New publication on tax reporting challenges

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28 May 2007

Deloitte & Touche (United Kingdom) has published Mind the GAAP: Best Practice Tax Reporting in a Changing Environment.

This publication  contains recommendations as to how companies might address the challenges of tax reporting in financial statements brought about by recent changes including IFRSs and auditor independence. The report draws on market research that investigates how large businesses in the UK are managing the challenges of tax reporting. Some of the facts uncovered may be surprising:
  • Company tax directors and managers lack confidence in their company figures.
  • Alarmingly, 43% of companies are concerned that errors in brought forward balances may eventually lead to material errors.
  • There is a high level of discomfort with the technical requirements of the accounting standards.
  • Nearly half (49%) of the companies claim to have had differences of opinion with their auditors on the interpretation of IAS 12.
  • Only 50% of in-house tax professionals believe that their personal knowledge of IAS 12 is adequate, and only 12% believe that their staff is fully trained in this area.
  • Accounting systems appear not to support the requirements of the tax function – making it difficult to get the numbers right.
The publication presents Deloitte's recommendations as to how companies can get to a 'fit for purpose' year end. Key recommendations for companies include the adoption of tax basis balance sheets, full quarterly tax reporting, and real time audits which conclude on the tax reporting impact of significant transactions, as they happen, to enable early identification of material issues.

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