of the global Ernst & Young organization can accept any responsibility for loss occasioned to any person acting or refraining from action as a result of any material in this publication. On any specific matter, reference should be made to the appropriate advisor. ED None 1252615.indd (UK) 05/12. Creative Services Group.
Welcome message from author
This document is posted to help you gain knowledge. Please leave a comment to let me know what you think about it! Share it to your friends and learn new things together.
Transcript
Planning and preparing for GCR
Local country Identifythebusinessentitiesandassociatedfilingrequirements
Determineandformaliseresponsibility,timingandmetricsforactivities
Designamodelthatanticipatesandmanagesacceleratingchange—regulatory,legalentity,financeandbusiness
Operating model Identifythesourcingmodelrequiredtosustainlocalfinanceandtaxcompetencies
Determinetheoptimaluseandlocationsforinternaland third-partyserviceproviderresources(whereappropriate)
ImplementaGlobalComplianceandReportinggovernanceframework
Processes and systems IdentifyopportunitiesforintegrationandefficientuseofGCRdata
IncludedGCRprocessesinITandsystemsarchitectureandplans
Identifytime-intensiveprocessesanddeterminewhatcanbestandardized,automatedorcentralized
Case Studies
Visibility and controlAretailcompanywithoperationsthroughoutEMEIAnoticedlackofvisibilityandcontrolcausingittobereactivetolocalneeds.Bydeployingaglobalgovernancemodelwithactiveservicemanagementandlocalexpertise,thecompanyreportedsignificantlyimprovedqualityandtimelinessofreturnsandfilingsandanincreaseinthetimeavailabletofocusonplanningandotherbusinessvalue-addingactivities.
Optimizing working capital through GCRAcompanydeterminedthattherationalizationofitsindirecttaxoperationsinEuropecouldpresentasignificantworkingcapitalopportunity.Followingananalysisofitscurrentstate,itimproveddatacollectionandstandardizedprocesses.ThisresultedinamorerobustGCRdatasupplychainandprovidedtheabilitytoundertakefocuseddataanalytics.Thisinturnenabledthecompanytosubstantiallyreduceitsworkingcapitalrequirements.Thecompanyisnowapplyingsimilarimprovementstoitssupplychainoperationsandcross-bordertransactionsworldwide.
Leveraging an array of external providersAcompanywithhighlydistributedentitiesrecognizedthatitsGCRprocesseswereabouttobetestedwhenitacquiredanotherglobalcompany.ThecompanybeingacquiredhadnoformalGCRprocessesorgovernanceinplace.Complianceandreportingwasmanagedatthecountrylevelbylocalemployeeswithlittletonovisibilityorcontrolatthegrouplevel.Thecompanywasoperatinginacomplextaxandaccountingenvironmentwiththepotentialfortaxauditsandrelatedcontroversy.Employeeswereleaving,exposingthecompanytoalossofknowledgeandinsight.Seniorexecutivesrealizedthattheyneededtoreducerisksandprepareforaddedcomplexityandworkload.ThecompanyworkedwithaspecializedGCRservicetodevelopablueprintthatidentifiedfilingrequirementsalongwithamapoftheresponsibleparties.Keyfilingriskswereidentifiedandimmediatelyresolvedwithoutpenalties.ThecompanynowhasarobustGCRmodelinplacethatprovidesvisibilityandcontroloveritsstatutoryreportingandtaxcomplianceobligations.
ContactsRavi Mahajan GCRIndia
+91 22 6192 0890 [email protected]
Rahul KashikarGCRIndia
+91 22 6192 1538 [email protected]
Fiona Barnett GCREMEIAtaxCentre
+44 20 7951 6867 [email protected]
Accelerating compliance complexity and enforcementThe global economic climate is driving:
► Companiestoexpandintonewandemergingmarketswhereregulationisinitsinfancyandsubjecttorapidchangeandwhereknowledgeableresourceisscarce
► Regulatoryauthoritiestofocusonrevenuecollectionandenforcementresultinginarapidsuccessionofpolicy,administration,andreportingchanges
► Maximizationofinternalefficienciesandeffectiveness—taxandfinanceteamsareexpectedtoreducecostswhileatthesametimedemonstratingtheirabilitytocontributehighvalue-addtokeybusinessactivities
Thisincreasinglycomplexandevolvingenvironmentfortaxandaccountingisdrivingcompaniestorecognisethecloselinkbetweenstatutoryaccountingandtaxplanning,provision,complianceandcontroversy.
Record andprocesstransactions
Legal entityfinancialaccounting
Taxaccountingandprovisions
Statutoryaccountingandreporting
Income taxcompliance
Indirect taxcompliance
Tax planning and controversymanagement
Governance and control
Werefertotheresultingend-to-endprocesseswhichareatthecoreofalltheseissuesandservicesasGlobalComplianceandReporting.
Companies are asking themselves
I have visibility and control over local compliance and reporting: Wehaveformalcomplianceprocessanddocumentation Aconsistentprocessisbeingappliedineachjurisdiction Icanaccesscopiesoftaxreturnsandstatutoryfilings Iamawareofactualorpotentiallatefilings
I know who is accountable for local compliance: Icontroldecisiononserviceproviderselection Icanshowwearegettingtheexpectedlevelsofservice Icandemonstratethetaxreturnsaretimelyandaccurate
Ourprocessesareefficientandeffective: Wemaximizeuseofcentrallyavailabledata Financialdatasensitisedforeffectiveuseintaxprocesses Thesamedatausedacrossfinanceandtaxprocesses Wehaveformalplanstodriveyear-on-yearefficiencygains Weareleveringourinvestmentinoursharedservicescapability
I understand what I am paying for compliance services: IknowwhatIampayingtoexternalproviders Iknowwhichprovidersweuseineachcountryandwhy Iunderstandtheinternalresourcesinvolvedincompliance Icanarticulatethevaluederivedtomystakeholders
I actively track tax audit activity outside the HQ: Iunderstandtheauditprocessforeachcountry Iknowtherightresourceshandlingtheseaudits Icanshowthattheconsequencesofauditsarebeingminimized
Global Compliance and Reporting (GCR)Balancingefficiency with control and value
of businesses state they havehadtoconsiderthetaximplicationsofcentralizingbusinessormanagementfunctions
of businesses state they havehadtoconsiderthetaximplicationsofacostreductionprogram
62%76% 77%ofglobalgrowthwillcomefromemergingmarketsby2015
IMFGlobalEconomicOutlook,October2010and2010Ernst&Youngtransferpricingsurvey
Implications on global businesses
Ernst&Young
Assurance|Tax|Transactions|Advisory
About Ernst & YoungErnst&Youngisagloballeaderinassurance,tax,transactionandadvisoryservices.Worldwide,our152,000peopleareunitedbyoursharedvaluesandanunwaveringcommitmenttoquality.Wemakeadifferencebyhelpingourpeople,ourclientsandourwidercommunitiesachievetheirpotential.
Ernst&YoungreferstotheglobalorganizationofmemberfirmsofErnst&YoungGlobalLimited,eachofwhichisaseparatelegalentity.Ernst&YoungGlobalLimited,aUKcompanylimitedbyguarantee,doesnotprovideservicestoclients.Formoreinformationaboutourorganization,pleasevisitwww.ey.com.
©2012EYGMLimited. AllRightsReserved.
EYGno.XX0000
InlinewithErnst&Young’scommitmenttominimizeitsimpactontheenvironment,thisdocumenthasbeenprintedonpaperwithahighrecycledcontent.
Thispublicationcontainsinformationinsummaryformandisthereforeintendedforgeneralguidanceonly.Itisnotintendedtobeasubstitutefordetailedresearchortheexerciseofprofessionaljudgment.NeitherEYGMLimitednoranyothermemberoftheglobalErnst&Youngorganizationcanacceptanyresponsibilityforlossoccasionedtoanypersonactingorrefrainingfromactionasaresultofanymaterialinthispublication.Onanyspecificmatter,referenceshouldbemadetotheappropriateadvisor.
EDNone
1252615.indd(UK)05/12.CreativeServicesGroup.
Glo
bal G
over
nanc
e an
d Co
ntro
l
New technologies | Shared services facilities and Business Process Outsourcers�Integrated end-to-end processes and technologies
• Market reach• Operational agility• Stakeholder confidence• Cost reduction• Tax value
BalancedRecord-To-Report(R2R)
Globalization of service providersFinance function transformation
Limited internal resourcesNew sourcing options
Evolving business modelsIncreasing enforcementChanging regulationsMarket expansion
Record and process
transactions
Legal entity financial
accounting
Tax accounting and provisions
Statutory accounting and
reporting
Income tax compliance
Indirect tax compliance
Tax planning and controversymanagement
Valu
e
Control
Back office focused
Hig
h qu
ality
, high
cost
Business focused, high risk
Achieving the
optimalbalance Efficiency
Maturity models — where are you?
Governance and control
Local Regional/Global
Loca
lRe
gion
al/G
loba
lG
over
nanc
e an
d co
ntro
l
Processes and execution
LocalCountry approach
Simplification, standardization and cost reduction
Control, access and visibility over local process
1
2
3
Compliance and reporting services
QualityControl
ChangeManagement
BudgetaryControl
Knowledge Management
ContinuousImprovement
Deploy
Plan Gather Analyze Deliver Evaluate
Initiate Monitor Escalate Report
Achieving the right balance, and … … the benefits of a balanced approach
Your journey to a fully optimized global compliance and reporting solution
Limitedornoglobaland/orregionalvisibilityLimitedornostandardizationindatacollectionVarietyofserviceprovidersglobally/regionally
ServiceProvider
ServiceProvider
ServiceProvider
ServiceProvider
ServiceProvider
ServiceProvider
ServiceProvider
ServiceProvider
Client HQ
Germany
France
SpainCanada
China
Japan
Mexico Belgium
Model 1
Formalglobaland/orregionalgovernanceSingleorfewserviceprovidersStandardizationservicelevelexpectations
Local EY team
France
Local EY team
Belgium
Local EY team
Mexico
Local EY team
Japan
Local EY team
China
Local EY team
Canada
Ernst & Young
Client HQ
Local EY team
Spain
Local EY team
Germany
Model 2
AlignmentwithfinancesharedserviceLeveragingITandSSCinvestmentsGlobalKPIswithasingleprovider
Local complianceand reporting
Global/regionaldata managementand governance
Retained financeand tax/business
unit resources
Global/regionalshared service
centers
Global/regionalfinance and tax
organization
Global complianceand reporting
Global financeand tax
Model 3Transition
Consolidationofmanydiscretelocalprocessesandserviceproviders,eachwithinconsistentservicelevelsandperformance.
Increasedgovernance,globalvisibility,consistencyofserviceperformance,costcontrol,reportingandmanagement.Improvedreadinessfortaxauditsandcontroversy.
Transition
Increasetheuseofsharedservicescapabilities.Simplify,centralizeandstandardizesystems.Improvedatamanagement,exchange andre-use.
Reduceorremovetheneedforlocalfinanceinvolvementincomplianceandreporting.Focuslocalresourcesonbusinesspartnership.
Partnering with Ernst & Young ► Commitment—globalComplianceandReportingisastrategicinvestmentpriorityforErnst&Young.Wehaveaglobalinfrastructurewhichenablesthedeliveryofefficientandtimelycomplianceandreportingservices.
► Efficiency—createefficientandeffectiveprocessesbydrawingcentrallyonourcomplianceandreportingspecialistsoperatinginover140countries.
► Control—haveconfidencethatyouarecompliantwithlocalobligationsthroughglobalgovernance,consistentservicereporting,formalchangemanagementandbudgetarytransparency.
► Value—re-usedataacrosstheR2Rprocessestodrivecontinuousimprovement,generateplanningideasanddeliverincreasedvaluetoyourbusiness.
Benefits of our experience ► Effectivebalanceofefficiency,valueandcontrol
► Single point of ownership and escalation
► Increasedcompliancewithfilingdeadlines
► Connecting statutory reporting and income tax data
► Internal resources focus on higher-value activities
► Globalvisibilitytoobligations
► Consistentservicedelivery
► Singlepointofcontact
► Effectivechangemanagement
► Budgetarycontrolandvisibility
► On-lineworkflowmanagement
► Real-timereporting
► Qualitymanagement
► Documentcollaboration
► Thoughtleadership
► Continuousimprovement
Related Documents
