When the Holiday celebrations are over, you wake up New Year’s Day with resolve to be organized; hit the gym; and of course, be prepared for the audit of the income tax provision! The work you have done to make your process efficient; improve data collection; communicate with management and the board; and address tax risk management will be put to the test.
Here are a few tips to be prepared for your auditors:
- Consider data sources. Identify gaps in core system data and review risk management actions taken with auditors including software data collection tools. Automate data movement from source into provision calculation.
- Determine audit requirements for the IT environment, software products, and spreadsheet risks. Be ready to respond.
- Identify gaps in technical skills. Consider tax jurisdictions, technical issues, and non-routine matters. Supplement your team with specialist skills as needed.
- Prepare analysis and reconciliations. Include account reconciliations; valuation allowance assessments; plans regarding foreign earnings repatriation or cash flow reinvestment; and accuracy of estimates used. Use software with self-reconciling reports and automated journal entries to assist.
- Prepare detailed disclosures. Establish summary reports for footnote and management reporting with an audit-ready roll-up trail.