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How to Effectively Manage Your Tax Close Process

USA
3 Apr 2013
Does your tax close process need a tune-up? Now is a good time to analyse the tax process engine. Taxand USA addresses some of the questions and components of the process to think about.

My tax close process is complex and time-consuming. Where should I start my analysis?
Focus on 1 or 2 key areas that will dramatically help improve the process. Taking a phased approach, by addressing 1 or 2 items each quarter, is an effective method for building a finely tuned process.

How long does it take to complete a quarterly and year-end tax close?
Break down the process by task then by hours or days and create a document for this that will support the analysis. Document the difference between an interim and year-end close (if applicable), since the process is quite different for many companies.

What is the greatest challenge (or time-intensive part) of the current process?

  • Receiving data in a timely manner to start the process
  • Confirming the accuracy of some of the data received
  • Manipulating data to develop the information needed
  • Loading data into the tax provision software or workbook
  • Delivering the required numbers to management in a timely manner
  • Needing more time to step back and analyse the numbers
  • Incorporating late entries into the process

When is a good time for implementing tax close process changes?
This will vary from corporate to corporate. However, having a discussion towards the beginning of the year about enhancements that should be implemented will give you more flexibility to schedule the action items appropriately on your calendar. As tax professionals are aware, the further we get into the current year, the more difficult it is to complete projects before year-end.

Discover more: How to effectively manage your tax close process

Your Taxand contact for further queries is:
Michael Stenftenagel
E. mstenftenagel@alvarezandmarsal.com

 

Taxand's Take

Implementing value-added changes to the tax close process can be challenging, but the benefits can be substantial. In most cases, the entire process does not need to be overhauled to generate short-term gains that will reduce the time incurred, mitigate risk and increase the accuracy of the numbers.