Tax & Accounting Blog

How to Define, Defend and Build Consensus for an Automation Project

Accounting, Accounting Firms, Accounting, Audit & Payroll, Audit, Blog, Business Practices, Business Tax, Corporations, Organisations, Tax December 5, 2018

David Allen, Thomson Reuters Sales Director, Asia and emerging markets talks about building the right conditions for tax automation

This article first appeared at Charted Accountants ANZ on the 5th November 2018.

The growing focus on transparency means companies in Australia will spend more than A$40 billion a year combined on tax compliance reporting.

This means companies need to gather, analyse and understand data and processes across functional areas.

Cross-functional collaboration is fundamental to meeting the compliance requirements of this new era as transparency initiatives such as Justified Trust and BEPs involve reporting on the activities of the whole company. While this is onerous, it also creates an opportunity to upgrade technology for everyone’s benefit.

Technology can elevate a company’s tax accounting processes and solve many of the issues weighing accountants down in their day-to-day work. However, getting approval to invest in tax technology is not always easy.

“The flow of data eliminates duplicate work and decreases the time and resources spent on tax processes.”

When getting approval for any kind of investment, the business will have two questions:

  • How will our clients benefit?
  • How will revenue will be generated, and how much?

Tax and finance departments are not traditionally viewed as profit making, so convincing the business to invest in these departments is difficult. This can lead to an organisation staying with systems and processes that no longer adequately serve them, and in time may have a negative effect on the business.

You need to define and defend to build a business case to invest in tax technology. Be prepared to define and defend the case on multiple levels – there are more factors to argue than revenue generation.

Define the benefits

Some of these include:

  • Accuracy and insights – Reduces human error and risk through real-time access to data and effective tax rates, and enables analysis and advice about what’s happening to be provided on the same day.
  • Efficiency and productivity – The flow of data eliminates duplicate work and decreases the time and resources spent on tax processes.
  • Global collaboration and compliance – Enables real-time data access and removes language, time zone and local reporting requirement barriers.
  • Talent attraction and retention – Best practice technology can be a drawcard for potential employees. It also creates job satisfaction by freeing up time to provide strategy and analysis, elevating the visibility and contribution of the tax department.
  • Security – Data is protected by passwords and encryption.

Defend by communicating the risk of not investing

Legacy systems and processes can lead to errors and fines – Excel sheets are not standardised and can have nuances specific to the way they were used by a particular person. When those individuals leave the business or move out of the role, there is a risk that the sheets they created may develop errors in the hands of a new user. These may not be discovered. Even if discovered, the same or different errors could happen again. This exposes the business to risk of fines.

  • Reputational damage – This can have a knock-on effect to the company’s bottom line.
  • Market edge – Firms that don’t adopt and adapt to technology will start to lose clients.

Build your case for tax technology internally

There are a number of steps to sell your case internally:

  • Define your high-level elevator pitch: Define the cost of the problem. Define your solution. Describe the implementation plan and risks. Ask, what is required and is funding available?
  • Before technology implementation: create awareness internally of the challenges. Identify advocates in the business who are outside your team. Determine the path to sign-off, which can be very different to talking to the CFO. Acquire funding.
  • Understand how your project fits in: What is going on in your environment? Is there a larger initiative to consider, such as BEPS, tax transformation, or global tax reform? Understand what is already funded and how you can piggyback on that. Do decision-makers have goals or motivations you can capitalise on?
  • Build a great business case: What has been successful for other recent projects? (Try to get a copy of an approved case and use what works. Understand decision criteria – ROI, payback, or other project ratios). How many approval steps are there? What does the governance model look like? If you get budget, how do you get ahead of the procurement and legal process?
  • Make a successful pitch: First, know your audience – who will be in the room? Who are your advocates? What does your audience need from you to be able to say ‘yes’? Second, practice your presentation – think through your answers and what resistance you may face before you start.

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