surveys indicate that 50% to 70% of the tax departments in publicly traded
companies exclusively use spreadsheets to manage ASC 740 processes. However,
the percentage would be higher if the surveys focused strictly on small and
medium businesses (SMB). These numbers have held steady the scrutiny of the
last fifteen years relative to the tax areas of financial statement reporting
and internal controls. The current provision offerings have not met the needs
of SMB tax executives. If a technology solution wants to be an answer to the
homegrown spreadsheets running the ASC 740 process, it must be accurate and
comprehensive while being easy to use.
Accuracy is required
to reduce the risk of accounting for income taxes but the complexity of ASC 740
threatens a tax professional’s ability to be accurate. Precision in following
the balance sheet approach, jurisdiction-by-jurisdiction rate calculations,
loss and credit tracking, currency issues and uncertain tax benefits are all
highly complex. Spreadsheet tools drive tax professionals to adopt shortcuts
and work-arounds that chip away at accuracy. Accuracy will only be achieved
when the details of ASC 740 are embedded in the technology that enables
embracing the complexity, not cowering to it.
comprehensive solution will cover all the aspects of ASC 740 in a single
application. Current modularized solutions (with questionable interfaces), whether
packaged software or spreadsheets, only add to the risk of the tax provision.
Payables, UTBs, RTPs, footnote presentation, and all aspects of ASC 740 should
be native to the solution. Comprehensiveness does not mean embedding underlying
tax calculations within the provision tool. ASC 740 is solely focused on the
financial statement presentation of tax positions. Accordingly, a comprehensive
solution should not try to recreate tax calculations found in tax work papers.
Rather, the solution should leverage work performed for prior year as well as
Ease of Use
ease of use (like beauty) is in the eyes of the beholder, as tax professionals
we prepare, review and analyze work a certain way. Our work flows from source
data to tax work papers to returns. We
read transactions like others read sentences. Therefore, tax technology should
be built to flow with our work. We should not trade the complexity of ASC 740
for a complex software tool. Most SMB tax departments don’t have the luxury of
a full-time provision expert. So the solution must be intuitive enough avoid a
steep learning curve with each provision cycle. Calculations should flow from
one part of the provision process to the next, preparer and reviewer notes
should reside with the numbers, and reconciliations and roll-forwards should be
completed automatically. We need to drill from summary to detail and back to
summary as we review and make comments. And once the detail is accurate and
complete, the outputs should appear at our fingertips. Finally, business and
accounting changes should be easily identified and addressed.
Tax Prodigy Provision
Tax Prodigy Provision is a powerful, web-based (SaaS) ASC
740 engine that is accurate, comprehensive, and easy to use. Tax Prodigy Provision is designed to follow
the natural flow of the tax accounting process intuitively, even for the most
technically-minded tax professionals.
The application addresses every aspect of the provision including S-Ox
controls. The algorithms within Tax
Prodigy Provision provide accurate accounting for income tax at the detailed
level mandated by the rules of ASC 740. In other words: no more short cuts, no more guesstimated
blended rates, and no more spreadsheet blows.
Tax Prodigy Provision is the solution that supports the SMB tax executive in getting
ASC 740 right.