TAX ANALYTICS, AUTOMATION AND ACCOUNTING...As business systems and data breadth continue to grow in volume and complexity, controlling costs and improving business processes becomes

AUGUST 14, 2018

TAX ANALYTICS, AUTOMATION AND ACCOUNTING

2 TAX ANALYTICS, AUTOMATION AND ACCOUNTING

With you today

MATT BECKER

National Tax Office Managing Partner

MICHAEL WILLIAMS

National Practice Leader, Income

Provision (ASC 740) Services

KIRSTIE TIERNAN

National Leader, Data Analytics &

Automation

BARBARA TORZEWSKI

National Practice Leader,

Tax Transformation Services


Agenda

Identifying the benefits and applications of tax transformation services

A review of the latest tax technology tools used by accounting firms and corporate tax departments

A review of specific examples that demonstrate how to incorporate robotic performance software and analytics tools into your business


How we’re seeing clients using technology within the tax function

Opportunities• Mitigate risk• Frees up tax professionals to focus on value added and strategic projects

Areas where we’re seeing deployment of technology• Data collection and management

- External reportingo Extracting data from Company systems to process more efficientlyo Leveraging opportunities to automate to do things more quickly

- Internalo Supporto Management reporting

• Process improvement• Streamlining workflows• Functional management such as calendars• Internal controls


Tax transformation value drivers


Is this your tax department?


Gather and Confirm

External

CurrentHistoric

Input

Manual

Data entry

Tables

Bridge or Upload

Consume

Transformation

Complex

Data

Internal

Business reportsManagement DecisionsSub processes

External

Financial StatementsDivisional reportingIndustry

Government

Tax ReturnsTax ComplianceInternational Reporting

Files and Drawers

Network hard drive

Database

SQL or NoSQL

SharePoint

Archives

Robotics

Software Tools(ONESOURCE, Vertex, Etc.)

Data AnalyticsTax process overview


Benefits of tax department automation

PROCESS EXCEL SOFTWARE

Spreadsheet Balance Rollovers

ManualTime ConsumingError Prone

AutomatedQuick and Easy

Corporate Structural Updates Time Consuming Error Prone

Easy to Add/Remove EntitiesDatabase Accommodates New Items

Book/Tax Difference Calculation Updates

ManualVersion Control Formula Analysis

AutomatedCalculations Can be AttachedAudit Trail Tracks Changes

Consolidation of Data Formula DependentNon-standard Data

Database Consolidates Automatically

Reporting Formula DependentStaticManual Reconciliation

StandardizedAutomatically UpdatedFlexible – Slices and Dices Data


Benefits of tax department automation

OPERATIONAL EFFICIENCIES

Improved use of tax resources

Shift focus from data manipulation to data analysis

Increase time spent on value added tax planning and issue identification

Single data source

Faster turn-around time


Brainstorm to identify data-related tasks appropriate for automation.

Identify the best tools and products that align with the unique requirements of the organization.

Create an automation roadmap.

Implement custom apps and bots with employee training programs for seamless integration into business operations.

TAX ANALYTICS AND AUTOMATION

Tax department transformation

As business systems and data breadth continue to grow in volume and complexity, controlling costs and improving business processes becomes increasingly challenging and increasingly paramount.

Goal is to automate and optimize business processes, allowing them to spend more time analyzing data and becoming more valuable to the business and less time tending to mundane tasks.

BENEFITS

Spend more time consuming data and less time gathering it.

Automate standard business processes.

Save time and resources by identifying and improving data inefficiencies.

Improve accuracy and quality of work products.

Maintain data and document security.

Reduce turnover.

Limit training effort of new resources.


How do you select the right tools

Tools should fit into your tax technology strategy

Focus on the priorities of your organization

Both short term and long term

Consider synergies with existing technology

Look for ways to reuse data

Evaluate opportunities to extend existing ERP systems to reduce data collection


Making a business case

Focus on Risk• Effect that inadequate tax processes have on the company’s business• Companies who report material weaknesses in tax accounting lose an

average of 6.8 percent in their stock price within 60 days of the announcement**

• Late filing penalties are additional costs, poorly filed returns increase audit risk

Tax Technology Value Proposition (TVP)• Greater efficiencies + lower risk of error – cost to implement = return on

investment

Cost Saving is Not Necessarily primary focus

** Glass, Lewis & Co. LLC


When to use automation

Many resources doing the same task

Data or information produced by the task could be shared

Timely processing of data is vital to the business

The people performing the task do not enjoy the task

The task is repeated often and is time consuming

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Tax Software Solutions


Leading provision automation tools

http://onesource.thomsonreuters.com/

http://onesource.thomsonreuters.com/


Leading fixed asset tools


Leading sales & use tax tools


Leading property tax tools


Tax automation – Top 10 factors to ensure a successful implementation

1. Software alone is not the answer

2. Change (aka fear) management is crucial

3. Demo multiple packages

4. Do not start a project without enough budget

5. Don’t try to implement the software yourself

6. Hire a consulting firm with appropriate experience

7. Assign an internal point person to lead the project

8. Don’t spend months on the implementation

9. Ensure your department is properly trained

10.Ensure your department is properly supported


Robotic process automation tools


Robotic process automation

More time can be spent consuming &

analyzing data

Increased employee satisfaction &

retention

Maintain data &document security

Improve quality ofwork product

Increaseprofits through

data efficiencies


Project based phases

PHASE IProject Initiation

PHASE IISystems Design

PHASE IIIDevelopment

PHASE IVImplementation

PHASE VFollow-up

Information gathering• Evaluate present

system through interviews and brainstorming sessions.

• Document process and data flow.

• Identify and document problem areas and concerns.

• Create project summary memo.

• Prepare ROI support.

Design overview document noting summary level understanding and process flow of proposed solution.

Create specs/ requirements document considering the following:• Proof of Concept

(POC)• Technology• Resources• Testing• Deployment

Create database to host all data needed for the solution.

Create data source connections.

Identify audit/ transaction logs that can be generated.

Obtain any libraries and/or components needed for the solution.

Create code. Test/debug code in

sandbox environment. Confirm deliverable/

results are accurate. Create notifications to

ensure bot runs as expected.

Consider need for additional monitoring.

Ensure formatting/ documentation of code is appropriate.

Set up meeting with client IT team to discuss deployment.

Deploy in test environment.

Test implementation. Reconfigure/retest. Review security/

privacy/access. Deploy in production

environment. Create training

documentation. Conduct training

sessions with users.

Summarize ROI achieved.

Post-implementation meeting and assessment.

Identify additional areas for RPA based on initial successes.


Tax provision footnote bot

3 reports are run from OneSource

Template is configured specifically for client data

Footnotes are created and updated

Final draft of statements is automatically generated

Original process to update footnotes: 3-5 hoursNew process: 10 minutes


Address cleansing bot

Sales data is obtained from multiple systems/clients/formats

City/State/Zip Code combinations are often incorrect or misspelled

Chicago Hieghts, IL 60411should beChicago Heights, IL 60411

Software robot reviews the address combination and updates the misspelling automatically

The cleaned file with corrected address combination is exported for review and processing

Original process to update footnotes: 3-5 hoursNew process: 30 minutes


Multi-location system bot

John SmithFinancial Reporting DeveloperLobster Roll Inc.Franchise Restaurants

Each morning I begin by collecting the franchisees’ sales data…

Securely Connect to a store’s server

Location: AZ021

Export yesterday’s sales and inventory to CSV

Import & merge withhistorical data

Access DB

Now I can begin to analyze the data and email to the other departments

Original process: 5 and 10 minutes per storeNew process: runs overnight in the background = no manual effort


Contract review

Convert Analyze Report

BULK FILE LOCATION

UPLOAD PORTAL

REPORTING & ANALYTICS

ANALYSIS INCLUDES:• Pre-defined Search Terms and

Categorizations• Identify Structured Data (tables)

BDO DATA ANALYTICS ROBOTICS DOCUMENT

ANALYTICS


Robotic process automation CLIENT SUCCESS STORIES

ABOUT THE CLIENT

ENGAGEMENT BACKGROUND & CHALLENGES

CLIENT NEEDS CLIENT IMPACT

FRANCHISE A franchisor of laundromat facilities had multiple locations, each with a different instance of a point of sale system. They needed to pull data from each system on a daily basis, aggregate it, and report on it in real time. Their current process required manual logging into each system, running individual reports, and combining each for additional reporting to management. The process took three to four hours every day. This task would become impossible as they grew from four locations to 200 locations in the next year.

BDO was asked to develop an automated solution that could pull reports from each location and aggregate the data in one place for accurate and efficient reporting. This process needed to be efficient enough to also be deployed to all new locations as they opened.

Our bot captured the necessary data and was able to run in the background overnight. The bot allowed management to focus on decisions they could now make in real time about the business. It also allowed them to add more locations easily to the process without needing additional resources. This resulted in an estimated savings of $200,000 per year.

MANUFACTURER Our client recognized that the calculation for determining qualification for a specific job tax credit was extremely tedious (100+ hours) due to extensive analysis of new hire/termination activity and manual data entry using spreadsheets.

BDO was tasked with creating an error-free and efficient model to automate the calculation of the credit.

Our automated solution takes in payroll and HR data and is able to quickly create a summary of job tax credit opportunities for the client. This solution reduced the client’s manual effort in some cases from hundreds of hours to mere minutes. This resulted in a savings of $25,000 per analysis.


Robotic process automation CLIENT SUCCESS STORIES

ABOUT THE CLIENT

ENGAGEMENT BACKGROUND & CHALLENGES

CLIENT NEEDS CLIENT IMPACT

RETAIL A retail client was filing returns in multiple states. As part of their process, they submitted address information to their sales tax return software. However, if the address was invalid (incorrect spelling, wrong zip code/city/state match), then the entire submission was marked as an error by the software. The client’s team would then spend hours reviewing the addresses in order to identify the error so that the submission could be updated. If there was more than one inaccuracy, the team would potentially have to resubmit several times.

BDO was engaged to provide an automated solution that could validate addresses and cut down on the time-consuming work of address verification.

Our customized and automated solution was able to take the addresses and automatically review and fix the incorrect ones, returning a clean file with a log of what was updated. The automated solution would then resubmit on behalf of the team to the sales tax return tool. This reduced the time spent on each review to only a few minutes. The client experienced an estimated savings of $20,000 per year.

MEDICAL EQUIPMENT MANUFACTURING

BDO was tasked with developing an automated solution that could reduce the amount of time it took to prepare presentation material for a monthly update to their CFO.Information for their report was being pulled from multiple sources and involved a large amount of manual data entry. A major issue occurred when the numbers changed last minute and they had to quickly recreate the presentation.

The client needed BDO to develop an automated solution to remove excessive manual work, specifically a solution that could recreate presentation slides quickly and at the last minute.

Our automated solution saved the team 15 hours every quarter, while ensuring accuracy.It also allowed them to not only provide the update to the CFO before the quarterly deadline, but also to update it quickly if numbers changed at the last minute. Because all of the data was now being pulled together in a database, they were also able to add value to their current update by analyzing trends over time, hence creating a more insightful analysis to the CFO. This resulted in an estimated savings of $7,500 per year.


Getting started with artificial intelligence and analytics

Assess Status Get Educated

Brainstorm Governance, Employee

Capabilities, IT Infrastructure


Data analytics tools


Mindbridge Ai Auditor – Fraud Detection


Computer vision


Sponsorship exposure analysis


Tax disruption by AI

Forecasting Virtual Support

Pattern Identification

and Classification


QUESTIONS?

THANK YOU!


Presenters

MICHAEL WILLIAMS

National Practice Leader, Income Provision (ASC 740)

Services & Tax Partner

More than 25 years experience of broad corporate tax experience in various industries

Extensive federal, state, and international corporate tax experience encompassing tax reporting/ASC 740, tax compliance, tax planning, and tax operations.

Works with companies ranging in size from large, multi-billion dollar, publicly traded companies to emerging market/growth companies

Responsibility for engagements involving ASC 740, Sec. 382, R&D tax credit, transfer pricing, intellectual property planning, M&A, global structuring, etc.


Presenters

KIRSTIE TIERNAN

National Leader, Data Analytics &

Automation

Oversees data analytics, predictive modeling, and automation

More than 15 years of experience

Expertise includes big data, business intelligence, technology advisory, risk management, robotic process automation, and more

Assist clients with implementation of leading edge technology solutions that prioritize process improvement and efficiency


Presenters

BARBARA TORZEWSKI

National Leader, Tax Transformation

Services

Over 16 years corporate tax accounting experience, including SEC Corporations

Certified implementer of ONESOURCE™ Tax Provision, Workflow Manager

Broad base of tax, accounting and tax automation experience

Emphasis on ASC 740 Accounting for Income Taxes, management of all corporate tax compliance filings, ONESOURCE™ Tax Provision (Taxstream), ASC740-10 (FIN48) Uncertain Tax Positions and tax department process design and improvement including tax analytics services

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BDO is the brand name for BDO USA, LLP, a U.S. professional services firm providing assurance, tax, advisory and consulting services to a wide range of publicly traded and privately held companies. For more than 100 years, BDO has provided quality service through the active involvement of experienced and committed professionals. The firm serves clients through more than 60 offices and over 500 independent alliance firm locations nationwide. As an independent Member Firm of BDO International Limited, BDO serves multi-national clients through a global network of 67,700 people working out of 1,400 offices across 158 countries.

BDO USA, LLP, a Delaware limited liability partnership, is the U.S. member of BDO International Limited, a UK company limited by guarantee, and forms part of the international BDO network of independent member firms. BDO is the brand name for the BDO network and for each of the BDO Member Firms.

Material discussed is meant to provide general information and should not be acted on without professional advice tailored to your firm’s individual needs.

© 2018 BDO USA, LLP. All rights reserved. www.bdo.com

TAX ANALYTICS, AUTOMATION AND ACCOUNTING...As business systems and data breadth continue to grow in volume and complexity, controlling costs and improving business processes becomes

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