Tax executives in both the United States and other countries said they are spending more time than ever on risk management, according to a new survey.
The survey by Ernst & Young of 541 tax executives in 18 countries found that the majority of them now spend up to 20 percent of their time on tax risk issues. The percentage spending that much time on tax risk has increased from 16 percent in 2006 to 26 percent in 2008. Seventy-seven percent of the executives surveyed indicate that the absence of skilled resources contributes to tax risk. Among North American professionals, primarily in the U.S., 37 percent rate "changes in financial standards" as their top external tax risk.
Half of all the survey respondents use tax process improvement measures to better integrate with the wider organization, but there's a divide between companies over how proactively they manage risk. While 64 percent say their tax risk coverage is comprehensive, only 35 percent say that they have a documented procedure for managing tax risk that extends beyond statutory requirements.
Large multinational companies place a higher emphasis on tax risk management in general, with 50 percent identifying it as a critical measure, compared with 42 percent overall. Communication with senior management and the board is key to managing tax risk. Eighty-seven percent of respondents say they have a well-established communication channel with senior management, and only 14 percent say their board never receives a presentation on tax risk.
