Tax Accounting & Reporting

A major requirement for the proper determination and accounting of current and deferred income taxes for the consolidated financial statements according to IFRS, US GAAP or any other GAAP is an extensive flow of information from the subsidiaries to the parent company. To be able to efficiently process and consolidate the reported tax data at group level, the use of a standardized determination and reporting tool is critical, which can be used worldwide.

A real alternative to web-based software solutions for this purpose is the use of Microsoft Excel, which is a standard tool that is used at the corporate level by almost everyone on a daily basis working in accounting and tax departments.

I would be happy to advise you on improving your in-house Excel-based calculation solutions for determining current and deferred taxes (IAS 12/HGB) or to provide you with sophisticated solution proposals, which are sure to assist you in reducing inefficiencies and errors from manual input.

Functions at company level / reporting unit

• standardized calculations of current income taxes for corporations, fiscal unities and Flow-Through entities
• current tax movement schedule
• standardized true-up concept for the purpose of considering differences from the previous year’s tax provision calculation, e.g. after submission of tax returns, completion of tax audits
• standardized concept for the consideration of losses carried forward for corporate income tax, trade tax, interest or tax credits
• import of trial balances plus automated account mapping for temporary and permanent differences
• standardized calculation of deferred taxes (IAS 12 or HGB)
• one-step calculation of deferred taxes (direct comparison of IFRS vs. tax base),

or alternatively: two-step calculation of deferred taxes (1. local GAAP vs. tax base and 2. reconciliation from local GAAP to IFRS for comparison to tax base)

• differentiation between differences recognized in profit or loss and differences recognized through e. g. OCI (both permanent and temporary)
• deferred taxes on loss carryforwards, interest carryforwards, tax credits
• integrated approach to assist in determining recoverability of deferred tax assets
• two classification concepts for netting of DTA with DTL: a) long-term or b) differentiation between long-term and short-term
• fully automated and standardized tax rate reconciliation for the reconciliation of the expected tax expense to the actual tax expense recognized in the income statement due to
  • differences to local tax rates
  • non-deductible expenses / tax-exempt income
  • aperiodic current and deferred taxes
  • changes in tax rates
  • changes in valuation allowances
  • Loss carryforwards (different reconciling items for: expiry, utilization in previous year not recoverable, non-recognition of current year losses)
• determination of necessary closing entries, generation of posting lists for any system (e.g. SAP/Lucanet/HFM/NAV)
• determination of other disclosures in the notes to the financial statements in accordance with IAS 12
• inherent controls/validations and sign-off concept
• concept for the annual transfer (roll-forward)
• protection concept against unwanted manipulation of the calculation logic

Functions at consolidation level

• standardized presentation of tax data (deferred tax sheet by balance sheet position, tax rate reconciliation and tax expense) per consolidation unit (entity level) in local currency and in group currency
• currency translation from local currencies into group currency
• concept for the consideration of deferred taxes on consolidation entries (capital consolidation, elimination of intercompany results, debt consolidation, at-equity accounting), first-time consolidations/purchase accounting and de-consolidations
• concept for determining offsetting amounts (IAS 12.74), taking into account consolidation effects and taxable entities / tax groups
• concept for determination of outside-basis-differences (OBDs) and the disclosures according to IAS 12.82
• standardized calculation of all disclosures required for the notes for the group financial statements in accordance with IAS 12
• concept for annual roll-forward

Advantages of excel-based tax reporting solutions:

• uncomplicated and cost-effective worldwide implementation
• no recurring costs after implementation (e. g. no license fees)
• possibility of adaptation to company-specific characteristics
• low training requirements due to the use of Microsoft Excel as a familiar tool
• elimination of the final export of the results to Excel, which is usually necessary.