Editing Compliance Tracker in Excel

Tax people will always be in love with Excel📈. And it's OK, as Excel definitely has merits for the in-house tax community. At the same time, Excel comes with many risks and limitations. The recipe for success can easily turn into a disaster 😵…

Raise your hand, who is using Excel for at least 2 of the below use cases:

– Tracking tax compliance deadlines
– Having a tax risk register
– Managing your global tax controversy
– Managing your quarterly tax reporting and provision exercise
– Documenting your tax control framework
– Documenting the analysis of all potential DAC6 arrangements
– Tracking tax attributes like tax losses, VAT essentials, …

We all should raise our hand, right?

As such not a problem, Excel remains a great tool despite its 38th anniversary (yes Clippy 📎 we all miss you). However, be mindful of the following limitations and risks:

– Tax people tend to create for every problem another Excel. Yep, I am guilty myself. I think it is fair to say that on a weekly basis, I created at least 3 Excel files. If not at least one a day. For a quick simulation, a template for one or the other tax job, etc. Here is the problem: you end up with a humongous amount of files, that float in isolation, and result in a significant data and intelligence trap…

– Excel comes with no or very low governance. Sure you can put password protection on a sheet, nice. Or you can lock cells and use data validation for restricting data input. But it is very difficult if not impossible from a governance and RACI perspective to maintain and control. Restricting access rights to an Excel is possible, but comes with a lot of shortcuts and overall shortcomings, which are unacceptable from a tax governance perspective.

– Ensuring an audit trail in Excel is painful, very painful. Have you ever tried to find back the reasoning of certain formulas or calculations in such a file from 3-5 years ago? Comments in cells often make it even harder. Yes there is version history to a certain extent. But even writing about it as we speak gives me a feeling of anxiety…

– Excel nudges “artistic freedom”. Indeed, ask 5 tax managers to build a GAAP to STAT to TAX template, and you will get 5 very different files. Ask the same for a discounted cash flow analysis and you also get different results. Long story short, we all have our Excel preferences and conditioning. By nature. Very difficult to get harmonisation here. This results in sheets that your colleagues or successors don’t understand logically. Which results in frustration…

– Hey, what is the latest version of the file? Ah, I found it, it is called “2023_Q4_Global-tax provision_final_v4_clean_v2”. Hmmm, sounds familiar?

Let us definitely continue to sing our praise for Excel. Let us however also be open to seeing the limitations, and step up our tax game in a world of ever-increasing risks, more demanding stakeholders, ESG, and tax governance gaining importance, and overall unprecedented levels of change!