Do you have problems with the design or implementation of your Tax Control Framework? Are the fiscal risks within your organization visible enough? Do the fiscal risks fit within the risk appetite of your organization? The KEY Group can help you with the answers to these questions. The normative standard (to control the fiscal risks) is developed by us; we can give a quick and efficient insight in the degree of deviation of your current state. In the next step we decide – in close cooperation with you – to close the gaps or not.

1. Tax risks under control

2. What is a Tax Control Framework?
• A Tax Control Framework (TCF) is an internal control instrument
specifically aimed at the tax function within an organization.
• A TCF is an integral component of an organization's Business
Control Framework (BCF).
• The ultimate objective of a TCF is to arrive at correct, complete
and timely filing of all applicable tax returns.
• Among other things, this includes policy, the supervision and
subdivision of fiscal responsibilities, internal
procedures/processes and control measures (hard and soft
controls).
2
T +31 (0)20 - 658 6344 I www.key-group.nl

3. What are the objectives of a Tax Control Framework?
• A TCF ensures that an organization is in control of its fiscal
processes, that fiscal errors are prevented, that fiscal possibilities
are identified on time and that correct tax returns are filed on
time.
• A company's TCF system is adequate if it provides insight into
where tax risks may arise in the organization (awareness), while
the degree of risk tolerance is established internally and while
appropriate control measures are taken with respect to the
identified material risks.
• In the Netherlands, the realization of a properly functioning TCF
is a condition for entering into Horizontal Supervision (also
known as Horizontal Monitoring.
• Similar initiatives in Australia, Ireland, Singapore, UK, US
3
T +31 (0)20 - 658 6344 I www.key-group.nl

4. Questions for self-examination
1. Are the tax risks (or savings) adequately visible?
2. Has the amount of the risk appetite been defined (level of
tolerance)?
3. Are the tax risks consistent with your organization's risk appetite?
4. Is it known how the indirect tax processes can best be managed in
practice (segregation of duties, testing of controls, partial
observations)?
5. Are the control measures that have been taken effective and
efficient for achieving your TCF objectives?
6. Does your TCF connect with your BCF (in order to realize optimal
cooperation with Internal Audit)?
4
T +31 (0)20 - 658 6344 I www.key-group.nl

5. Design and implementation of TCF
• The KEY Group has designed a normative framework ('ideal situation')
based on risk analysis;
• We determine the actual situation by means of interviews, partial
observations and on-site observations;
• The comparison of the normative framework with the actual situation
rapidly provides insight into any differences;
• Differences are then eliminated (or not) based on the organization's risk
appetite (level of tolerance);
• Quantitative insight into the impact of the risks if data analysis is part of
the scope of the activities;
• The activities to be carried out are included in an action plan based on
priorities;
• All activities are carried out in close cooperation with the organization.
5
T +31 (0)20 - 658 6344 I www.key-group.nl

6. Data analysis results
6
T +31 (0)20 - 658 6344 I www.key-group.nl

7. Examples
Process Risk Normative Actual GAP/root Impact
measure situation cause
Entry of Wrong amount of Targeted audit of No audit or No link
purchase input tax reported purchase ineffective audit between € 3,900,000
invoice (pre-paid in return invoice entries in of VAT report purchase per year
tax amounts) VAT report invoices, input
tax and
administration.
Preparation of Sales invoice Periodic check ERP is 'black Sampling of
sales invoice does not contain of ERP design box' and sales invoices €10,000,000
(0% deliveries) all the necessary and sampling evidence for to check per year
details or 0% delivery is whether all
insufficient only compiled details and
evidence after request evidence are
from tax present
authority
7
T +31 (0)20 - 658 6344 I www.key-group.nl

8. TCF compliance
• In the context of Horizontal Supervision, organizations are
required to periodically test the functioning of their TCF;
• By using data analysis and statistical sampling, for instance,
compliance with the agreements can be determined and the
following advantages can be achieved:
– Improvement of the working relationship with the tax inspector;
– Rapid and efficient insight into the nature and size of the tax risks;
– Less time spent on testing risks in the tax section of the financial
statements;
– Reduction in the number of 'vertical' audits and cost savings from the
deployment of one's own resources;
– Strong decline in the chance of penalties.
Sampling Data analysis Effectiveness Efficiency
8
T +31 (0)20 - 658 6344 I www.key-group.nl

9. How we distinguish ourselves
1. The work is performed by former BIG-4 partners or a technology
leader and NOT by junior consultants;
2. The KEY Group is specialized in Business Control, Information
Technology and Indirect Tax Performance: we offer our knowledge
and service as an INTEGRATED approach;
3. We have already developed the normative framework for the Indirect
Tax Control Framework;
4. We not only conduct the gap analysis and make recommendations for
improvement, we also IMPLEMENT the improvements;
5. We have acquired our experience in long-term projects at the world's
largest multinationals;
6. Our approach is (1) efficient, (2) effective and (3) requires less time
from you and our efforts and is consequently relatively inexpensive.
9
T +31 (0)20 - 658 6344 I www.key-group.nl

10. The KEY Group team
ARJAN HASSING (RE RA) was IT Risk and Assurance Partner at Ernst & Young. Before that, Hassing worked at
Deloitte as an accountant. Hassing is a lecturer and examiner in the subject of Internal Control in the post-master's
program for Registered Accountant at Tilburg University. He is considered an expert in Business Control, statistical
sampling and data analysis. He has worked with Richard Cornelisse in the area of Tax Control Frameworks on
many occasions.
ROBBERT HOOGEVEEN RA was the Indirect Tax System and Technology Leader at Shell International; before
that he worked as an IT Auditor at the Dutch Tax Authority. Hoogeveen is specialized in the design and integration
of tax requirements, corporate processes and system functionality. Hoogeveen is also an authority on the
implementation and assessment of VAT functionality in SAP and/or tax engines, the design of VAT filing processes
and the auditing of indirect taxes using statistical sampling and data analysis.
RICHARD CORNELISSE was an Indirect Tax Partner at Ernst & Young and was in charge of the Indirect Tax
Performance Advisory Practice in the Netherlands and Belgium. Cornelisse assists medium-sized and large
companies in improving the efficiency and effectiveness of their Tax Function and Tax Control Framework. He has
authored several articles on Global Indirect Tax Management in specialized professional journals, among other
publications. He has worked with Arjan Hassing in the area of Tax Control Frameworks on many occasions.
10
T +31 (0)20 - 658 6344 I www.key-group.nl