CFO buy-in critical for overall success
CALGARY, Nov. 16, 2011 /CNW/ - With converging trends creating the
riskiest tax controversy environment in years, 56% of Canadian
companies have already seen a rise in the volume or aggressiveness of
tax audits, Ernst & Young finds in a new survey. And C-suite executives
must understand the full implications to navigate this uncharted
"Ongoing economic uncertainty isn't the only legacy left behind by the
financial crisis," says David Robertson, a tax litigator and partner at
Couzin Taylor, a national law firm allied with Ernst & Young. "A new
era of tax scrutiny is upon us after global governments moved to
deficit financing to reignite their economies and companies sought
economic growth in new markets with uncharted tax regimes."
Robertson says it's not enough to have tax on your priority list
anymore. To avoid exposing your company to risk, tax needs to be a
leading focus area for C-level executives and boards, including the
Ernst & Young's 2011-12 Tax risk and controversy survey: a new era of global risk and
uncertainty shows that 57% of all global companies interviewed saw the same
increases as the Canadian contingent. That number jumps to 75% for
large companies with revenues over $5 billion. What's more, 97% of tax
administrators interviewed globally will increase their focus on tax
risk related to international structures and cross-border transactions
in the coming three years.
While 77% of all companies agreed or strongly agreed that tax risk and
controversy management will become even more important to them, only
50% of all CFOs subscribed to that same viewpoint.
"Bringing the C-suite in on these discussions is more important than
ever as the Canada Revenue Agency installs new programs focused on tax
governance and risk management," says Robertson. "Canadian businesses -
including their senior executives - must be prepared to answer tougher
questions around their tax administration if they want to survive and
thrive in this new landscape."
According to Robertson, focusing on five key pillars can help establish
the right kind of foundation for these discussions:
Adopt a global approach to tax risk and controversy management.
Evaluate resources, processes and systems for global tax risk
Address tax risk and controversy at a strategic level — and execute
Make strong corporate governance in tax a priority — because it is to
Stay connected with complex, voluminous and fast-paced change.
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