Strained Accounting Departments Seeking International Tax Gurus
International business is no longer a choice but a necessity. And although technology has simplified communication, business and tax issues have become more complex. Hurdles include language, law, cultures, currencies and technology. Now, in the current environment of increased scrutiny and risk, companies must be prepared to support tax provision computations, positions, tax reserves, and disclosures. As a result, greater resource demands are being placed on already strained tax departments. According to executive recruiting firm, A.E. Feldman, experienced candidates looking for international tax accounting opportunities who can deal with the pressure and create value are in great demand.
FAS 109 (Accounting for Income Taxes) is the governing standard for financial statement accounting for income taxes. It requires separate tax rates for deferred taxes for each jurisdiction where a company is subject to tax. In issuing FAS 109 back in 1992, the U.S. Financial Accounting Standards Board recognized the complexities arising from business transactions as well as constantly evolving tax law and accounting requirements. Applying FAS 109 amid unclear, and often conflicting, international tax laws can be tricky to say the least.
The complexities and resource challenges surrounding FAS 109 have been exacerbated by new rules governing the Accounting for Uncertainty in Income Taxes released by the FASB about a year ago. Known as FIN 48, the new rules dramatically change how companies account for uncertain income tax positions. They include a higher standard that tax benefits must meet before they can be recognized in a company’s financial statements. Although FIN 48 is intended to increase the comparability of financial statements, it also significantly increases the calculation and documentation requirements for individually identified income tax exposures.
FAS 109 and related accounting guidance contain a myriad of rules and principles that can make the international tax provision process particularly difficult. This is because specific guidance does not always exist, forcing companies to make judgment calls. That’s why international tax accountants with a comprehensive FAS 109 methodology for global income tax are valuable. A clear approach may be the best line of defense against a material weakness.
The morass of issues and risks associated with accounting for global income taxes can seem overwhelming, even to experienced professionals. But for those seeking opportunities in financial accounting, financial analysis jobs, auditing jobs, tax accounting jobs, cost accounting jobs, managerial accounting jobs, or any other aspect of accounting over the next few decades, it will be virtually impossible to ignore the international business environment. Candidates who are able to master the global aspects of business, will be in high demand by the top firms.
