Oracle Announces Hyperion Tax Provision Built on Hyperion Financial Close Suite

Oracle has introduced Hyperion Tax Provision, a new web-based tax application that allows customers to collect, calculate and report on the consolidated tax provision and more closely align tax with financial reporting. Built on the Hyperion Financial Close Suite, Oracle Hyperion Tax Provision is intended to replace the manual methods used by many organizations with an automated and standardized process.

An integrated approach toward corporate tax and financial reporting makes sense because the finance close and the tax close (also known as “tax provision”) have many items in common, Marc Seewald, senior director, product management at Oracle, tells 5 Minute Briefing. The tax provision starts with the same trial balance data, as used by finance. The tax data must always reconcile back to the data in the financial consolidation system.  Having the tax provision separate from the financial close results in data silos. On the other hand, says Seewald, including the tax provision in the financial close results in “one source of the truth” for both finance and tax.

In addition, he explains, if a new account or legal entity is added in the finance system, then it must also be setup in the tax provision. A stand-alone tax provision solution would require a duplicate metadata governance process – typically maintained by the tax department. By bringing tax and finance together in one integrated solution, the tax department can rely on the existing metadata that is already in place, including chart of accounts and legal entities. This saves time for tax, and also results in stronger internal controls, Seewald notes. A third reason the integrated approach makes sense, he adds, is that the regional controllers that submit data to finance for the financial close are also submitting data to the tax department to support the tax provision, and if these users can be on one system, it makes the process becomes easier, quicker, and, again, has stronger internal controls

The result, he says is that bringing tax and finance together creates significant efficiencies that can result in a faster close, and more importantly, there is now improved transparency between tax data and finance data.. This allows the tax department to focus on more valuable areas such as risk analysis and tax planning.

There is greater scrutiny of corporate tax reporting now than ever before, resulting in the need for the tax application, says Seewald. There are increasing external calls for transparency and control, evidenced by regulations such as Sarbanes-Oxley, as well as FIN48, and SOA in the U.K. As a result, the tax provision now has board-level visibility. According to Seewald, it is interesting to note that the “tax expense” is typically one of the top three to four largest expense lines on the corporate consolidated income statement. “All of the other expense lines have a subledger or other enterprise software system supporting the generation of the number. However, the tax expense is wholly calculated in an Excel spreadsheet. This is simply no longer acceptable. Numbers as materially large as “tax expense” can no longer reside solely in Excel.” Excel is at the breaking point, says Seewald. “Most companies still use Excel for calculating the tax provision. But as globalization requires companies to expand into more markets and acquire more companies, this increases the volume of data necessary to manage the tax provision  and it has simply become too burdensome for an Excel-based process.”

Oracle Hyperion Tax Provision is integrated with Oracle Hyperion Financial Management.