It’s Risky Business
Professor Ray Panko, University of Hawaii at Manoa, found that on average 88% of spreadsheets have 1% or more errors in their formulas. These errors can and have led to expensive mistakes. Here are some to name a few:
- A spreadsheet error cost JPMorgan Chase $6.5 billion, one of their biggest financial losses ever. A value-at-risk (VaR) model they used had an incorrect formula — dividing a sum rather than an average, which likely downplayed volatility and led to a lower VaR.
- Almost 16,000 COVID-19 cases went unreported in England due to spreadsheets. Data was pulled together in an old file format that could only handle 65,000 rows of data. With each COVID-19 test result generating several rows of data, templates were limited to about 1,400 cases with the other cases being left off.
- Barclays Capital had to purchase 179 contracts in Lehman Brothers when it was tanking because it missed hidden cells in a spreadsheet.
When millions or billions of dollars are at stake, do you really want manual spreadsheet processes to be part of the equation? Spreadsheet costs aren’t just monetary either, they can cost users valuable time.
As the Saying Goes — Time is Money
“I let the workflow do all of the work for me and I spend most of my time analyzing data and finding insights that might help our clients. I didn’t go to school to cut and paste."
— Tax Reporting Partner at Grant Thornton
How many hours do you spend in spreadsheets each week? An IDC study showed that data workers averaged 24 hours/week (60% of their time) in spreadsheets, which seems cumbersome, especially for tax functions, because according to McKinsey, 81% of some or all tax processes and tasks can be automated.
Automation can help tax functions not only reduce errors and audits, but also spend more time on value-add analyses. Automation enables tax functions to:
- Create clearer audit trail
- Quickly identify potential tax issues before audit
- Detect anomalies
- Reduce administrative costs
- Automate compliance processes
- Spend more time on strategic tax analysis
Just imagine what you could do with 24 more hours added back to your work week.
Switch from Worksheets to Workflows
You don’t need to imagine taking back your work week anymore, but you do need to have a plan. With modern technology, many repetitive tax processes can be automated. But where to start? Identify a beneficial use case to automate. The best use cases have a clear business value and also check off one of more of the following:
- Improve efficiency by automating repetitive tasks
- Increase top-line growth by identifying opportunities
- Save money and increase bottom-line returns
- Reduce and mitigate risks
- Empower employees to deliver quick insights
Sales tax apportionment is just the beginning. Check out our eBook, Five Uses Cases to Help Tax Professionals Take Back Their Time, to see which tax processes can benefit from automation.
Ready to make your tax use case a reality? Get the Office of Finance Starter Kit for pre-populated workflows to help you on projects from sales tax reporting to fixed asset depreciation.
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