Use case: Continuous Monitoring Platform

"Large business services provider automates the testing of internal tax controls enabling real-time monitoring."

Client challenge

The Tax team is responsible for the execution of a large number of (formerly manually executed) tax controls to effectively mitigate tax risks. The risk & control matrix is documented in Excel. The team spends a significant amount of time and resources on testing the controls that appear to be effective in 99% of all cases. Mainly manual activities are performed at the end of a reporting period where time is scarce and control failures lead to distortions of the (Tax) reporting process. Additionally, a great extent of the activities needs to be documented in Excel, even when the outcome is meeting the expectation. Time consuming, labour intensive and not always challenging work. It surely should be possible to do things differently.

Approach

The Smart Automation and Quantitative Solutions team has implemented the Continuous Monitoring Platform (CMP) for tax purposes. The platform automatically analyses processes, transactions and master data, allowing for real-time insights in the tax position of the organization. Exceptions will be handled by the responsible business via customized workflows, making compliance part of the day-to-day business. Sets of automated tests will be performed on all new transactions at the end of each workday, which allows the responsible employee to immediately start working on the exception the following morning and come up with timely remediation of the error.

Results

CMP enables the client to have improved control over tax risks as real-time results and insights are available. Follow-up actions on exceptions are documented in the workflow and the sound, not editable audit trail provides objective comfort in the mitigation of tax risks.

Continuous Monitoring Platform enables organizations to achieve the following benefits:

Increase upfront certainty about effective risk management and the implementation of internal (tax) control procedures.
Control the full population instead of subpopulations created by random sampling.
A more effective allocation of human resources, as employees can now spend their time on the more complex and challenging tax matters.

Furthermore, the client will have the ability to provide assurance on the quality of the tax control measures and their results, both to internal and external stakeholders. This is extremely valuable to the organisation, also because this fulfills the requirements of the Horizontal Monitoring regime of the Dutch Tax Administration, ‘Doorontwikkeld Horizontaal toezicht’.