As the COVID-19 pandemic continues to upend supply chains and disrupt operations globally, corporations across India and South East Asia are adapting their processes and systems to the ‘new normal’.
Many are now under even more pressure than before to contain costs and drive efficiencies, while adding business value. Statutory reporting and tax compliance are key focus areas in this regard; and many corporations are turning to technology to modernize outdated ways of working and overcome challenges that have traditionally hindered reporting and compliance processes. These include manual and time-consuming approaches, siloed processes and fast-changing legislation in multiple jurisdictions.
Additionally, while regulatory authorities may be temporarily restricted by social distancing measures, they are not taking their feet off the accelerator. Corporations can expect the relevant authorities to continue scrutinizing their tax practices and compliance processes, often through virtual means.
In this environment, it’s vital to assess whether your accounting, finance and tax departments have the tools and support they need to maintain compliance efficiently and prepare statutory reporting obligations in an accurately and timely manner.
Five key questions to ask
1. Are your processes outdated?
It’s important to regularly assess your current statutory reporting processes, so you can identify risks and pinpoint opportunities for improvement.
SSON’s recent Statutory Reporting and Tax Compliance Survey, sponsored by Thomson Reuters, reveals that among leading enterprises across the Asia-Pacific region, as many as 6 out of 10 believe their current approaches to statutory reporting require improvement.
Today, statutory reporting processes often contain a large number of manual components, with spreadsheets being a popular vehicle for data collection and report generation. Unfortunately, this approach can be inefficient and lead to wasted time, inaccurate data and delayed reporting.
When asked how long it took to complete the statutory reporting process, 31% of respondents said 15 to 30 days, 15% said 30 to 45 days, and 15% said more than 45 days. These lengthy reporting cycles place immense pressure on finance professionals, which can lead to a higher risk of error, particularly when teams are under time pressure and there are last-minute adjustments. This could result in balance sheet errors and notes not tying into principle statements. When these accounts are on public record for all to see, this does not reflect well on the integrity of the business and could lead to reputational damage.
Readily available statutory reporting technology can help your business avoid these risks by streamlining processes and modernizing data management through automation. For example, data only has to be entered once as a journal and it will automatically update all the necessary numbers in the report, saving time and reducing the risk of manual data entry errors.
2. Is your audit trail credible?
An audit trail provides a step-by-step record of all transactions, from contract to financial statements, including accounting data, trade data, paperwork and electronic evidence, among other information. During an audit, this data trail is used to verify the accuracy and validity of the financial information that has been used to compile and explain statutory reports.
The ability to follow records back to their origin provides auditors and regulators with the transparency they require, while enabling your team to defend decisions and meet today’s high standards around record integrity and accuracy. However, with a manual process in place, it can be an administrative nightmare trying to keep track of what changes have been made to your initial trial balance, and by whom.
With this in mind, you need to assess whether you need to adjust your systems and approaches in order to create a clear audit trail that answers even the most complex questions convincingly. A trusted statutory reporting solution can provide standard work papers that substantiate your reports by providing a full audit trail from your trial balance, including adjustments, to your reports.
3. Are siloed approaches putting you at risk?
Open communication among team members, unified approaches, and access to shared information and systems is critical in the modern corporate environment. However, when the business is preparing statutory accounts for a large number of entities, there may be different teams involved in preparing different sets of accounts for one jurisdiction, with no consistency in policy wording or corporate standards.
It’s possible to address this challenge, while substantially reducing manual effort, by managing important audit documents and files through standard templates and a streamlined document management system in a central location. This helps to shorten audit cycle timelines and makes results easier to defend.
4. How do you manage regulatory changes?
According to the SSON Survey, managing compliance across multiple jurisdictions is a top challenge faced by 56% of tax departments. This could suggest the potential for non-compliance across some of these statutory accounts.
If, as a multinational business, you find it difficult to keep up with legislative changes across every country in which you do business, you may need a statutory reporting solution that provides country specific regulatory content along with new and updated disclosures, to ensure continued compliance as local legislation changes.
5. Is your technology meeting your needs?
You can improve your audit defense, compliance and statutory reporting capabilities significantly with technology. A trusted solution can support all processes in your finance and tax department, helping your enterprise efficiently and confidently navigate a volatile and fast-changing landscape.
Modern technology can also help your enterprise maintain control over the information and data within your accounts. Ideally, you need systems that allow you to gain uniformity across your organization and achieve a standardized financial reporting process that helps you save time, reduce errors and ensure compliance.
When you are ready to choose a statutory reporting technology solution, look for one that offers you the ability to:
Capture and store data in one location: A centralized platform reduces the time spent on data collection, data manipulation and multiple report iterations. If you only need to enter the data once and see it flow automatically to the relevant reports, you can eliminate the risk of re-keying errors, and cut the time spent on data processing and validation. You can also easily drill down from reports into the underlying data.
Automate routine tasks: You can save time and increase accuracy when preparing your reports with automatic rounding, note/page numbering, referencing and rollforward processes. Ideally, you should also be able to generate supporting work-papers that link your source data to your report.
Manage disclosures efficiently: You should ideally be able to insert and customize new disclosures in your reports using standard templates or create and control your own specific disclosures. Additionally, with a system that automatically applies new and updated disclosures to your reports, you can be confident that your disclosures are based on the latest updates. This way, your team can redirect the time they’d normally spend on research and formatting to higher-value activities.
The way forward
With these capabilities in place, you can feel confident that you have the appropriate level of controls in place, supported by a meaningful and credible audit trail.
Contact the Thomson Reuters India ONESOURCE team for more information.