Automation and integration are changing the tax industry. Tax Executive’s senior editor, Michi Trota, interviewed Evan Croen, senior vice president of product at Bloomberg Tax & Accounting, about the challenges tax departments face and how new technology—including artificial intelligence (AI)—can address them.
Michi Trota: What are the biggest challenges you see in the tax industry today?
Evan Croen: The biggest challenge we see by far in tax is inertia. Many accountants and tax departments feel that “if it was good enough for last year, it is good enough for this year.” This applies not only to tax domain decisions but also to technologies deployed to support processes. Rather than invest in change today, it can always be deferred to tomorrow. However, as some of our best clients have recognized, the need for accuracy and detail in tax work is only going to increase in the future. Departments are being challenged more and more on accuracy while maintaining speed, and they run a real risk of being left behind if they stick with the status quo (for example, Excel spreadsheets). Further, we expect CFOs to demand more strategic value out of internal departments, meaning that these departments will need to automate routine work through software to enable higher-value work.
We advise our tax accountant clients to think about technology beyond just for compliance. Unlike other tax and accounting solution providers, we don’t view putting data on forms as the center of the universe. Bloomberg Tax believes that tax calculations, including the work to create, maintain, and develop controls around them, is an area that has been largely neglected by technology vendors and accountants alike. We encourage accountants to have a more holistic view of technology, in which solutions to core tax problems are not built in isolation from one another, and in which calculations are central. In addition, we believe solutions, whether built in-house or purchased through a technology vendor, should give accountants access to tax information such as laws and rates at their moment of need. It is this transformation of tax into actionable intelligence, coupled with advanced calculation engines and robust planning tools, that will ultimately forever transform the tax and accounting landscape.
Trota: What does that look like—this transformation of the tax and accounting landscape?
Croen: Tax departments face a range of challenges, including burdensome manual processes, high-stress deadlines, data quality issues, technology solutions that require significant verification/augmentation using Excel, and limited resources. In addition, the complexity of taxes, increased globalization, and the exponentially growing volume of data continue to make the tax practitioner’s job even more challenging.
A recent Bloomberg Tax survey found that the overall burden of data management was one of the top challenges for corporate tax departments. The survey results indicate that essential ways to address the challenges tax professionals face are streamlining solutions such as automation and integrating processes, data sources, and tax information.
While we are excited about all our products in our suite, what we think truly differentiates us is how we are connecting them. Rather than building solutions in silos, we look for ways to make the tax function more seamless, efficient, repeatable, and integrated. These guiding principles are reflected in each of our software products. As an example, Bloomberg Tax Workpapers, currently integrated with our tax provision solution, combines the power of automated data transformation with the flexibility of a spreadsheet. Early adopters have moved beyond Excel to improve the end-to-end tax provision workpaper process with integrated tax guidance, data prep, and controls—all in a single solution.
Trota: What area is most ripe for this type of automation/integration?
Croen: Tax workpapers serve as the foundation of the tax department’s workflow, playing a pivotal role in tax calculations supporting crucial tax deliverables such as provision, compliance, planning, and audits. However, outside of spreadsheets, few technology solutions exist that address the many challenges experienced by tax professionals in their workpapers, and those that do exist often do not work well together.
A recent Accounting Today survey found that more than ninety-two percent of corporate tax accountants consider workpapers to be critical or very important for supporting the overall tax life cycle. However, only thirty-six percent of tax accountants expressed satisfaction with their current processes and tools for preparing and reviewing workpapers. In addition, the majority of tax accountants face issues managing data across key tax deliverables. These challenges include excess time spent manually cleaning and prepping source data, increased risk when updating tax calculations for multiple versions of source data, and an inability to trace calculations from the data all the way to the final computations.
