The reporting requirements of all governmental agencies have increased significantly and have become more complex. This is particularly true of the reporting requirements for federal and state taxes. The endless rules and regulations are always changing to be consistent with national policy and economic objectives. It is mandatory that business develop and maintain adequate records to meet the requirements of these widely diverse patterns of federal and local tax laws. If the records and reporting systems are not properly planned, a company will be subject to considerable financial exposure. Emphasis must be placed on the proper recording of financial transactions, accuracy in preparing data for tax reports, and timely reporting to concerned taxing authorities.
Some companies follow a practice of referring federal tax matters to public accountants or tax attorneys. There are, of course, times when such assistance is desirable and necessary. However, the tendency to place such responsibility in hands outside the home organization carries with it certain disadvantages. The application of tax laws to a specific business situation requires an intimate knowledge of the business and its transactions—something the external tax advisor cannot gain through an occasional or annual visit. More than this, the application of the tax laws must be considered in many day-to-day operating decisions. In addition, the controller has as a primary function the determination of the ...