Article summary: Tax risk may arise from numerous sources, explains expert Ana Sainz, Founder of The Claret Partners Limited. Her firm’s unique Tax Compass Process helps corporate clients to identify the issues contributing to tax risk.
People make mistakes; especially busy, over-worked people.
“The biggest tax risk comes from people – employees may be tired, rushed, inexperienced, lack access to key information, or they could be working with incomplete information,” says Ana Sainz, Founder of The Claret Partners Limited.
“Your biggest tax risk probably comes from your people: whether they know what they’re doing, or they don’t; and, whether they have enough time to complete tasks properly. Mistakes happen when people are up against a deadline and they’re very tired,” comments Sainz.
Her Toronto-based firm works primarily with banks, insurance companies and the private equity industry to develop tax strategies and to identify tax risk in compliance, accounting, governance and resources.
Sainz, who has 25 years of industry experience including work as an internal auditor for a major Canadian bank, says tax risk can also occur when the people working on a tax file don’t have access to the right information, which leads to mistakes.
“Tax frequently is at the end of a process – it’s at the very tip of the dog’s tail,” says Sainz. “Everything else has occurred, and the end of the year comes along, or the end of the process arrives, and tax is involved at that point. If the tax department is working with incorrect information or incomplete information – and people are stressed-out by tax deadlines – it can create enormous tax risk for the organization.”
A proven process
To help clients understand and identify these and other areas of tax risk, The Claret Partners has developed the Tax Compass Process.
To gauge where the tax risk might lie, Claret’s Tax Compass Process assesses:
• How aggressive the client is with tax filing.
• The level of tax planning currently being done.
• The size and complexity of the organization (are operations domestic or international).
Once the process is complete, Sainz says it’s up to the client to decide where they want to focus. For example, a client may ask Claret to explore their process risk. Or, the client may be concerned that some tax plans might have gone off-side and need to be reviewed.
“Most Tax Directors, or even most Controllers and Chief Financial Officers, will have an idea where their risk lies,” comments Sainz. “We can work within an assigned budget to focus on the areas of greatest concern.”
Discover the Claret Partners Advantage
No matter what your business or the size, tax departments have a significant responsibility – to deliver efficient, credible tax provisions, reporting and compliance. Achieving this goal requires your data, technology, people and process be effectively integrated.
To discuss your tax provision needs, please call 416-406-3337 or contact us to request more information.