Global Transfer Pricing Conference · Global Transfer Pricing Conference │ October 2016 Phase 1...
Transcript of Global Transfer Pricing Conference · Global Transfer Pricing Conference │ October 2016 Phase 1...
Global Transfer Pricing ConferenceData analytics and transformation
October 2016
www.pwc.com/transferpricing
The new normal – full TransParency
Global Transfer Pricing Conference │ October 2016
Today’s presenters
PwC │ 2
Brian T. Burt Laurent Bellay
David A. Nickson
Global Transfer Pricing Conference │ October 2016
Agenda
PwC │ 3
TP Analytics Overview1
Example Applications2
Case Study3
Q&A4
Global Transfer Pricing Conference │ October 2016
Transfer Pricing AnalyticsA new service offering…
1
Global Transfer Pricing Conference │ October 2016
HeadlinesData Analytics in the News
PwC │ 5
Data-informed.com
IRS Implements Analytics for Compliance,
Fraud Detection and Workforce Management
WASHINGTON—The U.S. Internal Revenue Service has launched
several data analytics projects that are improving compliance,
combating fraud, identifying abusive tax shelters and saving money,
according to several representatives of the federal tax collection
agency. The officials spoke at the Predictive Analytics World
Government Conference held here on Sept. 17 and 18.
Fighting tax fraud with big data
CNBC
Global Transfer Pricing Conference │ October 2016
Cross-Functional Solutions
PwC │ 6
• Enriches descriptive analytics to understand what has happened (reporting on key metrics)
• Improves predictive analytics to understand what is likely to happen (modeling and trend detection)
• Enhances prescriptive analytics (use of predictive models to determine the best course of action)
Corporate / Overall
• Enables operational and decision-making processes, in areas such as local adherence to TP policies, detection of risk, opportunity identification, projections and scenario planning, and overall business support
• Additional level of transparency benefits Client’s audit readiness and its ability to meet growing global tax information reporting requirements (e.g., country by country reporting)
• Allows for jurisdictional reporting and documentation of business activities, which is critical in managing increased tax controversies and disputes resulting from global transparency initiatives
• Multi-period trending and benchmarking using real-time data provide key insights into how the Tax function / TP policy is impacting the overall business
Tax / Transfer Pricing
• Improved forecasting / scenario planning, using historical, applying current or future data to obtain retrospective, current (real time) or prospective insights
• Leverage framework to analyze key indicators and perform due diligence for contemplated acquisitions (e.g., country by country SKU profitability / margin, tax implications, etc.), providing insight into how the acquisitions might be best integrated into Client’s global Commercial strategy
Commercial
Global Transfer Pricing Conference │ October 2016
Cross-Functional Solutions
PwC │ 7
Current state Leveraging data analytics & visualization
Data is manually gathered from disparate sources without the ability to analyze cohesively
Via Extract, Transform and Load (ETL) tools, data can be pulled automatically from source systems and stored centrally for efficient use
Excel is the predominant tool leveraged for storing, calculating and analyzing tax data, which can be effective, but oftentimes time consuming to maintain and review
Adding data and analytics solutions (e.g., SQL, Alteryx, PowerPivot) to the current Excel environment can augment the potential for automation (and reduction in time & level of effort)
Updating and reviewing calculations in complex Excel models can be time consuming and adds risk of error to the process
Data analytic tools (e.g., SQL, Alteryx, PowerPivot) can bolt on to existing Excel models or replace the use of Excel all together to increase the scalability of complex calculations (e.g., across legal entities, business units, consolidated groups) and mitigate overall risk via greater control
Results of tax calculations are highly aggregated and documented in static reports (e.g., PowerPoint, Word), requiring these deliverables to also be manually updated each time data is refreshed and minimizing end user functionality to dynamically interact with reported data
Visualization solutions (e.g., Tableau, MicroStrategy,Qlikview) are leveraged to bolt directly onto the calculation engine(s) (e.g., SQL, Alteryx, Excel) to create web and mobile-enabled, dynamic dashboards and provide enhanced data insights, enabling end users to efficiently make strategic business decisions
Global Transfer Pricing Conference │ October 2016
Sample Process Flow
PwC │ 8
Data AnalyticsApplications
2
Data AnalyticsClient example
3
Global Transfer Pricing Conference │ October 2016
Agenda
PwC │ 11
Company background / organizational set-up
Key issues to address
Process change - Phase 1 and 2
Where are we now?
Question & Answer
Global Transfer Pricing Conference │ October 2016
Organizational set-up - Transfer Pricing
PwC │ 12
• Corporate Taxation is responsible for developing Transfer Pricing policies
• The Legal Entity Transfer Pricing (LETP) team is responsible for administering those policies
− Efficiencies of a centralized team
− Calculations are performed on a monthly basis, one month in arrears
o true-ups occur continually each month
− Invoiced and settled monthly via intercompany accounts
− Legal entity controllers review the results and process associated journal entries and payments
Global Transfer Pricing Conference │ October 2016
What were the key issues to address?
PwC │ 13
• 14 independent excel based calculations with manual reconciliations
− data integrity – accuracy & completeness
• Data collection process into excel based models consumed more than 50% of monthly resource time
− sensitive to minor changes in accounting hierarchies
• Manual cross-model allocations
− consumed valuable review time on reconciliation rather than analytics
• Excessive time being spent on backwards analysis in response to tax authorities enquiries and audits
− extensive time to reproduce historical view of business segments and G/L account structure
• Key person risk
− incomplete executing documentation leading to concentration of knowledge with certain individuals in tax and accounting
Global Transfer Pricing Conference │ October 2016
Phase 1 Achieve automation – replicate reporting
PwC │ 14
Phase 1
Consolidated TP results
Relevant Information for
each Legal Entity
Reporting
package by
Legal
Entity
Financial Data Warehouse (FDW)
Integrity
Consistency
Completeness
Inputs
Mark ups, FX rates, Indirect
allocations, etc
Reduced and controlled
manual inputs
Process & Controls
Reconciliation
Validation
Sign-offs
Global Transfer Pricing Conference │ October 2016
Phase 2 - Enhance Data Analytics
PwC │ 15
Stakeholders:
Corporate Tax,
Legal Entity
Controllers
Ou
tpu
t
Dashboard
Reporting &
Analytics
Global Transfer Pricing Conference │ October 2016
Samples of BI software capabilities
PwC │ 16
Global Transfer Pricing Conference │ October 2016
Where are we now?
PwC │ 17
Phase 1 goal was achieving automation, gaining efficiencies, and replicating similar reporting format for local controllers
Phase 2 is taking advantage of the achievements realized through automation to build and enhance data analytics and reporting through a business intelligence tool such as Spotfire.
Lessons learned on reporting
Have the end goal in mind - understand reporting requirements and limitations
• Will facilitate the development and design process
Consider stakeholder requirements
• CbC reporting and other statutory audits
• Needs of corporate tax team, management and legal entity controllers
Global Transfer Pricing Conference │ October 2016
Panel Q&A
PwC │ 18
Global Transfer Pricing Conference │ October 2016
What did you think?
PwC │ 19
At the end of the session, tap Session Survey and provide your rating on any or all survey questions. Tap submit response.
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