Fourth Quarter Accounting & Tax Update - KPMG · Accounting & Tax Update January 9, 2018. ......

1© 2018 KPMG LLP, a Canadian limited liability partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights

reserved. The KPMG name and logo are registered trademarks or trademarks of KPMG International.

Fourth Quarter Accounting & Tax UpdateJanuary 9, 2018

Welcome

Trevor Hammond

Partner, Audit

Agenda— ASC corporate disclosure

— IFRS reporting for year end

— US tax reform

— Tax year end hot topics

— Digital transformation of finance

— Question & answer

ASC corporate disclosure

Kim Isotti

Senior Manager, Audit



ASC Corporate Finance Disclosure Report

Continuous disclosure review outcomes

ASC Corporate Finance Disclosure Report, 2017

http://www.albertasecurities.com/Publications/2017-CF-Report-website.pdf




Continuous disclosure review

Climate change related disclosures

—Lack of familiarity with environmental reporting guidance

—Requirement to disclose information regarding:

—Material environmental risks

—Risk oversight and management

Gender diversity

—Compliance regarding disclosure of:

—Policies and consideration of the representation of women

—Number of women in executive officer positions




Continuous disclosure review (continued)

CEO and CFO certifications

—Venture reporting issuer certifications

—Non venture reporting issuer certifications

Conditional agreements and letters of intent

—Insufficient information

—Deficient forward looking information (FLI) disclosure

—Progress updates and milestones




Continuous disclosure review (continued)

Information circulars

—Insufficient disclosures in respect of significant acquisition or restructuring transaction

Statement of cash flows

—Presentation and misclassification issues

Insider reporting requirements

—Deficiencies in maintaining System for Electronic Disclosure by Insiders (SEDI) records

Pro forma information

—Presentation in other filings

—Operating statements

—Pro forma oil and gas information




Offering documents

Earnings coverage

—Errors in the calculation of earnings coverage ratios

—Disclosure when earnings coverage ratio is less than one-to-one

Non-GAAP financial measures

—Increased prevalence of non-GAAP measures

—Omission of required disclosures

Third party information

—Missing, vague or inaccurate references

—Inappropriate disclaimers

IFRS reporting for year end

Reinier Deurwaarder

Partner, Audit



IFRS reporting for year end

Disclosures of changes in financial liabilities

—Disclose Cash and Non-cash Changes

Recognition of DTA for unrealized losses

—Clarification of future taxable profit

IFRS 9 / 15 / 16 disclosures



IFRS reporting in 2018 and 2019

2018

IFRS 9 financial instruments

—Impairment

—Debt modification

IFRS 15 Revenue from contracts with customers

—Follow the model

—Specific guidance

—Analyze contracts

Prepayments in a foreign currency (IFRIC 22)

2019

—IFRS 16 leases

—Uncertainty over income taxes (IFRIC 23)

US tax reform

Jim Rowling

Partner, Tax


reserved. The KPMG name and logo are registered trademarks or trademarks of KPMG International.14

2018 KPMG LLP, a Canadian limited liability partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative

(“KPMG International”), a Swiss entity. All rights reserved. The KPMG name and logo are registered trademarks or trademarks of KPMG International.

The A possible path to tax reform

Ways and Means

Chairman releases mark

11/03/17

Markup by Ways and

Means Committee

11/06/17

Ways and

Means

approves

bill

11/09/17House votes and passes 11/16/17

Senate

Finance

Chairman

releases

mark

11/10/17

Markup by Senate

Finance Committee

11/14/17

Senate votes and passes by

simple majority through

“budget reconciliation”

12/02/17

Resolve differences

and send back to House

and Senate for vote on

identical legislation

Final bill sent to

President Trump

for signature

Treasury and Internal

Revenue Service begin

process of implementing

the new law

HouseBill introduced

11/2/17

Senate White House

Joint

Conference

Senate Finance Committee approves bill11/16/17

Senate Budget Committee votes to send bill to Senate floor11/28/17

Markup

11/9/17

You are here

https://home.kpmg.com/us/en/home/insights/2017/11/tnf-ways-and-means-chairmans-mark-released-in-advance-of-markup-november-6.html


https://home.kpmg.com/us/en/home/insights/2017/11/tnf-ways-and-means-chairmans-modified-mark-to-hr-1.html


https://home.kpmg.com/us/en/home/insights/2017/11/tnf-ways-means-chairman-amendments.html


https://home.kpmg.com/us/en/home/insights/2017/11/tnf-ways-means-reports-tax-reform-bill.html?z


https://home.kpmg.com/us/en/home/insights/2017/11/tnf-senate-finance-tax-reform-markup-set-for-monday-afternoon-november-13.html


https://home.kpmg.com/us/en/home/insights/2017/11/tnf-senate-finance-chairman-modified-mark-released.html







https://home.kpmg.com/us/en/home/insights/2017/11/tnf-kpmg-analysis-house-tax-reform-bill.html



https://home.kpmg.com/us/en/home/insights/2017/12/tnf-senate-passes-tax-reform-bill.html



https://home.kpmg.com/us/en/home/insights/2017/11/tnf-ways-and-means-releases-tax-reform-bill.html



https://home.kpmg.com/us/en/home/insights/2017/11/tnf-senate-finance-committee-approves-tax-reform-bill.html

https://home.kpmg.com/us/en/home/insights/2017/11/tnf-senate-budget-committee-sends-tax-reform-bill-to-senate-floor.html




Key provisions – Business

Provision Conference Agreement

Corporate rate 21% effective for taxable years beginning after 12/31/17. Special rules for fiscal year filers. Permanent, unlike rates for individuals.

Cost recovery 100% expensing for investments in depreciable property other than real property or certain utility property and certain businesses with floor plan indebtedness; applies to both new and used property (used property cannot be acquired from a related party); applies to investments after September 27, 2017 and before January 1, 2023; phase-out 2023-2026 (80%, 60%, 40%, 20%).

Real property cost recovery No provision. Buildings remain subject to MACRS.

Interest expense Disallow net business interest deductions (whether paid to related or unrelated, domestic or foreign person) in excess of 30% of “adjusted taxable income”; adjusted taxable income generally is EBITDA from 2018-2021 and EBIT thereafter; would not apply to small businesses, real estate businesses, utilities, and floor plan indebtedness; disallowed interest carried forward indefinitely(not 5 years as proposed) and no excess limitation carryforward.

Net operating losses (NOLs) NOLs arising in tax years beginning after 12/31/17 limited to 80% of taxable income; generally no carrybacks and indefinite carryforward (no inflation adjustment) for net operating losses arising in tax years ending after 12/31/2017. Provides incentive to accelerate deductions into 2017.



Key provisions – Business (continued)


Corporate AMT Repeal corporate AMT; credit carryforwards partially refundable for years 2018, 2019 and 2020 (limited to 50% of excess credits over regular tax liability); remainder fully refundable for 2021.

Research activities No changes to research credit; Sec. 174 costs generally amortized over 60 months beginning in 2026.

Like-kind exchanges Non-recognition is eliminated for exchanges of property other than real property.

Section 199 Repealed beginning 2018.

Business entertainment expenses No deduction for entertainment, amusement or recreation. Retains 50% deduction for food and beverages associated with a trade or business.

Dividends Received Deductions Reduce 80% DRD to 65%; and 70% DRD to 50%.



Key provisions – International


Participation exemption system Create a 100% exemption for dividends received from 10% owned foreign corporations. Doesnot apply to dividends paid by a PFIC. Furthermore, such earnings cannot be subpart F income, nor subject to minimum tax discussed below.

Mandatory repatriation of existing earnings and profits (E&P)

Foreign undistributed and untaxed E&P accumulated post-1986 (not inherent gains) while an SFC under old system deemed repatriated; rate of 15.5% for cash/cash equivalents and 8% for illiquid assets; the tax is payable over 8 years (backloaded: 8% each of first 5 years, then 15%, 20% and 25%); E&P determined as of November 2 or December 31 (whichever is higher). Can use FTCs to offset tax.

Current tax on certain foreign income (aka “mintax”)

Create a current tax on global intangible low-taxed income (GILTI) – i.e., non-routine income; taxed amount is generally CFC income in excess of a 10% return on basis in business property; partial FTC offset permitted (no carryforward); Domestic corporations are allowed 50% (37.5% after December 31, 2025) deduction for GILTI amount and a 37.5% (21.875% after December 31, 2025) deduction for income deemed derived from foreign intangibles (FDII).



Key provisions – International (continued)


Related-party transaction base erosion measures

Create a base erosion anti-abuse tax (BEAT) that functions as an alternative minimum tax by adding back related party deductions (not including COGS) and certain credits; applies to taxpayers with annual domestic gross receipts in excess of $500 million.

Limitation of interest for domestic corporations part of an international financing reporting group

No provision.

Section 956 No provision to repeal; therefore, remains.

CFC look-through rule No provision to make permanent; therefore, will sunset.

Other Base Erosion Measures Limits on income shifting through intangible property transfers, limitation on amounts paid through hybrid transactions/entities (including REPOs), others.

Tax year end hot topics

Les Der

Senior Manager, Tax




US tax reform tax accounting implications

Provision Tax accounting implications

Corporate rate — Re-measure deferred taxes as of the enactment date and recognize the change as a discrete item

— Consider backwards tracing implications under International Financial Reporting Standards (IFRS)

— Scheduling may be necessary to appropriately measure deferred tax balances

Mandatory repatriation of existing earnings and profits (E&P)

— Deemed repatriation for controlled foreign corporations (CFCs) may create a tax liability that is not a deferred tax, including current / non-current implications

— Continue to assess ability to assert indefinite reinvestment of their accumulated undistributed earnings to avoid recognition of a deferred tax liability

Participation exemption system

— Consider whether dividend income is a source of foreign income to support realizability of deferred tax assets for foreign tax credits (FTCs)

— Consider indefinite reversal assertion for undistributed earnings

Current tax on certain foreign income (aka “minitax”)

— Expansion of current taxes on certain foreign income and deferred tax implications

— Treatment of “special deductions”

Related-party transaction base erosion measures

— BEAT appears to operate like a parallel income tax system; companies may need to determine which income tax system they expect to be in to identify and measure deferred taxes (i.e. scheduling implications)

— Accounting for the BEAT may ultimately be operationally challenging




US tax reform tax accounting implications (continued)

Provision Tax accounting implications

Cost recovery — 100% expensing creates new taxable temporary differences

— Consider whether 100% expensing puts certain companies in a loss position that generates NOL carry forward balances that require analysis of recoverability

Interest expense — Consider limitations on using disallowed interest carry forwards, including ordering rules

— Overall unrecognized tax benefit or valuation allowance assessment

Net operating losses (NOLs)

— Annual limitation may result in changes to the unrecognized tax benefit or valuation allowance assessment

— Reschedule reversals of temporary differences because reversals will support only 80% of a NOL carry forward

— Unlimited carry forward period may result in changes to the unrecognized tax benefit (or valuation allowance) assessment

— Elimination of ability to carry back NOL may result in changes to the unrecognized tax benefit (or valuation allowance) assessment

Corporate alternative minimum tax (AMT)

— Transforms the deferred tax asset for existing AMT credit carry forwards into a tax receivable

— Determine classification as current or non-current

— Release of unrecognized tax benefits (or valuation allowances) on existing AMT credit carry forwards




Canadian snapshot of general corporate rates

— British Columbia increased the province’s general corporate income tax rate to 12% (from 11%) effective January 1, 2018

— Saskatchewan decreased the province’s general corporate income tax rate to 11.5%, effective July 1, 2017. The rate will return to 12%, effective January 1, 2018

— Quebec gradually reduced the general corporate income tax rate beginning in 2017. The rate is 11.8% in 2017, and will decrease to 11.7% in 2018, 11.6% in 2019 and 11.5% in 2020. The rate reductions are effective January 1 of each year from 2017 to 2020

— Yukon decreased the province’s general corporate income tax rate to 12% (from 15%), effective July 1, 2017

Tax Rates for Active Business Income Earned by a General Corporation Substantively Enacted as of December 31, 2017

2017 2018 and beyond

Federal rate 15.0% 15.0%

Provincial rates

British Columbia 11.0% 12.0%

Alberta 12.0% 12.0%

Saskatchewan 12.0/11.5% 12.0%

Manitoba 12.0% 12.0%

Ontario 11.5% 11.5%

Quebec 11.8% 11.7/11.6/11.5%

New Brunswick 14.0% 14.0%

Nova Scotia 16.0% 16.0%

Prince Edward Island 16.0% 16.0%

Newfoundland and Labrador 15.0% 15.0%

Territorial rates

Yukon 15.0/12.0% 12.0%

Northwest Territories 11.5% 11.5%

Nunavut 12.0% 12.0%




Bill Date “substantively

enacted” under ASPE / IFRS

Date “enacted” under

US GAAP

Link

Federal Bill C-63 October 27, 2017 December 14, 2017 2017 Federal Budget Bill #2 Receives Royal Assent

Status of Federal legislation

Notable domestic measures include:

—Introduce an elective mark-to-market regime for derivatives held on income account

https://home.kpmg.com/ca/en/home/insights/2017/12/2017-federal-budget-bill-2-receives-royal-assent.html

https://home.kpmg.com/ca/en/home/insights/2017/12/2017-federal-budget-bill-2-receives-royal-assent.html




Bill Date “substantively enacted” under ASPE / IFRS

Date “enacted” under US GAAP

Link

British Columbia Bill 2 February 21, 2017 / October 26, 2017

November 2, 2017 Third Reading for British Columbia Budget Update Bill

Saskatchewan Bill 84 November 6, 2017 December 7, 2017 Saskatchewan Corporate Tax Bill Receives First Reading

Manitoba Bill 36 May 25, 2017 November 10, 2017 Highlights of the 2017 Manitoba Budgets

Ontario Bill 177 November 14, 2017 December 14, 2017 Ontario Drops Small Business Rate for 2018

Quebec Bill 146 November 9, 2017 December 7, 2017 Highlights of the 2017-2017 Quebec Budget

New Brunswick Bill 23 November 14, 2017 December 20, 2017 New Brunswick Drops Small Business Tax Rate for 2018

Nova Scotia Bill 39 October 11, 2017 October 26, 2017 Nova Scotia Budget Bill Receives First Reading

Status of Provincial legislation

https://assets.kpmg.com/content/dam/kpmg/ca/pdf/tnf/2017/ca-third-reading-for-british-columbia-budget-update-bill.pdf

https://home.kpmg.com/ca/en/home/insights/2017/11/saskatchewan-corporate-tax-bill-receives-first-reading.html

https://assets.kpmg.com/content/dam/kpmg/ca/pdf/tnf/2017/ca-Highlights-of-the-2017-Manitoba-Budget-tnfc1721.pdf

https://assets.kpmg.com/content/dam/kpmg/ca/pdf/tnf/2017/ca-ontario-drops-small-business-rate-for-2018v2.pdf

https://assets.kpmg.com/content/dam/kpmg/ca/pdf/tnf/2017/ca-Highlights-of-the-2017-2018-Quebec-Budget.pdf

https://home.kpmg.com/ca/en/home/insights/2017/11/new-brunswick-drops-small-business-tax-rate-for-2018.html

https://home.kpmg.com/ca/en/home/insights/2017/10/nova-scotia-budget-bill-receives-first-reading.html




Voluntary Disclosure Program (VDP)

Overview

— The CRA has extended the deadline to access the current VDP before new changes take effect

— New deadline of February 28, 2018 to file under the current rules

— Overall new VDP to be effective March 1, 2018 including the limited VDP

Large corporations

— Corporations with gross revenue in excess of $250 million in at least two of their last five taxation years and any related entities will generally be considered under the new VDP’s limited program (i.e. relief from negligence penalties but no interest)

No-name disclosures

— The VDP program will no longer allow taxpayers to make a no-name disclosure for income tax and GST / HST purposes

— Taxpayer who applies under the current VDP on a no-name basis will be required to disclose their name before the new regime takes effect on March 1, 2018 or within 90 days of the date the CRA receives the disclosure application, whichever is earlier

CRA knowledge of non-compliance

— No longer allow taxpayers to access the new VDP where the CRA has already received information about their potential involvement in tax non-compliance




Voluntary Disclosure Program (VDP) (continued)

Missing information

— The CRA is requesting taxpayers who cannot submit all information or documentation up front with its VDP application to include a written request for an additional specified period of time for any outstanding information

— Request is made at time of the submission of the application

Transfer pricing

— Applications relating to transfer pricing are not eligible for the VDP

— The CRA has clarified that such matters will be referred to the Transfer Pricing Review Committee for their consideration under the fairness provisions

GST / HST and other indirect taxes

— In the final guidelines, CRA has reduced the number of years for which the taxpayer must disclose all inaccurate and incomplete information under the General Program to four calendar years

— For VDP under Category 3, final guidelines maintain requirement that the related information must be provided for “all relevant years”




Interest and penalties related to income tax

No accounting policy choice in accounting for interest or a penalty related to income tax

Entity is required to:

— Consider whether the amount payable or receivable for interest or penalties meets definition of an income tax

— If it does, apply IAS 12 to that amount

— If it does not, apply IAS 37 to that amount

Actions to consider

— Consider whether tax laws in the jurisdiction and other facts and circumstances indicate that this amount is based on taxable profit

— Consider whether conclusion reached is consistent with the current accounting policy

— Changes in recognition and measurement, and presentation should be applied retrospectively in accordance with IAS 8 Accounting Policies, Changes in Accounting Estimates and Errors

Digital transformation of finance

Narmin Vasanji

Partner,

Financial Management

Aman Bagga

Senior Manager,

Management Consulting



Agenda

—CEO’s perspective

—Finance digital transformation

—Robotic process automation (RPA) use cases & benefits



View from the top – CEO agenda / priorities

US CEO Outlook 2017 survey

57%One out of three CEOs believe that their sector

will see a major disruption in the coming three

years as a result of technological innovation.

Areas of

greatest

investment

in technology

expected in

three years

25% Greater speed to market

22% Digitization of the business

21% Becoming more data-driven

21% Building public trust

20% Implementing disruptive technology

Digital and sensory concerns

say their

organizations do not

have the sensory

capabilities and

innovative processes

to respond to rapid

disruption

are

concerned about

integrating cognitive

processes and

artificial intelligence

say they

are not leveraging

digital as a means to

connect to their

customers

effectively

61% 45%

Top five strategic priorities in next three years

To disrupt is to exist

Time for a reboot?

https://home.kpmg.com/us/en/home/insights/2017/06/us-ceo-outlook-2017.html



What CEOs expect of CFOs

“The Regulatory

environment will have

the most influence on

the future role of the

CFO; 61% of CEOs

see it as an

opportunity to derive

competitive

advantage”

“70% of CEOs say

technology will have

the greatest effect on

the future role of the

CFO, yet less than half

think they’re good at

leveraging new tech”

“85% of CEOs say

applying financial data

to achieve profitable

growth is the greatest

strategic value a CFO

can bring to an

organization”

“97% of CEOs say

attracting and

retaining top finance

talent is the most

important contributing

factor to improve the

finance function”

“Almost 50% of CEOs

worldwide list global

experience as the

most important

attribute a CFO can

possess”

Big Data Tech Savvy Data Analyst People Skills Global Reach

Source: 2015 KPMG Global CEO Survey 'The view from the top.'

https://home.kpmg.com/xx/en/home/insights/2015/07/ceo-outlook-survey.html

Digital Finance



The digital wave journey

The Pivotal Perspective

Selection, implementation, and

integration of large scale technology

products and platforms that deliver

ROI such as SAP, Oracle, Workday,

Service Now, Appian and more play

a pivotal role.Over the last five years, our

customers have begun laying the

foundations necessary for

enterprise mobility including BYOD,

MDM, federated security, remote

access, virtualization and enterprise

app stores.

The Age of the Customer has

ushered in the Age of the

Employee increasing demand for

consumer grade digital

experiences the requires

understanding employee needs,

motivations and expectations. New systems of record, enterprise

infrastructure, and consumer grade

experiences aligned to the business,

defined by humanity and refined

through analytics creates a new level

of digitization.

Market and technology pressures

are pushing IT to restructure their

organizations, governance and

technology architectures to enable

this digitization through a

rationalization of enterprise systems

and processes.

Digital transformation, innovation and

acceleration requires a cohesive

business-driven STRATEGY, new

TARGET OPERATING MODELS, and

people centric business processes.

Source: KPMG USA



Digital transformation of finance – CFO response

Agenda in response to operating model disruption:

Leading finance organizations have developed an agenda to deal with disruption.

Extreme

automation

Integrating and combining:

• Cloud technologies/apps

• Robotics

• Artificial intelligence

• Blockchain

• Mobile

Insights &

analysis

New insights through:

• Descriptive and diagnostic

analytics

• Predictive and prescriptive

analytics

• Integrated business

plans

• Decision support

• Business partnering

Organizational

simplification

Changing way of work:

• Less people

• Less hierarchy

• Fewer locations

Skills &

talent

Changing requirements:

• Both strategy and finance

skills

• Process and control leaders

• Relationship and

collaboration

Innovation enablementIncreasing role in innovation

• Fundamental economics behind disruption

• Approaching disruption at the organizational level

• Maintaining an innovation portfolio

• Disciplined innovation process and structure

Agenda in response to business model disruption:



Extreme automation

The finance technology ecosystem will continue to evolve and be integrated.

Mobile Finance will be delivered real-time, custom insights via

new mobile interfaces thereby driving accelerated decision

making capabilities, allowing finance to positively influence

business outcomes.

Machine learningAdaptive technologies will radically change the work that

finance does through the use of smart algorithms that can

be leveraged to accomplish activities and tasks.

Data managementData management will no longer be an aggregation of

performance data; finance will lead data strategy utilizing

new data sources (internal and external) to drive deeper

prescriptive insights.

BlockchainBlockchain will accelerate transaction recognition and

provide enhanced security, lesser storage requirements,

and shorter delivery cycle times; integration with cognitive

technologies will result in extreme automation.

RoboticsRobotic Process Automation (RPA) will drive “extreme

automation” within rules-based finance processes

resulting in greater capacity for value-added activities.

Natural language processingNLP will provide finance with unconstrained, real-time

information accessibility, beyond just the numbers.

Cloud ERP, EPM and BICloud technologies will give finance the ability to select

best-in-class application solutions, real-time data

accessibility, and business partnering capabilities.

CognitiveCognitive technologies will advance automation past

execution, through the ability to reason and infer trends

and patterns from both structured and unstructured data.

RPA Use Cases



Basic automation vs. robotics process automationRobotics Process Automation -

Software bots (algorithms) operating and orchestrating other software

applications

Basic Automation - ERP, point solutions, custom scripts or macros

Rules configured at the outset,

limited customization capabilities

post-implementation (hard coded)

Past approvals data storage and

archiving

Additional components and

applications require integration to

work in synch

Considerable IT infrastructure and

costs required for implementation and

integration

Lengthy implementation months,

quarters

Flexible and faster performance

Software bots are continuously

trained by their users, throughout

the VAP process

Software bots collect data from

the approval process/ past

approvals

Software bots operate behind the

scenes, through the existing UI

Minimal IT infrastructure and

implementation/ integration costs

Swift implementation about 6-8

weeks

Virtual Approval Process (VAP) for Non Standard Deals – Adding rules for

mandatory review

Basic Automation

Robotics Process

Automation

Use Case Example

Option 1

Option 2



RPA implementationUse case – Accounts ReceivablesUse issue/scenario: Automation solution was required to create an excel dashboard of Account Receivables – Ageing Analysis by Customer

Be

fo

re A

utom

atio

nA

fter A

utom

atio

n

Manual Steps: 08

Manual Steps: o* Non exception based

Mail the consolidated spread sheet to respected teams for further investigations

Filter the type code column to remove the process types which are no longer needed

Removing the Excel columns based on the requirement.

Filtering the Account reference column to remove the leading zeroes which are no longer needed and Sort it based on Ascending order.

Compare the Due amounts with the existing values. If match is found then update the spread sheet as matched else update as balance on account

Merge credit and debit columns and name it as Amount Due

Sort Account reference column based on the Ascending order

Receiving Excel files from Finance team

Receiving Excel files from Finance team

Open the Outlook,Search for the specific folder and extract the required file.

Filter the type code column as well as Account reference column which are no longer needed and sort it based on the Ascending order

Merge credit and debit columns and name it as Amount Due & compare the due amounts with the existing values and update the comments column with the status.

Fin

an

cia

l S

erv

ices

Time Per Record: 12-15 min

Time Per Record: 05-07 min

Removing the Excel columns based on the requirement.

Mail the consolidated spread sheet to respected teams for further investigations

Extracting the required file from the outlook.



Be

fo

re A

utom

atio

nA

fter A

utom

atio

n

Manual Steps: 12Request/month: 600

Headcount/location: 13 FTE Global: 700 FTE

Accuracy and improved productivity achieved by automating the Journal and Expense accrual entries

Manual Steps: 1

Receive Journal

Entry request

from business

Extract Journal Entry information

Applies 8 different validations to check data correctness

Calculate Journal Entries

Log in to SAP and enter t-code

Download approved file from SharePoint

Check for Approved requests

Reviews request and Approves

Check if journal above review threshold

Submit Journal Entry information to SharePoint for Approval

He

alt

hca

re

Use case – Manual Journal Entries – Expense Accrual

Use issue/scenario: Automated solution was required to replace manual SAP Journal and Expense Accrual entries to eliminate manual errors and reduce

turnaround time for large volume of requests.

Upload data into SAP

Execute SAP query to Post entry

Receive Journal

Entry request

from business

Extract Journal Entry information

Applies 8 different validations to check data correctness

Calculate Journal Entries

Log in to SAP and enter t-code

Download approved file from SharePoint

Check for Approved requests

Reviews request and Approves

Submit Journal Entry information to SharePoint for Approval

Check if journal above review threshold

Upload data into SAP

Execute SAP query to Post entry

Update SharePoint with SAP upload details

Update SharePoint with SAP upload details

If the validation fails then rejects request and notifies requestor

RPA implementation



What are the benefits?

Cost Efficiency

Estimates have found

that software robots

cost about one third as

much as an offshore

employee and as little

as one fifth of an

onshore employee.

Smaller facilities and

infrastructure footprint

Bots do not require

cubicles, desks, PCs,

restrooms, break

rooms, or telephones,

significantly reducing

the facilities and

infrastructure footprint.

Scalability

Bots can scale up or

down automatically

and respond

instantaneously to

changes in demand

and/or in business

growth without human

intervention.

Productivity/performance

Bots work 24/7 and do

not take vacations, call

in sick, or require

breaks. They perform

at their peak all the

time.

Quality/reliability/

consistency

Bots always perform

as commanded and

are 100% accurate,

eliminating human

error. They

consistently perform

their tasks the same

way every time.

Auditability

Bots log all of their

activities so there is

always a record of

what they did and

what the outcome

was, providing an

audit trail.

Process digitization

Bots are constantly

generating data about

process and make

tribal knowledge

repeatable while

providing opportunities

for continuous process

optimization.

Employee satisfaction

Bots free up humans

from performing

mundane, routine

work and allow them

to take on higher

value, more fulfilling

work that results in

higher job satisfaction

and morale.

1 2 3 4

8765

Quantitative

Qualitative



Efficiency gains can be significant

Key automation opportunities highlighted below are based on the Level 2 processes with the highest potential percentage reduction in FTEs. These opportunities may provide significant cost savings opportunities for the finance organization. The details for these opportunities are further delineated in KPMG’s finance process toolkits.

ID Process area Process Estimated % Reduction in FTEs

1 Record to Report Month-End Reporting 50%

2 Record to Report Manage Process 40%

3 Record to Report General Ledger Close 50%

4 Source to Pay Requisition & Procurement 16%

5 Source to Pay Purchasing 16%

6 Source to Pay Supplier Management 26%

7 Source to Pay Receiving & Storage 55%

8 Plan to Perform Performance Reporting 37%

*Estimates are based on percentage of activity that can be automated and cost benchmarks for organizations with market cap in excess of $20 billion

(US). The key automation opportunities are for discussion purposes.

Questions?

Today’s presentation will be posted to

kpmg.ca/quarterlyupdate

Trevor Hammond

Partner, Audit



Additional references

— ASC Corporate Finance Disclosure Report

— ASC Financial Reporting Bulletin

— KPMG US Tax Reform Website

http://www.albertasecurities.com/Publications/2017-CF-Report-website.pdf

http://www.albertasecurities.com/Publications/OCA_Oil_and_Gas_KPI_Bulletin_2018_Update.pdf

https://home.kpmg.com/us/en/home/insights/2016/12/tnf-tax-reform-expectations-for-2017.html#01

Thank you

kpmg.ca

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The information contained herein is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavour to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No one should act on such information without appropriate professional advice after a thorough examination of the particular situation.

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Fourth Quarter Accounting & Tax Update - KPMG · Accounting & Tax Update January 9, 2018. ......

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