Success Story - Coherent Corp.

Challenge

Following multiple acquisitions, newly formed Coherent Corp. faced the formidable challenge of unifying tax operations across the globe. More than ten ERP systems, short-period returns, a widescale restructuring project, and challenges arising from tax reform complicated every component of the recently combined tax lifecycle.

Provision and RTP

Historically, the company’s provision and RTP processes were entirely manual. Underlying book-to-tax adjustment data was incomplete or inconsistently presented, and workpapers leaned on assumptions from prior year workflows. The review process relied on static, heavily annotated PDF files, which prevented data-driven analysis and robbed time from meaningful planning and discussion.

A new acquisition only served to further complicate matters as the newly acquired company had inefficiencies of its own. They utilized large and unwieldy Excel workbooks, which were more dynamic than PDF files, but still manual and inflexible. Team members in California led quarterly provisions and the German group handled complex European tax matters, leading to gaps in coordination and communication. Consolidations were cumbersome and planning and analytics deserved more attention here as well.

International and Federal Compliance

International compliance preparers struggled with disconnected source data that fed offline models and workpapers, and they populated certain information by hand. Data transparency and audit trails were limited, and the team raced against the clock every year. Between scattered data, manual entry, and limited transparency, e-filing required intensive reviews and time-consuming corrections.

The incoming team from the recent acquisition outsourced its federal and international compliance processes. However, they did the lion’s share of the work themselves before the provider populated the return — at a cost that outweighed the value.

As Coherent Corp. continued to add entities and take on complex transactions, the hybrid process grew even more convoluted. Adding fuel to the fire, recent resource challenges stemming from bigger workloads, turnover, and retirements underscored the need for automation and efficiency.

Solution

Recognizing the varying sets of adjustments for the global provision and the need for a more structured, linear process, Coherent Corp. created a master tax package template for all foreign and domestic entities, accompanied by a detailed user guide for project owners. This would allow each subsidiary to prepare tax provisions in accordance with a prescribed format and centralize review and analysis with tax headquarters.

Within the provided packages, the team could embed CSC Corptax^® Office templates to automatically pull data for the tax provision and RTP from furnished information and push it into Corptax with a single click. This would enable preparers to do comparative analyses across entities and jurisdictions and spot anomalies — and permit tax headquarters to control and streamline the process.

They used Corptax Office to:

• Create simple, standardized workpapers, so anyone could automate dataflow into Corptax

• Run the new process in parallel with the old process to ensure they got to the same results

• Run reports with Office POV for real-time validation that data in Corptax aligned with offline workpapers, automating an important review task

The team also used Corptax Office POVs to achieve and integrate instant tie-outs between data residing in Corptax and their offline workpapers. An added benefit: Corptax Office templates would allow the team to effectively use Corptax multi-year RTP functionality much more effectively than the prior RTP process. With so many jurisdictions having multiple open years, short periods, and audit adjustments, this functionality proved vital.

On the compliance side, Coherent Corp. merged legacy compliance processes into one standard process by implementing CSC Corptax^® International Compliance with the guidance and support of CSC Corptax^® Professional Services.

Results

Coherent Corp. now has a uniform provision process for every single entity and drastically cuts time spent reviewing quarterly and year-end provisions. Further, subsidiary-level preparation allows for more robust discussions around underlying data and its treatment at both local and tax HQ levels. Posted provision data accelerates prep and planning for federal and state teams.

Compliance-wise, Coherent Corp. experiences more accurate preparation, integrated FDII and Form 1118 calculations, and optimized reviews, while embedded Corptax Office templates enhance speed and efficiency. Standardization lets staff seamlessly shift roles and cover multiple responsibilities as needs dictate. The new workpapers also ensure accuracy with Hyperion numbers as well as with Corptax data — and the team has a backup for all complex calculations with variances highlighted immediately.

International postings automatically flow to domestic federal, state, and provision groups – including provision adjustments – dramatically accelerating reporting for all groups.

And, centralized automation not only streamlines data management and compliance checks, but improves accuracy and auditability, making e-filing faster and more reliable.

All in all, Coherent Corp.:

• Conserves nearly $700K insourcing compliance

• Cuts provision prep and initial review from 200 to 20 hours

• Saves 100s more hours of manual input and data manipulation for compliance

• Devotes ample attention to review and accurately e-files with time to spare

• Curtails workstream volatility, fortifies flexibility, and swiftly addresses new priorities

As Coherent Corp. International Tax Senior Manager Jeremy Munza emphasizes, “By successfully integrating subsidiaries and cohesively merging tax processes, we’ve established a foundation to meet future change with agility and confidence.”

Coherent Corp. is currently working closely with Corptax to automate its CbC and Pillar Two reporting processes.