The Big 4 are waking up to country-by-country reporting. PWC published a report on the subject in August 2012. EY's polemic on the issue followed in 2013, and now KPMG have joined the club:
KPMG have, thankfully, avoided the hysteria that appears to have gripped EY. However, there report also misses a vital point that PWC have grasped and acknowledged, which is that the demand for country-by-country reporting emanated in and has been driven by the tax justice movement (and technically mainly through reports written by me, as PWC acknowledged). Instead they focus solely on the current consequences of that pressure without considering that we might be at the start of a process of change here which will be ongoing and where all the initiatives are arising outside the accounting profession.
Still, their time line on the reforms is interesting and good and worth noting here:
A great deal has happened. But anyone who thinks that's it is seriously mistaken, a point I think KPMG acknowledge, albeit for the wrong reasons, when they say:
Country by country reporting was initially focused on a few select sectors, but given the proposals from the OECD, this is now a pressing issue for most multinationals. Companies will need to consider the level of resources and costs involved in gathering the data, the ease of gathering the data and potential system changes and how technology can assist. The requirements for auditing the data or getting a form of assurance over the process will need to be considered. Due to the risk of the information being misinterpreted, providing an accompanying narrative to explain the data ensures that the information is as useful as possible to the reader. The tax transparency debate is constantly evolving and companies should be actively involved in shaping this debate, as well as keeping abreast of proposals and how this may impact them.
They're right about that.
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Companies already collect this data so it’s a bit disingenious to use the “resorces and cost” argument. Most systems are set up to enable you to collect group / local and tax reporting and even if an organisation doesn’t use all of that functionality in their transaction system, they certainly have the underlying data. There are new reporting requirements all the time in businesses so why should this be treated as anything more than a new reporting requirement ? Even the move to IFRS didn’t require major system changes or major changes in data collection. This is a win-win for companies like KPMG, they make money advising organisations to lobby against the requirement, then when it goes through, they make it out to be a huge deal and make money “helping” companies to implement the change.
I think one of the issues is different accounting standards in different countries eg us gaap. Obviously it can all be translated into a common gaap but we should acknowledge there will be some cost (but the Benefit should be worth it)
I’m amazed rm is singing the praises of PwC….is this the start of something I wonder…
On Friday 15 in Marx A touch Of The Irish I suggest that Karl Marx may owe something to the Irish myths. As the world of fantasy takes over global finance could there be something in it?