Amit Tekwani
Managing Director and Financial Reporting Practice Leader
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Hear more from Equity Methods: Your trusted partner in equity compensation excellence.
It’s not just the basic deferred tax framework of ASC 740 that creates complexity, but also attendant issues such as employee mobility, an evolving tax and regulatory environment, the need to forecast tax settlement events (due to ASU 2016-09), and vast amounts of equity award data. Companies also must stay abreast of downstream events such as deferrals, settlements, and disqualifying dispositions. And then there’s the impact of different tax rules and rates across different jurisdictions.
Now, with the elimination of the APIC pool and therefore heightened P&L volatility from tax accounting, organizations of all sizes are under renewed urgency to automate and enhance their tax reporting procedures.
Services
On its own or as part of our end-to-end financial reporting service, Equity Methods supports all aspects of tax reporting for share-based payment awards. We can:
- Sync tax reporting with upstream expense reporting. We can do this whether your internal staff handles the expense process or Equity Methods does, and whether or not you use a software tool provided by your stock plan administrator.
- Streamline and automate deferred tax reporting processes. This includes calculating the upfront deferred tax assets (DTAs), unwinding DTAs at settlement, determining the actual tax benefits, and computing excess tax benefits or shortfalls for P&L recognition.
- Manage multiple and frequently-changing tax rates. We seamlessly update DTA balances as tax rates change and illustrate the cumulative-effect adjustments associated with changes.
- Incorporate the effects of employee mobility. We track employee movements without requiring you to provide a history of employee locations. The effects of mobility are directly integrated into all areas of tax reporting.
- Customize reporting around recharge and cost-sharing agreements. We work with you to identify all international tax provisions affecting your tax accounting process, such as recharge and cost-sharing agreements. We deliver custom reports at both consolidated and country-specific levels to eliminate the need for manual tracking.
- Conduct IFRS 2 deferred tax reporting. We automate the DTA mark-to-market process required under IFRS 2, which is by far the most significant area of deconvergence between US GAAP and IFRS. Beyond that, we provide IFRS deferred tax reports on a standalone subsidiary basis with detailed controls and tie-outs.
- Track events throughout the tax reporting lifecycle. These can include 162(m) revisions and NOL situations. We also handle DTA buildup and unwinding for awards related to modifications, acquisitions, and spinout transactions, as well as assumed awards in an acquisition. On top of all this, we can verify outstanding DTA balance and provide DTA balance sheet proof reports.
- Run quarterly or semiannual forecasts. We forecast excess tax benefits and shortfalls using multiple stock price, performance multiplier, and stock option exercise rate assumptions. We also can help you determine the effects of stock price volatility and tax rate changes on the income statement.
Reduce complexity with a global tax reporting framework for your equity compensation plan.
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