TEI - Nebraska Chapter
Meeting
Effective Process
Improvement
January 17, 2012
www.ryan.com
Process Improvement
John Fiore
Director
630.515.0477
john.fiore@ryan.com
Chicago, IL
Anne Giffels
Senior Project Manager
312.214.4244
anne.giffels@ryan.com
Chicago, IL
Determining Your Starting Point
Where should you focus your time and budget?
What are Best Practices?
Attribute
Examples
High Level of Integration
•
Compliance and provision technology configuration
is matched
Tax Sensitized Source Data
•
•
High percentage (>50%) of book-tax differences
are automated
Very little manipulation of data after it is received
Company Recognition
•
Tax is included in M&A due diligence
Focus on Effective Rate
•
Materiality and a risk-based approach to
preparation and review
Continuous Improvement
•
Ongoing process improvement workplan that is
updated every year
Establish a Vision
• Short-term
– Immediate results
– Build momentum
– Foundational
• Long-term
– Two to five years
– Strategically focused
– Company supported
Approaching the Process Review
Questions for the Audience
How are you currently scheduling and communicating process
improvement initiatives?
Which tax department attributes are you focused on improving in
your one-year and five-year plans?
What steps are you taking to maintain the energy for continuous
process improvement?
Marketplace Observations
–
Start with the Data
Starting with the Data
–
Understand the Process
Budgeting /
forecast
information from
??
Estimated
payments from
business units
Provision to
return
reconciliation
Spreadsheets
for Provision
SAP - G/L
SAP Franchise tax
information
Treasury/holding
company G/L
FAS intercompany
reports
FAS - property by
state
M&A Activity
(basis, sales
price) - Finance
Spreadsheets
for Return
Compliance
Tool
Partnership
bonuses from
business units
Subsidiary G/L
K-1 for outside
partnerships
SAP - Total
Sales
Sales by state
from business
units
Miscellaneous
tax credits
Estimated
payments from
business units
Payroll Dept. officer
compensation
SAP - G/L
SAP - Payroll
Provide Visibility
Key Considerations
• Evaluate Your Technology – Improve or Replace
– Compliance
– Provision
– Document Management
– Calendar
• Automate Book-Tax Differences
– Provision
– Return
Technology Evaluation
• Define Your Requirements
– What You Need vs. What the Current Software
Provides
• Rank
the Requirements
– Must Have
– Should Have
– Would Like to Have
• Evaluate Your Technology Against Your Requirements
– Identify Gaps
– Identify Matches
• Next Steps
– Evaluate Other Software?
– Request Additional Modules and/or Improvements?
Book-Tax Difference Automation
• Prepare a List of Your Book-Tax Differences
– Brief Description of the Calculation
– Data Sources
• Separate Into Groups
– Reversal of Book Expense – Full or Partial
– Change in Balance Sheet Balance
– Change in Balance Sheet +/- Payments
– Scheduled
– Other
• Weighted vs. Unweighted
• Map Into Matrix
– Simple or Complex Calculation
– Simple or Complex Data Source(s)
Book-Tax Difference Visibility Chart
Examples of Improvements to Undertake
• Book-Tax Difference Visibility
• Book-Tax Difference Automation
• Debrief – Provision, Compliance, Data Collection,
Audit Closing
• Technology Evaluation – Provision, Compliance,
Workflow, Tax Data Warehouse
• Technology Training
• Implement/Improve Compliance Technology
• Implement/Improve Provision Technology
• Document Retention Evaluation
• Document Retention Improvements
Planning for Improvement – When?
YE Provision
4th Q
Estimated
Payments
Return
Extensions
State Returns Due
Process Improvements Project List
Q3 Provision
Federal Returns Due
3rd Q
Estimated
Payments
Q2 Provision
•
•
•
•
•
•
•
•
•
•
•
•
Book-Tax Difference Visibility
Book-Tax Difference Automation
Provision Debrief
Data Collection Debrief
Compliance Debrief
Provision Technology Evaluation
Compliance Technology Evaluation
Technology Training
Implement/Improve Compliance
Technology
Implement/Improve Provision Technology
Document Retention Evaluation
Document Retention Improvements
Begin Returns
Q1 Provision
1st Q
Estimated
Payments
2nd Q
Estimated
Payments
January
• Normal Activities
– Year-End Provision
• To Do List
– Provision Debrief
 What worked well?
 What needs to
improve?
YE Provision
February/March
Return Extensions
• Normal Activities
– Data Collection for Tax
Returns
– Prepare for Compliance
– File Extensions
• To Do List
– Complete Compliance
Implementation/
Improvement
April
• Normal Activities
– Begin Tax Return
– Q1 Provision
– Q1 Estimated
Payments
• To Do List
– Evaluate Provision
Software
Begin Returns
Q1 Provision
Q1
Estimated
Payments
May/June/July/August
• Normal Activities
– Continue Preparation of
Tax Returns
– Q2 Estimated Payments
– Q2 Provision
• To Do List
Q2 Provision
– Implement Provision
Software
Continue Returns
Q2
Estimated
Payments
September
• Normal Activities
– Complete Federal
Return
– Q3 Estimated Tax
Payments
Federal Returns Due
• To Do List
– Implement/Improve
Federal Tax Packages
– Federal Compliance
Debrief
Q3
Estimated
Payments
October
• Normal Activities
– State Returns Due
State Returns Due
– Q3 Provision
• To Do List
Q3 Provision
– Evaluate Tax
Compliance
Technology
– State Compliance
Debrief
– Plan for Year End
– Implement/Improve
State Tax Packages
November/December
• Normal Activities
– Q4 Estimated Payments
• To Do List
– Implement Changes for
Year End
– Automate Book-Tax
Differences
– Implement Compliance
Software
Q4 Estimated
Payments
How Much Time Do You Need?
Process Improvement Initiative
Duration
Effort
Provision/Compliance Debrief
1 Week
1 Day
Technology Selection
3–4 Weeks
5 Days
System Implementation
3–4 Months
3–4 Weeks
Book-Tax Visibility
2 Weeks
2–3 Days
Book-Tax Automation
4 Weeks
10 Days
Resources
• People
– Within Tax
– Outside Tax
 IT – Utilize Their Project Management Expertise
 Accounting/Finance
 Internal Audit
• Process
– Workplan
– Measurement – What Gets Measured Gets Done
– Budget – $ and Time
• Technology
– Project Management Tools
Questions for the Audience
What observations do you have about your current process
improvement plans?
How do they fit into the bigger picture of creating a more efficient tax
department?
Are there any process improvement experiences, good or bad, that
you would like to share?
How do you set priorities among a list of process improvement
initiatives, and how do you build process improvement into the
calendar?
Keys to Successful Redesign
•
•
•
•
Identify the Root Cause of the Problem, Not the Symptom
Reconnect the Tax Department to the Organization
Shift Resources From Compliance to Value-added Activities
Outsource Appropriate Processes
Process Improvement is a Process
•
•
•
•
•
•
The World Series isn't won or lost on Opening Day
Don’t Try to do Everything at Once
Workplan to Stay Focused
Strive for Continuous Improvement
Start with Smaller Projects to Build Momentum
Know the Stakeholders and Make Sure They’re Involved
Common Mistakes
• Unrealistic Deadlines
– Aggressive Timelines
– Flexible Planning
• Scope Changes
– Poorly Defined
– Badly Managed
• Risks Not Managed
– Identify and Assess
– Mitigation
• Poor Communication and
Collaboration
– Competing Priorities
– Silos
• Stakeholders Not Engaged
– Not Properly Identified
– Excluded
• Undefined Goals and Objectives
– Share the Vision
– Repeat Often
How to Avoid the Mistakes
• Trust the Team
– Include the Team to Set Timelines and Scope
– Bottom-Up, Not Top-Down
• Face Your Fears
– Don’t Focus on the Benefits at the Expense of Identifying the
Problems
– Prepare Mitigation Plans
• Communicate, Communicate, Communicate
– Weekly or Bi-Weekly Status Reports
– Regular Steering Committee Meetings
Where Do You Want to Start?
Meaningful and Lasting Improvements
• Employ a dynamic combination of approach, expertise, experience
and style that positions us to deliver sustainable results
• Provide an integrated and total solution to the tax process needs of
our clients
• Recognize there is no single element, no simple formula, for
achieving successful change and that each solution is as unique
as each client
• Demonstrate that capability and knowledge transfer are key, so
that tax processes can continually improve after the project is
complete
• Engage professionals throughout the process to manage change
and build ownership and support for lasting results
• Focus on results that bring meaningful change to your organization
Questions?
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