Skip to main navigation

Seizing the opportunity in Global Compliance and Reporting: Achieving accountability and governance - EY - Global

Seizing the opportunity in Global Compliance and Reporting

Achieving accountability
and governance

  • Share


"There’s no supervision beyond the country in question — that would be too costly, as it’s usually a small operation. So if they’re doing it wrong, we have no idea [until it’s too late]." Forbes Global 2000, technology hardware and equipment company

Summary: Many companies still have not implemented any meaningful or consistent governance model for their GCR requirements. More than 60% of respondents have been subjected to unplanned audits and more than 40% had received unexpected tax assessments and had been asked to pay penalties in the past year. Importantly, 17% of companies suffered interruptions due to lack of compliance, which most CFOs will not tolerate in any other part of the business.

The management of today’s GCR processes is often more a product of piecemeal evolution than of conscious design

Strong governance is essential, but often lacking. Respondents to our survey indicate that less than 44% of companies have established discrete or otherwise dedicated GCR responsibilities in their organizations.

Less than half of companies have established a discrete GCR function

EY - Less than half of companies have established a discrete GCR function

Percentage of respondents with a discrete GCR function

Improving control and accountability

Respondents indicated that multiple departments are responsible for GCR. As shown in the follow chart, responsibility typically is divided not only between finance and tax but also the business operating units.

With responsibility for GCR distributed across the organization, controls are often hampered, and improvement opportunities are difficult to realize.

Responsibility for GCR processes is spread widely across departments within companies

EY - Responsibility for GCR processes is spread widely across departments within companies

Percentage of respondents with a discrete GCR function

Solid governance provides:

  • The foundation to control and access GCR on a global basis
  • Ensure timeliness and completeness against filing requirements
  • Proactively manage risks and improve efficiency
  • Effectiveness across GCR processes

Adoption of global approach to governance varies widely

Our survey indicates that many companies have adopted a global approach to governance, although the adoption rate varies significantly between individual GCR processes. The level of global governance over GCR processes varies widely.

The level of global governance over GCR processes varies widely

EY - The level of global governance over GCR processes varies widely

Companies with global governance and monitoring of GCR activities

Take the example of governance for preparation of income tax provisions

Seventy-nine percent of companies have global governance for the preparation of income tax provisions.

Over the past 10 years, many companies experienced negative incidents and unexpected risks related to their tax provision processes. Improved governance in this area has been critical to improved results. Today, companies face new but similar risks in the other GCR processes, yet many companies still have not implemented any meaningful or consistent governance model for their GCR requirements.


Case Study: Re-engineering GCR on a massive scale


Governance, always an essential element of GCR, can be even more important in the midst of business integration or a large restructuring.

A Fortune 500 company with hundreds of legal entities spread around the world recognized that its GCR processes were about to be tested when it acquired another global company with hundreds of additional entities. The company being acquired had no formal GCR processes or governance in place. Instead, compliance and reporting was managed at the country level by local employees with little to no visibility by headquarters.

While the target was relatively free of a history of non-compliance, it was operating in a complex tax and accounting environment that heightened risk along with the potential for tax audits and related controversy. Employees were also leaving, exposing the company to a loss of knowledge and insight.

Senior executives realized that they needed to move fast to reduce risks, as well as prepare for added complexity and workload. The company worked with a specialized GCR service to develop a blueprint that identified filing requirements along with a map of the responsible parties.

Key filing risks were identified and immediately resolved without penalty. The service provider helped implement, and now support, standard processes as part of a global governance framework and technology solutions to provide visibility of key milestones and documents.

The company now has a robust GCR model in place that provides visibility and control over its statutory reporting and tax compliance obligations.




<< Previous | Next >>

Contents

EY - Download 'Seizing the opportunity in Global Compliance and Reporting' as a printable document

Connect with us

Subscribe to our email alerts.


Contacts


Related content

Back to top