Case Study
Case Study: Wim Schipper, GIBO Group (PDF 112KB)
Case Study: Dutch Water Board solution Dave van den Ende, Deloitte Netherlands (November 2007) (PDF 152KB)
Case Study: A small business case study - Joe the tradesman
Savings in time and money
- Currently a small business takes an average 38 hours to complete government financial reporting transactions
- Under SBR this time is reduced to 26 hours
The estimated time saving of 12 hours equates to an annual saving of $324 for a small business.
Before SBR
Joe provides a trade service to households in his town of Wagga Wagga. He is in his late twenties and in the future wants to expand his business, employ some apprentices and take on a business partner. He is struggling to meet demand due to a national skills shortage in his line of work and is therefore reluctant to take on more work due to the additional paperwork he would have to complete or have to pay someone else to complete on his behalf.
Currently, Joe only has to complete a yearly income tax return, relevant business schedules and quarterly BAS. Not one for sophisticated record keeping, Joe's records are a combination of a cheque book, invoice/receipt book, bank statements and an envelope containing his receipts for work related expenses. Around November each year, Joe takes his records to his accountant who prepares Joe's income tax return and payment summary.
After SBRJoe has spoken to his accountant about his record keeping and paperwork concerns surrounding the hiring of more staff and apprentices. Joe's accountant shows him an SBR compliant software product that sits on his desktop that has all the information and schedules for government reporting embedded as a module within it. Joe realises that even with the additional reporting obligations due as a result of taking on staff, this software would make life easier than it is today. This new software will help Joe run his business by keeping track of the businesses incomings, outgoings, payroll and any other incidental financial items. Joe's accountant will help him purchase all the required hardware and software as well as setting up his internet connection. The accountant also suggests Joe might now want to get an email address and possibly down the track get someone to help set up his own website.
By using the software recommended by his accountant, Joe could complete his own BAS, ABS surveys he may be required to complete, as well as any other reporting obligations and submit them electronically. The software will also remind him when each form is due, and for additional assurance he has the option of sending some of his forms to his accountant for review, before submitting them. Joe will pay his accountant less than he does today, as the once a year visit to complete his tax return and other government obligations will take only a few hours as opposed to the day or two it takes now.
The software will also allow Joe to know how well his business is tracking, whether it is turning a profit or a loss, where his money is being spent, what type of work brings in the most money for the least amount of effort and so on. This level of analysis will allow Joe to become more astute about the types of jobs he accepts, and how much he should charge for different types of work without waiting until the end of the year when he sees his accountant. Also, Joe can easily transmit his electronic records to his accountant whenever he wants, so his accountant can provide him with more value added advice around business planning without Joe having to go and visit him.
A large business case study - Megacorp
Savings in time and money
- Currently a large business takes an average 578 hours to complete government financial reporting transactions
- Under SBR this time is reduced to 429 hours
The estimated time saving of 149 hours equates to an annual saving of $4,105 for a large business.
Before SBR
Megacorp is one of Australia's corporate leaders in finance, property, consultancy, insurance, investment and superannuation. Megacorp's diversified portfolio of interests ensures they are able to work across boundaries that many companies cannot. With this diversification, however, comes significant government reporting obligations. Megacorp's headquarters are in Sydney, but they also have offices in every capital city in Australia as well as offices in the major international finance centres of New York, London and Hong Kong. Within Australia they employ 9,498 full-time equivalent staff.
Megacorp is a listed company on the Australian Stock Exchange and in the last financial year, Megacorp reported a full-year net profit of $1.2 billion. The year's result was driven largely by continued growth in lending volumes and property as well as taking advantage of the resources boom, underpinned by successful implementation of a cost reduction program. The bank again released a fully franked dividend to investors, and part of this distribution was returned to the company through its dividend reinvestment plan.
Like many multinational corporations, the regulatory reporting requirements for Megacorp include compiling some 382 forms on routine matters to various regulatory reporting agencies. This total includes approximately 206 reports to ASIC, 100 to the ATO, 50 to APRA, 14 to AUSTRAC, 5 to APCA, 5 to the RBA, 1 quarterly and 3 annual surveys to the ABS , and, as a listed entity, 2 to the ASX [1]. Megacorp is also required to compile for submission additional forms to agencies such as WorkCover, Department of Health, Offices of State Revenue for Payroll & Land Tax, various other State and local governments, and the Australian Securities Exchange on a variety of other routine and special circumstance matters. If the facility exists, Megacorp will take advantage of electronic lodgement with government departments, particularly when they can stream data.
As Megacorp does business across a number of different states and territories, they face additional reporting burdens due to inconsistencies between different jurisdictions' legislative reporting requirements.
Megacorp generally manages its own regulatory obligations through in-house services, therefore they are better geared to understand and accurately meet their compliance responsibilities. However, the compliance process for Megacorp can be highly complicated, time consuming and require advice from large accounting and law firms for specialised advice. The company spends a significant amount of time simply gathering, collating and calculating information from numerous areas across its company so it can aggregate for government compliance. They currently use SAP and take feeds from SAP to a tax workpaper compilation tool provided by a Big 4 firm. Megacorp have additional tools that they have purchased to electronically download information from SAP into their financial statements (which still require significant manual intervention) and their APRA returns.
Megacorp's diversified interests also have an impact on the various areas of the company which are required to have input into government reporting obligations. These include natural resources, trading securities, investment securities, property finance, non-business loans, corporate loans, government loans, actuarial insurance information, superannuation numeracy and international financial activities.
As Megacorp operates internationally as well as across state borders, another layer of complexity is added to their compliance burden.
Some of the main burdens for Megacorp include worker's compensation calculations particularly when contractor and sub-contractor calculations are taken into account Contractors also further complicate super guarantee calculations The recent increase in the complexity of FBT rules has led to Megacorp changing their FBT structure to simplify its cost calculations. However there is still a significant burden when calculating employee FBT liabilities for their annual payment summaries, particularly because the liability must be calculated for each employee due to the threshold differences.
Megacorp has expressed concern that some of the forms it is required to complete do not have any substantive use by the regulators. Megacorp has also pointed out that it is unable to provide similar data once or in the same format to different agencies, and so reporting information to one agency needs to be reworked to ensure that it can be sent to another agency, which requires a different format.
After SBR
The use of international standards for communication of financial data has assisted Megacorp in streamlining many of its reporting obligations. Further alignment of Megacorp's financial information with SBR-compliant financial standards and software means a layer of interpretation and manipulation required to meet government obligations is removed. This has led to significant savings in the gathering and collating of financial information. Each piece of information no longer requires individual aggregation for use in government reporting.
By tagging each piece of financial data at its source to Megacorp's chart of accounts as well as to international financial standards, the information can be electronically passed between different software systems without qualification. This has allowed Megacorp to further automate many of its processes which previously required manual intervention. An example of this is the APRA form ARF320.9 Intra Group Receivables and Payables, for which the financial information required is predominantly GL-based but in the past was an involved manual calculation and collation process.
Much of the financial information required by ASIC and APRA is similar, however APRA requires much more detailed breakdowns which are very different to how ASIC requires its information. Many of these breakdowns can now be set up to aggregate and calculate automatically. Payroll tax calculation has also been simplified with the closer alignment of definitions and calculation methods across states.
International transactions which are required to be reported to the Foreign Investment Review Board (FIRB), Bank of International Settlements (BIS), and Australian Transaction Reports and Analysis Centre (AUSTRAC) have also been simplified through alignment with International Financial Standards.
While Megacorp already lodges the majority of its government obligations electronically, it can now lodge most non-streaming type lodgements through a single sign-on and window instead of having numerous different authentications and passwords for different government departments. This has assisted in simplifying the electronic sign-off process for management as well as giving them a transparent audit trail for understanding how the final figures being reported to government have been calculated.[1]: Australian Bankers' Association - Supplementary Submission to the Regulation Taskforce (Section 5)
