Today's Technology for Tomorrow's Firm.
Issue link: https://cpapracticeadvisor.epubxp.com/i/667870
26 April 2016 • www.CPAPracticeAdvisor.com A YEAR IN THE LIFE: SALT ACCOUNTANT However, implementation of internal controls within these orga- nizations, or making improvements when needed, can alleviate concerns. To beter assist your clients, instruct them to focus on the following three main areas: training on data man- agement, sales and use tax sofware and pre-audit defense. 1. TRAINING ON DATA MANAGEMENT: Stafers must be properly trained to f u nct ion i nter na l ly as well as coordinating activities w ith outside resources. Training encompasses several elements. • Obtain the necessar y data. This includes the "who, what, when, where and how" (WWWWH) felds of the data. Find out which systems have tax calculation data, which ones have tax decision data and how information should be disseminated. Examine reports - some manual rev iew of complex transactions may be required. • Understand the WWWWH data being managed. Staffers should be well- versed in electronic processes and coding sales and purchase transactions f o r d i f f erent j u r i s d i c t i o n s an d accounts. Tey must be able to verify transaction details, prepare back-up documents to support returns and reconcile tax accounts. • Communicate with the IT staf and understand IT systems. Know what information exists, in what format and what will be needed for tax return preparation and audit protection. Foster cooperation between the tax depar tment and IT to promote success. • Safeguard and validate the data. Obtain the necessary exemptions and resale certifcates based on the data. Establish procedures for maintaining ta x and audit issue resolutions. Notably, stafers should be trained in depar tment accountabi lit y and reporting and reviewing for audit purposes. 2. SALES AND USE TAX SOFTWARE: Utilizing all the tools at the frm's disposal, such as compli- ance sofware, is an important aspect of internal controls. Accordingly, take the following steps. • Meet compliance requirements through automated tax decision, rat- ing and return preparation. Ensure that the WWWWH is being met and statutory exemptions are addressed. • Use accounting personnel where they are needed the most. Don't waste high-priced talent on insignificant maters. • Archive data for audit and other purposes. Tis can provide critical support in the future. • Provide seamless integration with accounting and billing platforms. Te software w ill allow your firm to "bridge the gap." • Remember that automation doesn't provide absolute protection from human error. As a result, you still have to conduct reviews, particularly as they pertain to certain accounts, past p robl ems o r majo r c l i ent s an d vendors. 3. PRE-AUDIT DEFENSE: T he f ina l main step i n i nter na l cont rol requires frms to shore up their defenses for a potential audit. To this end, consider these recommendations. • Assess the audit risk. Focus on the possibility of inaccurate records and misapplication of ta x r ules. The assessment may lead to f ur ther strengthening of internal controls. • Review the W W W WH data. The more detailed the information is, the beter. When appropriate, suggest new data fields that would assist in the audit process (e.g., project codes or electronic delivery felds). • Conduct a self-audit. Do a complete work-up of transaction details and reconcile data with returns. Tis can help identify potentially dangerous issues and any missing items. Prepare your responses to likely inquiries. • Weigh the benefts of a system walk- through with an auditor. Tere's no preparation like the real thing. Do your small business clients measure up? Pass along this informa- tion and work with them to ensure the optimal results. How to Maintain Internal Controls for Sales and Use Taxes By Ken Berry, J.D. - CPA Practice Advisor Tax Correspondent M any of your small business cli- ents, especially those in retail operations, have struggled with responsibilities for collecting and remiting sales and use taxes to the appropriate jurisdictions. Tis includes issues relating to sales transactions and exemp- tion documentation, purchases of fxed assets and expenses, tax return preparation and point-of- sale (POS) systems.