Tax Manager noticing that auditors are in the office

A lot of you will have, as we speak, these visitors again… You know what I mean, it is the time of the year: closing season! It’s that period when the auditors are in the office, asking challenging questions 🔎 . Also to tax. But here is the good news: you can be audit-ready… by design!

We have all gone through this. The year is wrapped up. The tax notes to the financial statements have been prepared. The tax provision is ready. Whooooof, we survived! Back to the fun part of our tax job…

But then, the auditors arrive… this means it’s time to buckle up for all the harsh questions that can be expected:

“Show me the reconciliation of your ETR”
“Show the tax provision working papers”
“Do you have a ruling for this?”
“Demonstrate that you are in control of your tax compliance”
“Show me a blueprint of your processes”
“Please provide an overview of your tax risks”
“Is this supported by an advisor memo?”
“Please explain all the material tax projects that took place”
“Give me the business plans that support your recognized DTAs”
“Any tax governance measures that you implemented?”

Etc, etc, etc. You know what I mean…

These tend to be challenging questions, that require a lot of prep and data gathering. On top of that, they require a convincing story, a lot of context. I recall the lengthy meetings I had with my auditors, and even more the endless back-and-forth of emails. Yes, typically after 9pm… 🥵

The audit process should not be that painful though. Proactive tax leaders know so. They invest in audit readiness. Actually, they are audit-ready by design! Here is how:

🟢 They have a workflow engine that operationalizes their tax processes;

🟢 With such workflows, audit trails are guaranteed. By design;

🟢 By doing so, they have the right controls in place, and step up their governance game. Across all different tax jobs;

🟢 They invest in risk management and have an updated register that underpins their tax accounting;

🟢 They keep track of all projects, including their business support, and back-up their decisions proactively. They have defense files on the shelf.

🟢 They have a fully integrated repository that supports all of the above. They have live monitoring of their tax KPIs