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Tax accounting and risk advisory services (TARAS)

Income tax accounting and disclosure in the financial statements
In the context of globalization of accounting systems and increasing demands for transparency, tax and finance directors of the international companies are dealing with the challenges of income tax accounting and disclosure in the financial statements prepared under IFRS/US GAAP. For several years accounting for income taxes remains one of the main causes for restatements and is one of the top areas of material weaknesses.

Year

2010

2011

2012

2013

2014

2015*

Restatements

78

94

113

101

103

50

Material weakness

94

75

65

55

88

15


*The numbers shown from 2010 – 2013 are numbers reported by Audit analytics; the 2014 and 2015 numbers are based on EY analysis; the numbers for 2015 are presented through 3/18/2015

Income tax accounting requires both deep technical knowledge of tax legislation, and understanding finance accounting principles. In many cases it is difficult to make such combination internally, without the assistance of a professional advisor.

To support you in accounting for current and deferred income taxes, EY offers the following outsourcing services:

  • Income tax accounting advisory
    • Supporting research and documentation of current and deferred tax accounting matters
    • Assistance in implementation of new accounting standards
    • Financial statements and disclosure requirements
    • Training and education for local management
    • Consulting on tax accounting matters related to conversion of financial statements from local GAAP to IFRS/US GAAP
    • Validation of the current income tax payable balances against the tax authorities’ records
  • Tax provision preparation and review
    • Calculation of tax provisions (quarterly and annual), including provision to return adjustments
    • Review of tax provision calculations prepared internally
    • Assistance in data analysis and calculations for valuation allowances
    • Analysis of provisions for uncertain tax positions under ASC 740 or contingent liabilities under IAS 12 and relevant financial statement disclosures
    • Preparation or review of tax provision templates prepared for audit or corporate reporting purposes
  • Tax balance sheet accounts
    • Preparation of tax basis balance sheets to support cumulative temporary differences
    • Development of methodology for tax basis balance sheet preparation
  • Tax process improvement and controls assessments
    • Assistance with the design and documentation of internal controls and processes related to the tax provision and tax account disclosures
    • Testing of tax controls with recommendations on tax process remediation
    • Developing new tax processes and controls for initial adoption of new accounting standards
  • Transaction tax accounting assistance
    • Validation of the current and deferred tax accounts of the target company
    • Analysis of provisions for uncertain tax positions / contingent liabilities of the target companies
    • Assistance in preparing carve-out and pro forma financial statements

By combining qualified professionals and international methodologies EY is ready to offer you turnkey solutions for income tax accounting in accordance with IFRS/US GAAP, to help dealing with one of the major issues for representative offices and branches of international companies doing business in Russia.

 
 

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Alexei Malenkin

Alexei Malenkin
Partner, CIS Tax Accounting and Risk Advisory Services Leader

+7 (495) 755 9898
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