Tax in 2020: A Q&A with Deloitte tax innovation experts – Part 2

Tax in 2020: A Q&A with Deloitte tax innovation experts - Part 2

In the second part of this two-part interview series, Chuck and Andy discuss the adoption of technology, how it should supplement rather than replace roles, the implementation of technology and the difference in innovation culture in the UK and the US.

Tax in 2020: A Q&A with Deloitte tax innovation experts – Part 2

In order to address the difficulties faced by tax professionals struggling to manage the analysis of complex tax data for indirect tax, several technological advancements have been made. One such example is Cognitive Tax Insight, or ‘CogTax’, which has been developed by professional services giant Deloitte as part of its ‘Tax in 2020’ initiative.

As it represents a current example of how technology and machine learning can be utilised, Accountancy Age spoke to Andy Gold, tax innovation partner and Chuck Kosal, Chief Transformation Officer, both at Deloitte Tax LLP.

In the second part of this two-part interview series, Chuck and Andy discuss the adoption of technology, how it should supplement rather than replace roles, the implementation of technology and the difference in innovation culture in the UK and the US.

Read the first part of the interview here.


Q: There are many people out there, perhaps more so when we talk to smaller firms, who are wary of technology like this. How do you allay people’s fears that this automation might lessen their role slightly, or make some of the work they do day-to-day redundant?

Chuck Kosal: I’ll let Andy weigh in too because he does do a lot of our state and local tax innovation here locally in the US, so he’s on the ground and feels it, but our experience has been that most of the technology that we’ve developed and we’ll continue to develop is actually replacing the menial, tedious, frustrating, tasks anyway, and what’s actually happening is our people are able to spend more time actually being accountants instead of being data manipulators.

One might assume it’s going to eliminate their jobs but what it has really done, and it’s a focus of Tax in 2020 for us, is changed the value proposition to our clients; they can spend more time in the data, more time in providing insights and driving true value to our clients. Compared with, if you look back five years ago, many accountants around the world that spent their entire day just manipulating data, and there’s not a lot of value in that. It must be done but it’s hard to put a value against that.

Andy Gold: Our experience is that most of the companies we work with are already thin in terms of their resources and asking them to do a lot of the day to day reporting and regulatory matters results in struggles to get to the analytics and the planning. We found that when you include the junior professionals early in the process, they’re the ones that are going to be able to highlight where it is that they’re spending so much time and are doing more of these administrative type tasks that they want to get out from underneath.

You need the process, to redesign and transform, so it does engage with them and it raises them up in what they do day to day because now they’re part of the delivery of the transformed solution. They’re redesigning the process, they’re the ones who are running the analytics and getting the results so I think it has made them more of a contributor and part of the process, so you get the value along the way too.

Q: So it’s more about supplementing what people already do rather than replacing too much?

Chuck Kosal: There’s been a lot of technology, even in the context of my point solution (see Part 1), where we developed it and there was a view somehow that the new technology would potentially take hours out of the system, but it’s been quite the opposite. And I’ll tell you what’s interesting and you see this in Europe; the more technology we seem to invest in and deliver, and I mean this holistically and not just in the tax profession, but just around the world with government regulatory bodies, that the more visibility, the more access to analytical data there is, the more the government want to see it.

So we create a solution to a problem and we think, ‘ok, here we go, this is going to take all this work away,’ and many regulatory bodies and even clients will look at it and go, ‘well what I want to see now is something different,’ so it’s funny – I don’t know when that paradigm is going to ever change, I think it’s just going to continue.

Q: What feedback have you had so far, particularly on Cog Tax, but then also with regards to other innovative elements you’re bringing in as part of Tax in 2020 from clients and their users?

Andy Gold: So clients are finding that they are just able to get behind a lot more information, so they’re not looking at things on a sampling basis. It means that their analysis is faster, it means that it’s more accurate, it means that they are able to predict and get in front of determinations and decisions rather than looking backwards.

We’re also finding that making progress in certain areas of tax sets their minds thinking, ‘well where else can we aim this?’ So we look at indirect tax in the US and around the globe, and we’ve got our different partners around Deloitte thinking about, ‘what about VAT, what about GST, can we use it in the income tax space?’ so it really kind of starts to feed innovation.

Chuck Kosal: I would add, in the context of the bigger, holistic, Tax in 2020, our clients have really embraced and provided great positive feedback to us around this idea of the transparency and really the personalised experience and the collaboration.

I think there’s a recognition that we’re investing in ‘the user experience’ and ensuring that we help them truly achieve their goals as well and their objectives, so our feedback has been very, very, positive around this idea of there been a digital approach to things with the transparency we talked about and the personalised experience that people feel will help them do all the things that are important to them, our clients.

Q: I won’t get you to talk too much about your competitors, but there was a quote in the press from Chuck, I believe, which said that news reports and articles were often focussing on future breakthroughs, but the reality is that Deloitte are deploying machine learning to support your clients today; would you say that you feel like you’re ahead of the game with this new initiative, and that you’re managing to differentiate yourself from others as a result of these innovations?

Chuck Kosal: I will say that, I won’t address whether we’re ahead or behind, I think that’s for our clients to really decide. I will tell you what we are which is practical, and what I mean by that is that we see lots of commentary, we see press releases, we see conversations about things, the exciting technologies, algorithms, blockchain, and many things that are out there, and what we are focussed on are the practical solutions to practical problems.

We do believe these technologies can and do support those solution sets, but we’re very focussed on actual delivery versus the conversation, and so I think that is what’s important to us, it’s our responsibility, it’s our vision to serve our clients in a way that helps them with their day to day problems versus the excitement around the deployment of a technology that might not solve problems.

Q: Bringing it back to our audience in the UK; what difference do you see when you’re in the US and then in the UK when it comes to the culture, or the way your clients are embracing digital change, do you see a difference between the two countries?

Chuck Kosal: I don’t know that I see a difference, it’s funny, Andy and I have had this conversation several times and if I was to maybe try to synthesise this, and going back a little bit to clients with a fear of change, or ‘where do you start?’, I think around the world everybody has that same paralysis, you know, ‘where do I start first?’.

What we see is that the real practical way to attack that is working through this continuum of, ‘what do we need to get done and what would be nice to get done?’ and I think around the world people are tackling it in the same way, ‘let’s focus on things that must get done.’ And when you talk about changes in regulatory environments, if you talk about automated connection in the context of government tax, direct taxing, that’s a must. We need to get that done right, because governments require it. I think people have a tendency to push off in all of our jurisdictions those things that are really nice to have versus, ‘I really must get that done,’ so I don’t see a tremendous difference in the way people want to attack the problems.

Andy Gold: I think what I’ve seen, working with our Belgium firm and some of our folks in the UK and Australia, is that the same kind of drive for innovation is occurring around the globe, with the same kinds of tools. The real goal for us is to bring the synergy of all those efforts together, but there’s a lot of opportunity to learn from what is happening all around the globe and apply it to similar problems.

Andy Gold (L) and Chuck Kosal – Deloitte tax innovation team.

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