Ten Tips to Successfully Audit your Internal Business Operations this Spring
With spring around the corner many Canadians are organizing themselves for the year ahead. With year-end behind us, many businesses are doing the same.
For managers focused on setting their business up for success in 2013, taking stock of internal operations is an important task.
Gary Robinson, Commercial Director for BSI Canada, one of the world’s first standards organizations, is encouraging Canadian business owners and managers to take on the role of the auditor this spring to do an internal analysis of how their staff is performing to meet desired objectives.
He has compiled a list of tips to help business managers approach internal audits within their companies. The ten tips below are a starting point for any manager who is looking to review their operations in a way that will help engage employees in playing a meaningful role in achieving excellence in business:
- Ensure systems and processes are clear: Systems should be outlined clearly and important information needs to be accessible and identifiable in case of emergency. It is unreasonable to expect employees to respond to situations in a pre-determined way if those systems aren’t clear.
- Enter the area with respect: Reinforce to employees that they are the expert in their area and you are relying on them to show you what is working and what is not working. Empowering people in this way will make the process more seamless and will generate better results.
- Get employees talking: The more you listen, the more information you will have to improve the way the business works. Internal audits aren’t about telling employees what they are doing right and wrong, they are about better understanding the way the business is working in reality.
- Focus on every area of the organization: A one per cent improvement in 100 areas is better than a 100 per cent improvement in one area. Invest in improvement in all areas of the business.
- Embrace non-conformance: If the attitude towards internal audits is that the auditor is ‘out to get you’, it will discourage staff to expose when things have gone wrong or aren’t going as expected. Create an environment where non-conformances are seen as opportunities to improve the business.
- Shift the focus towards how to improve: Instead of looking for instances where things have gone wrong, ask employees whether or not they have thought of ways to improve processes in order to receive proactive solutions.
- Look for signs of weakness: Be proactive and look for areas in the business that are starting to show signs of weakness, this way you can do something to make those areas stronger before they cause a non-conformance.
- Measure & track key areas of the business: If a fault arises, having concrete data to help navigate the issue will save the organization time and money. When auditing systems, this information is used to distinguish between what has changed and what has stayed the same.
- Think about what is in it for employees: Not every employee will like or embrace others’ idea of continual improvement. When it comes to corrective action, the path of least resistance is found by answering the very important question of what is in it for them to engage with the process.
- Provide balanced reports: It is very important to report back to staff with both positive and negative results. If results are too heavily skewed on one side or the other, you may diminish the potential for improvement.
Robinson has seen that making excellence a habit rests on working with people to set up systems that are clear, accessible and that strive to meet determined objectives.
Six issues at the top of tax and finance leaders’ agenda
New Deloitte research reveals that tax leaders are under increasing pressure to add strategic value as companies accelerate business model transformation, from undergoing digital transformations to rethinking their supply chains or investing in green initiatives.
According to Phil Mills, Deloitte Global Tax & Legal Leader, to “truly deliver value to the business, the tax function needs to rethink its resourcing model and transform its technology infrastructure to create capacity and control costs”.
And the good news, according to Mills, is that tax and business leaders have more options at their disposal to achieve this.
Reflecting the insights of global tax and finance executives at global companies, Deloitte’s Tax Operations in Focus study reveals the six issues at the top of tax and finance leaders’ agenda.
Trend 1: Businesses seek more strategic counsel from tax
Companies are being pushed to develop new digital products and distribution channels and accelerate sustainable transformation and this is taking them into uncharted tax territory. Tax leaders say their teams must have the resources and skills to give deeper advisory support on digital business models (65%), supply chain restructuring (49%) and sustainability (48%) over the next two years. This means redrawing the boundaries of what tax professionals focus on, and accelerating adoption of advanced technologies and lower-cost resourcing models to meet compliance requirements and free up time.
According to Joanne Walker, Group Tax Director, BT Group PLC, "There’s still a heavy compliance load today, but the vision for the future would be that much of that falls away, and tax people become subject matter experts who help program the machine, ensure quality control, and redirect their time to advisory activity.”
Trend 2: Tipping point for resourcing models
Business partnering demands in the tax department are on the rise, but 93% of tax leaders say their department’s budget is remaining flat or falling. To ensure that the tax function can redefine itself as a strategic function at the pace that is required, leaders are choosing to move increasing amounts of compliance and reporting to a combination of shared service centers, finance departments, and outsourcing providers that have invested in best-in-class technology.
Trend 3: Digital tax administration is moving faster than expected
in addition to the rising focus of the corporate tax department partnering with their business counterparts, transformative changes to the way companies share tax information with revenue authorities is also creating an imperative to modernize operations at a faster pace. Nine in 10 (92%) respondents say that shifting revenue authority demands on digital tax administration will have a moderate or high impact on tax operations and resources over the next five years—and several heads of tax said the trend is moving faster than expected.
"It’s really stepped up in the last couple of years," says Anna Elphick, VP Tax, Unilever. "Tax authorities don't just want a faster turnaround for compliance but access into a company’s systems. It's not unreasonable to think that in a much shorter time than we expect, compliance will be about companies reviewing a return that's been drafted by the tax authorities."
Trend 4: Data simplification and lower-cost resourcing are top priorities
Tax leaders said that simplifying data management (53%) and moving to lower-cost resourcing models (51%) must be prioritized if tax is to become more proactive at delivering strategic insights to the business. Many tax teams are ensuring that they have a seat at the table as ERP systems are overhauled, which is paying dividends: 56% of those that have introduced NextGen ERP systems are now highly effective at supporting the business with scenario-modeling insights. Only 35% of those with moderate to low use of NextGen ERP systems said the same.
At Stryker, “we automated the source P&L process for transfer pricing which took a huge burden off of the divisions," says David Furgason, Vice President Tax. "Then we created a transfer price database to deposit and retrieve data so we have limited impact on the divisions. We are moving to a single ERP platform which will help us make take the next step with robotics.”
Trend 5: Skillsets are shifting
Embedding a new data infrastructure and redesigning processes are critical for the future tax vision. Tax leaders are aligned — data skills (45%) and technology process experience (43%) are ‘must have’ skills in a tax department of the future, but more traditional tax specialist knowledge also remains key (40%). The trick to success will be in tax leaders facilitating the way these professionals, with their different backgrounds, can work together collectively to unlock lasting value.
Take Infineon Technologies, which formed a VAT technology and governance group "that has the right knowledge about how to change the system to ensure it generates the right reports", according to Matthias Schubert, Global Head of Tax. "Involving them early was key as we took a greenfield approach, so we could think about what the optimal processes would look like and how more intelligent systems could make an impact
Trend 6: 2020 brought productivity improvements
Improved productivity (50%) and accelerating shifts to remote working (48%) were cited as the biggest operational benefits to emerge from COVID-19-driven disruption. But, as 78% of leaders now plan to embed either hybrid or fully remote models in the tax function long term, 34% say maintaining productivity benefits is a top concern. And, as leaders think about building their talent pipeline and strengthening advisory skill sets, 47% say they must prioritize new approaches to talent recognition and career development over the next two years, while 36% say new processes for involving tax in business strategy decisions must be established.