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The company had reported a material weakness in internal controls relating to financial
reporting for income taxes. The complexity of the legal entity structure, the volume of
intercompany activity and related loans and the lack of standardized processes and
systems all contributed to the need for improvement.
PwC’s solution
PwC Tax and Advisory Finance won a competitive bid to help the CFO, the Chief
Accounting Officer, and the VP of Tax conduct a four-day summit for the company’s
global tax team. We were able to help identify a number of opportunities in the tax area
that were directly related to issues with the underlying accounting. In this unique
situation, PwC’s Tax team became part of the overall business process improvement
effort, joining forces with Finance advisors and working collaboratively to look for
solutions.
Working with the client, PwC’s cross-functional team, led by Accounting, Tax, Treasury,
and Finance, set out to help create an integrated solution to reduce risk and simplify the
intercompany loans process. In order to determine the path to a long-term solution, we
first analyzed the array of outstanding loans and the quality of the related baseline data.
The team only had three weeks to standardize, reconcile, and produce a billing file that
the company could use to bill its intercompany interest. Working jointly with the client,
PwC helped create a standard template and process to recalculate 450 intercompany
loans based on their unique attributes.
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Next the client commissioned the development of an inter-company database, using SQL
with a web front end, to be used as the loans sub-ledger, accessible to more than 200
users worldwide. With the client, PwC helped develop a standard template for the loan
schedules, to correct the historical data, and then develop core management reports and a
dashboard that together provide insight for enhanced decision making and preventive
controls to maintain quality.
Using this standard approach, together we verified the need for significant data clean up.
We helped correct the necessary schedules, and with these new controls now in place,
many more errors have been eliminated, such as missed transactions, calculation errors
and inaccurate or untimely reporting.
Our ability to offer cross-functional insight was critical to the success of this engagement
for the client. What started as a Tax and Finance project quickly became an exercise in
business process improvement, tactical accounting operations support, and the
implementation of technology solutions.
Accounting has sped up the generation of its interest accrual reports from two weeks to
five minutes, while Treasury has decreased its loan file processing time by more than 80
percent, while simultaneously eliminating the earlier errors in the loan schedules. Global
visibility into the database promotes transparency, enables reconciliation to G/L, and
creates an audit trail. Tax is able to optimize its tax planning now that it knows it is
working with accurate information. With the availability of 18 Accounting, Tax, and
Treasury reports that can be generated in less than one minute each, the client is saving
time and reducing waste as it maintains its ongoing focus on quality.
Or contact
Keith Considine David M. Shebay Brian K. Shin
Partner Director Manager
(713) 356-6832 (512) 970-0984 (713) 356-8060
keith.considine@us.pwc.com david.m.shebay@us.pwc.com brian.k.shin@us.pwc.com
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