Tax Control Framework with Runbook
Since the Dutch Tax Authorities have implemented Horizontal Monitoring, traditional audits with a vertical approach and strong focus on the past will gradually disappear. With Horizontal Monitoring, the taxpayer must be able to demonstrate that the organization is in control of its tax processes and relevant tax risks, which is referred to as the tax control framework. In exchange, the Tax Authorities' approach will shift from reactive (with tax audits over previous years) to proactive, in a joint effort to deal with relevant tax risks at present.
Advantage
The fact that the tax risks and positions can be dealt with within acceptable commercial deadlines is a huge advantage. It provides certainty that no unexpected expenses will occur later on. The right determination of the tax cash flow saves time and money.
In order to qualify for this type of monitoring, an enforcement covenant will first have to be concluded with the Tax Authorities. This covenant lays down the game rules of horizontal monitoring. The most important rule is that the organization sets up a properly functioning Tax Control Framework (TCF). A TCF is a system of internal control processes to control the risks relating to tax matters. It ensures that the company is in control from a tax perspective.
Approach
The approach for setting up a Tax Control Framework is as follows:
1. Determine which tax components must be included in the TCF
2. Identify the tax processes, risks and tax control measures
3. Define the desired improvements in the tax control measures (mature)
4. Implement the desired improvements in the TCF (manage)
5. Ensure that there is periodic maintenance of the TCF (maintain)
The complete Tax Control Framework can be effectively supported by Runbook's Internal Control module, and our Triple M-Approach (manage, maintain, mature) ensures that the game rules of the covenant can be complied with more easily.
Runbook Company International is a part of the SAP ecosystem and a certified SAP Software Partner providing solutions to streamline the Financial Close Process, Internal Controls and Compliance Documentation in SAP. Organizations who have implemented Runbook have been able to successfully reduce cost and improve quality through the automation of recurring financial processes. Understanding the unique needs of this market, Runbook is addressing the challenge directly with additional offerings focused on streamlining critical financial processes.
Runbook's Internal Control solution not only supports the SOX and Internal Control Frameworks, but now also provides support for the Tax Control Framework!
January 2010
By Robert Kathmann, Solution Manager Runbook Company International
