Case Study
Complex Provision Process Made Simple With Bloomberg Tax
- Solve provision process complexities worsened by spreadsheet reliance
- Bloomberg Tax Provision
- Faster conversions and calculations
- Automated tax offsets
- Efficient account reconciliation
Challenge: Solve provision process complexities worsened by spreadsheet reliance
With over 100 legal entities across 20 countries, a leading company in the agriculture industry must navigate an increasingly complex tax provision process. Faced with risk, time, and optimization challenges, the company’s director of tax accounting sought a better way to manage and update tax data for more efficient financial reporting.
Using spreadsheets fell short in addressing minutiae in depreciation, foreign-derived intangible income (FDII) and global intangible low-taxed income (GILTI) deductions, as well as general and branch foreign tax credits. ASC 740 added a further layer of complexity, with accounting needs that spanned new entry and reconciliation demands, among many critical areas.
For years, the director of tax accounting was the only full-time employee on the tax provision team, which created a common predicament: When the tax provision process relies on a manual Excel-based approach, it is nearly impossible to resolve learnability, continuity, and version control issues. Wanting to mitigate risk, she began to assess other options for streamlining the company’s data management needs.
Solution: Software implementation that delivers on ease, speed, and cost promises
While competing software promises to expedite the provision process, implementation can be a long, arduous process. Because of this hurdle, many tax departments end up sticking with old systems.
“I’ve heard horror stories of people saying it took years to implement other software,” said the director of tax accounting.
When the company decided to switch to Bloomberg Tax Provision, she was pleased by the ease, speed, and cost of implementation.
“Bloomberg Tax Provision took us three to four weeks to implement – that was huge for us. It’s very easy software to use; we had a demo for two hours and we were up and running.”
With Bloomberg Tax Provision up and running, the company’s director of tax accounting no longer needed to spend hours poring over spreadsheets and instead could concentrate on high-level analysis to optimize for future tax liabilities.
[Request a demo. Discover a simplified ASC 740 workflow and audit-ready reporting capabilities with Bloomberg Tax Provision.]
Results: Speedier calculations and conversions for easier interim reporting
Automated tax offsets
With an international reach, the company generates hefty foreign tax credits – which require complex valuation allowance analysis – and have uncertain tax benefits on their foreign branches with offsets to the U.S.
Bloomberg Tax Provision handles these multijurisdictional issues with ease, according to the director of tax accounting. As an example, while the company has anticipatory credits in Canada, the software automatically reflects an offset in the U.S.
“We haven’t seen [this feature] offered with any other software,” she said.
Line of sight into calculations
Bloomberg Tax Provision provides line of sight into effective tax rate calculations, which is an invaluable feature when operations span jurisdictions. By contrast, rate reconciliation is tricky when calculated through tools like Excel, as new data may not automatically flow into the final rate.
The leading agricultural company has a rate rec set up for all 20 jurisdictions in which they operate, in addition to having one broader rec that allows the tax team to see every adjustment that goes into the effective tax rate. If there is a rate change, the software automatically calculates the difference and factors it into the rate reconciliation.
“We can compare prior to current quarters,” the director of tax accounting said. “Or if changes arise that need to change the comparative rate rec, you can identify those differences to make sure you’re comfortable with everything before you book entries.”
Ease of new item entry
While Excel-based models struggle to keep pace with new tax laws, accounting rules, and business locations, Bloomberg Tax Provision makes it easy to add new permanent items.
“If you need to set up a new entity or jurisdiction, it’s seamless,” the director of tax and accounting said. “The software identifies the correct location for items to go within tax workpapers.”
Speedy conversions and calculations
Interim reporting frequently focuses on converting figures into U.S. dollars, leading to a significant amount of time on currency translations in Excel. Due to time constraints, reporting often bottlenecks, causing stakeholders to hurriedly analyze data at year-end.
The director of tax accounting describes the ease of using Bloomberg Tax Provision for interim reporting: “We upload in the local currency and [the software] calculates the cumulative translation adjustment and any foreign exchange rate changes in our deferred roll forwards.”
She added that other comprehensive income (OCI) calculations are also easy to compute: “It’s almost like you don’t have to think about the OCI entries, because they automatically get in the software.”
[Request a demo. Discover a simplified ASC 740 workflow and audit-ready reporting capabilities with Bloomberg Tax Provision.]
Efficient reconciliation and true-up generation
As the director of tax and accounting noted, account reconciliation used to be someone’s part-time job but after implementing Bloomberg Tax Provision, it is automatically delivered.
She also mentioned how true-ups are equally easy to generate. “You can run the current comparison report,” she said, referencing final quarter and tax return provisions. “Once numbers are [calculated], you’re ready to book the true-up.” No manual adjustments are required.
Taken in their entirety, these benefits add up to one big result: Confidence in the details.
“All reports we give come out of Bloomberg Tax Provision,” the director of tax accounting said, who noted the software’s solid control functionality also preserves data integrity. Based upon these features, and “because it’s not an Excel file, where you have to check for errors, auditors are comfortable with the reports they get.”
[Request a demo. Discover a simplified ASC 740 workflow and audit-ready reporting capabilities with Bloomberg Tax Provision.]