Case study - direct tax compliance, advisory, statutory financial statements and audit support

What was required?

The client was entering into the next phase of their finance function transformation and was looking to reduce their headcount initially across EMEA, but also expanding to LATAM and APAC.

This involved the removal of all remaining senior financial controllers in certain EMEA countries and Mazars fulfilling a global compliance role of direct tax, statutory financial statement, and audit liaison across 21 countries working with:

• The EMEA CFO
• Their Central Support team based in Poland
• Their Accounting SSC in India
• Their Big 4 auditors

The objectives of the client were to have a strong partner who would:

• Visualise their direct tax/tax advisory and SFS compliance processes in real-time
• Work to minimise the amount of time the EMEA CFO spent on compliance
• Be an extended part of his finance team in each country
• Ensure the smooth running of finance operations following the transformation

How did we help?

Given the significant change in operating structure, we implemented a detailed transition plan including country visits with the client and local teams for all major trading parts of the group. Since the controllers were leaving the business, knowledge transfer and retention was critical and the key focus was to document all current processes and dependencies.

Key elements in this phase were communication and governance of the set-up and transition process. By connecting on a weekly or bi-weekly basis on both strategic and operational issues we managed to identify and resolve issues on a timely basis  This transition model was so successful that the client requested that we retain this in the run phase with monthly meetings with key group management from EMEA, LATAM and the headquarters in the US.

The set-up included an exhaustive review of the inputs and completion of the US GAAP to local GAAP bridge, ensuring that every adjustment was fully understood and that the data from the Shared Service Centre was sufficient to facilitate its production. We also worked extensively with the Big 4 auditor in each jurisdiction to align with their centralised audit process and ensure that each local team was clear on the timetable for the US GAAP bridge, local audit review processes, and client validations.

As part of the transition process, we implemented InControl to ensure that the EMEA CFO had an overview of all compliance requirements across EMEA for the first time. This allowed him to better understand the needs and timings of each stakeholder and put in place a robust timetable for reporting which fed into the group reporting timetable.

Alongside the US GAAP bridge we deliver the drafted local financial statement and CIT returns with a covering summary memo in English which is reviewed by the central team before being discussed with the client. This allows the CFO to understand key changes or risks in the local environment and yet minimise his time spent on local compliance processes where they are within the risk parameters that the group defines.

We are now entering into the second year of our collaboration and the significant investment made at the transition phase is paying off with the defined model and processes operating well and a good spirit of collaboration with the client. The client has asked Mazars to now extend the cooperation to LATAM and APAC.

Key learnings

• Mutual investment at the transition phase is crucial to establish clear requirements, scope, and processes.
• An aligned spirit of collaboration is critical based on mutual benefit and learning from experience.
• Stakeholder engagement across the breadth of the year end statutory compliance process is needed if changes are to be sustainable and successful.

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