As owners of the business, shareholders want to maximise the value of their investment.
They want to minimise risk of financial loss and have comfort that the company’s management will attain and exceed predicted returns on invested capital. Strong corporate governance is expected and required.
As tax can represent over 40% of corporate earnings, it is essential that there are no material errors or surprises in reported tax expense that will adversely impact returns. Tighter internal controls over the tax reporting process have become much more important under the balance sheet-based methodology of IFRS, which increases the sensitivity of earnings to swings in tax balances.