The Challenge of Managing Corporate Tax Information in the Age of Big Data
Changing tax laws, budget cut-backs, and restructuring have compounded the challenges of keeping up with ever-increasing complexity and volume of corporate tax data.
By now you have most likely heard of “big data,” defined as the implosion of data, including corporate tax information created in the modern age. The phenomenon is no longer isolated to a few select industries or relegated to a limited number of operational fronts. And, if not managed properly, big data can hinder meeting tax planning mandates in support of a company’s overall financial goals, as well as, impact the ability to cost-effectively achieve tax compliance. As a result, tax data analytics, the foundation and underpinning of successful tax planning, is now a top priority for many leading companies.
The process of cleaning, transforming, and modeling data to discover useful information that supports solid tax-related business decisions is the goal. Although, one static source of data would be ideal, for most companies this is not the case. Data can come in different formats and from various sources, such as ERP systems, accounting software, and manual spreadsheets.
On average, tax professionals spend 80 percent of their time entering and re-entering data into spreadsheets. Unlike a trusted, automated software solution with up-to-date tax law, spreadsheets are devoid of the checks and balances necessary to ensure accuracy. An even greater challenge for tax analysis is that facts needed to support decision making are many times trapped in multiple spreadsheets. The result is a fragile, interlinked system of spreadsheets that can break at any moment. Without a feasible plan for moving this tax data into vetted, third-party systems that are designed from the ground-up to support strategic tax planning, tax teams will continue to be stuck in the minutia of data entry.
In case you missed it, please reference this 2016 FEI Daily article, written by Diane Tinney, director of product management for the Software group at Bloomberg Tax. The article discusses how companies can implement corporate tax data best practices, and explores new processes and automation techniques for achieving successful tax analytics and future tax planning.