As the PCAOB releases its 2015 audit inspection reports for the auditing firms, one thing remains clear: we are not out of the woods yet. Key findings from the reports highlight continued deficiencies in internal control over financial reporting and areas impacted by economic risks such as business combinations and investments. They also note that income taxes continue to be one of the most frequently selected areas of financial reporting, particularly relating to testing the design and operating effectiveness, and controls testing valuation allowance of the net deferred tax assets.
Even though the PCAOB aims to evaluate the work of audit firms, the unfortunate impact to audit clients is increased scrutiny and documentation, creating longer audits and more investment of your time. Overall, 35% of Big Four audits sampled were found to be deficient in 2014, and while this number is estimated to decrease slightly 2015, it won’t be enough alleviate the audit burden completely.
Whether you are an accelerated filer or a smaller company, there will still be a continued impact to you and your organization. Given the complexity of tax processes in general, the tax department is rarely seen as anything but a red flag in a company level risk assessment. Add to this the burden of internal pressure from the top to improve accuracy, transparency and efficiency, it may feel as though the list of requirements just doesn’t stop growing.
In anticipation of year end, the PCAOB has also released some insight as to the upcoming 2016 audit cycle focus, stressing that it will continue to focus on similar issues as 2015 and adding to the list income tax related disclosures, related party transactions and audit quality review. While quality review isn’t a new concept, the increased focus on it can potentially create new issues for you and your team. You won’t be able to rely on past audit history as a more stringent quality review may bring up additional questions or request additional support not previously required.
True Partners Consulting is here to serve as your advocate and advise you on dealing with these new challenges and alleviate the burden you experience at year end. Have you considered a Tax Process and Controls Review to prepare yourself for the year-end provision?
We will spend a few days with you and your team to:
Our goal is to work with your team to develop a customized process that best fits the needs and concerns of your individual tax department and organizational strategy
True Partners Consulting is an independent tax consulting and advisory firm with a team of experienced professionals who can help you identify areas of risk within your recently completed tax return compliance process, as well as the upcoming tax provision process.
We can assist in evaluating existing roles and responsibilities to ensure that the proper alignment is in place and look for ways to leverage existing internal and external resources to increase efficiency and free up time. Together, we can build a comprehensive strategy to tackle your year-end provision process.
Ready to schedule a Tax Process and Controls Review? Contact either John or Jennifer below. Happy New Year!
John P. Bennecke, Managing Director
Jennifer Crawford, Director