Case study · Tax reporting and account reconciliation · South Africa

Before there was a manual

A telecom group headquartered in South Africa, operating in 20 countries across Africa and the Middle East, moved its tax provision, tax reporting, Total Tax Contribution, tax risk register and account reconciliations off emailed spreadsheets and onto Oracle EPM. It was among the first Tax Reporting builds anywhere. I was the functional lead, and I taught it to the people who would run it.

What was builtTwo products, five workstreams
Oracle Enterprise Performance Management, cloudEPM
Tax ReportingTRCSTax provisionReturns and CbCRTotal Tax ContributionTax risk register
Account ReconciliationARCSReconciliations

Among the first
anywhere

Client
Telecom group, South Africa-headquartered
My role
Functional lead
Team
A project manager, me, a senior consultant and two consultants
Delivered at
Accenture
Operating countries
20
Trained onsite
30+

01 · The problem

Every change went round by email.

As the group later described its starting point, budgeting, financial reporting and tax compliance ran on spreadsheets that were emailed between the countries and head office.

Each change meant consolidating and aggregating the numbers again. Figures were updated in some places and not in others, and the same calculation could be done two different ways. Change one figure below and watch what it costs.

A head office in the middle, six operating countries around it, each with its own copy of the figures.Head officeGroup pack v3NigeriaTax pack v3GhanaTax pack v3UgandaTax pack v3CameroonTax pack v3Côte d’IvoireTax pack v3ZambiaTax pack v3
Emails sent
0
Re-consolidations by hand
0
Versions in circulation
1

A simulation. Six of the group’s countries shown; versions and counts are illustrative.

02 · No playbook

A new product leaves every question open.

Oracle’s Tax Reporting cloud service was new, and this was among the first implementations of it delivered anywhere in the world. There were few finished builds to learn from.

So the design questions were answered from the tax first, then proved in the product. These are the kind of questions the functional design had to settle.

  • 01 · Provision

    How should deferred tax roll forward, entity by entity, in a product that had not done it here before?

  • 02 · CbCR

    Can the Country-by-Country Report be built from the same figures as the provision?

  • 03 · Total Tax Contribution

    How do you count every tax the group bears and collects, not only income tax?

  • 04 · Risk register

    What makes a tax risk worth a line in the register, who owns it, and how is it rated?

  • 05 · Reconciliation

    Which accounts need a reviewer, and which can close on the preparer's word?

  • 06 · Everyone

    How do you teach a system to people in twenty countries when nobody has used it yet?

Illustrative questions

03 · The scope

Five workstreams on two products.

Tax Reporting carried the provision, the reporting that follows from it, the group’s Total Tax Contribution and its tax risk register. Account Reconciliation carried the balance sheet. Choose a workstream to follow its data.

Choose a workstream
The general ledger, the consolidation, tax data and payments, and risk assessments feed Tax Reporting, which produces the tax provision, return data and CbCR, the Total Tax Contribution and the tax risk register. The general ledger and sub-ledgers feed Account Reconciliation, which produces reconciled balances.General ledgerConsolidationTax data, paymentsRisk assessmentsSub-ledgers and bankTax ReportingTRCSAccount RecsARCSProvision and ETRReturn data and CbCRTotal Tax ContributionTax risk registerReconciled balances

Tax provisionTax Reporting

Current tax and deferred tax by entity, rolled up to the group, with the ETR reconciliation that explains the gap between the statutory rate and the effective rate.

Statutory rate
28.0%
Non-deductible expenses
+2.6%
Foreign rate differences
(1.9)%
Prior-year adjustments
+0.4%
Effective tax rate
29.1%

Illustrative ETR reconciliation for one entity, % of profit before tax. Bars start at 24%.

Returns and CbCRTax Reporting

The data the returns need, and the Country-by-Country Report, built from the same figures as the provision rather than from a second set of workings.

Illustrative CbCR Table 1, in millions
Table 1RevenueProfit before taxTax paid
Jurisdiction A4,210912268
Jurisdiction B2,980541162
Jurisdiction C1,14520361
Jurisdiction D620(48)4

Illustrative figures, in millions.

Total Tax ContributionTax Reporting

Every tax the group pays, not only income tax: the taxes it bears as a cost, and the taxes it collects for governments from customers and employees. For a telecom group, licence fees and taxes on airtime sit beside corporate income tax.

Borne62
Collected85
  • Corporate income tax 38
  • Licence and regulatory fees 14
  • Employer payroll taxes 6
  • Customs and other 4
  • VAT and sales taxes 58
  • Employee income taxes 12
  • Withholding taxes 9
  • Excise on airtime 6

Illustrative figures for one country, in millions.

Tax risk registerTax Reporting

Each tax risk in one register: rated for likelihood and impact, given an owner and a response, and reviewed with the provision rather than in a separate spreadsheet. Choose a risk.

16 of 25Transfer pricing on intra-group management feesOwner: Group tax. Benchmarked, documented and reviewed each year.

Illustrative risks and ratings.

ReconciliationsAccount Reconciliation

Balance sheet reconciliations, each with a preparer and a reviewer, a due date and an audit trail of who did what and when.

  1. PreparedThe balance agreed to its support, with any difference explained.
  2. ReviewedA second person approves it, or sends it back.
  3. ClosedLocked for the period, with its history kept.

Simplified. Sources are described by type.

04 · The team

Five people, one design.

I led the functional side: what the provision, the reporting, the contribution and risk views and the reconciliations had to do, and how the build should express it. Then I took it to the users.

  • Project managerPlan, scope and the client relationship.
  • MeFunctional leadThe design of the provision, returns and CbCR, Total Tax Contribution, the risk register and the reconciliations, then the training and the UAT.
  • Senior consultantConfiguration and testing.
  • ConsultantBuild, data and test support.
  • ConsultantBuild, data and test support.

05 · The room

Thirty-plus people flew in to learn it.

The people who would run the system each period came to South Africa from across the group’s operating countries. I delivered the training, then ran the user acceptance testing with them, as the change management for the whole programme.

Flights from the group’s operating countries in Africa and the Middle East converge on South Africa, where the training was held.NigeriaGhanaCôte d'IvoireCameroonBeninCongo-BrazzavilleGuineaGuinea-BissauLiberiaUgandaRwandaZambiaEswatiniSudanSouth SudanSyriaYemenIranAfghanistanThe training room
30+

people trained onsite, then testing the build themselves

20

operating countries in the group, across Africa and the Middle East

The group’s operating countries in 2018. Locations are approximate.
  • Afghanistan
  • Benin
  • Cameroon
  • Congo-Brazzaville
  • Côte d'Ivoire
  • Eswatini
  • Ghana
  • Guinea
  • Guinea-Bissau
  • Iran
  • Liberia
  • Nigeria
  • Rwanda
  • South Africa
  • South Sudan
  • Sudan
  • Syria
  • Uganda
  • Yemen
  • Zambia

06 · Training and UAT

Taught first. Then tested by the people who would use it.

Change management was not a slide at the end. The users learned the system in the room, and then they were the ones who tested it and accepted it.

  1. Step 1

    Training, module by module

    The provision, returns and CbCR, Total Tax Contribution, the risk register and account reconciliation, each taught in the room.

  2. Step 2

    Hands-on practice

    Attendees worked the system themselves before they were asked to test it.

  3. Step 3

    User acceptance testing

    The people who would run each period tested the build against the design.

  4. Step 4

    Fixes and retests

    What failed was corrected and tested again before sign-off.

  5. Step 5

    Sign-off

    The users, not the build team, accepted the system.

Illustrative test cases. 10 of 10 passed

To test0

In test0

Passed10

UAT-01 · Provision · passedCurrent tax by entity
UAT-02 · Provision · passedDeferred tax roll-forward
UAT-03 · Provision · passedETR reconciliation, group
UAT-04 · Returns · passedReturn data by entity
UAT-05 · CbCR · passedTable 1 by jurisdiction
UAT-06 · Total Tax Contribution · passedTaxes borne and collected, by country
UAT-07 · Risk register · passedA new risk rated, owned and reviewed
UAT-08 · Reconciliation · passedPreparer completes a reconciliation
UAT-09 · Reconciliation · passedReviewer rejects, preparer corrects
UAT-10 · Reconciliation · passedPeriod close and audit trail

07 · The result

A system the group could run itself.

The provision, the reporting, the contribution and risk views and the reconciliations on one platform, built early in the product’s life, and handed to users who had already tested it.

The group later reported that its tax provision calculations, and their comparison with the group effective tax rate, moved from quarterly to monthly, with stronger oversight of the provision across its operating countries.

12 provision runs a year, each compared with the group ETR

Jan
Feb
Mar
Apr
May
Jun
Jul
Aug
Sep
Oct
Nov
Dec
Among thefirst

Oracle EPM Tax Reporting implementations delivered anywhere

30+

users trained onsite, from across the group

5

workstreams live: provision, returns and CbCR, Total Tax Contribution, the risk register, reconciliations