A corporate tax compliance and reporting survey conducted by CCH – involving 14,000 financial services participants including accountants, chief financial officers, tax managers and financial controllers – revealed only 10 per cent of all firms use fully integrated systems.
The other 90 per cent continue to use mixed solutions to complete all reporting and compliance obligations, with spreadsheet software listed as the most commonly used software solution across all categories.
Speaking at a lunch in Sydney, commercial director of CCH Corporate Reporting Solutions Tony Katsigarakis said although 83 per cent of respondents stated they are confident in their systems this directly contrasts with the views of regulators such as the ATO.
Mr Katsigarakis said the ATO has identified a handful of key sources of error, listing poor systems among them.
He said the ATO believes “mistakes are inevitable if firms insist on the continuing use of spreadsheets”.
“The ATO has already flagged that in 2014 it will be looking at how systems are running among its corporate taxpayer base to identify areas of risk,” said Mr Katsigarakis.
There have been countless studies that will consistently tell you that spreadsheets have 90 per cent plus error rates, he said.
“I’ve been reviewing spreadsheets since the mid-90s and I am actually surprised it’s as low as 90 per cent; I’ve only struck one or two spreadsheets in my life that didn’t have errors,” said Mr Katsigarakis.
“Spreadsheet software that was first released in 1985 is not adequate to support systems and decisions going into the 21st century, despite upgrades.”
Mr Katsigarakis said despite the fact financial accounting, analysis and modelling today requires “high levels of integration, resilience and reliability” many organisations are still using systems founded on legacy software or software unfit for purpose.
“The majority of systems in place are “dated, flawed, unreliable and will fail to deliver robust integration and resilience.”
Mr Katsigarakis said many managers refuse to acknowledge this and may be exposing their businesses to risks.
“There is a potential disaster waiting to happen – financial managers and directors may be guilty of a wilfull blindness in the face of a relentless onslaught of ever increasing compliance and reporting requirements” he said.
