More Facts Resolve Tax Risks –

Report to the Audit Committee and a Provision Recommendation –

A TAX EXPOSURE is typically a combination of capital, penalties, and interest. A determination must be made, based on the information available, as to whether there is a tax exposure or whether circumstances exist to mitigate or eliminate the exposure. Based on this determination the amount is either provided for, raised as a contingent liability, or excluded as an exposure.

In reporting to the audit committee , the tax exposure is dependent on the facts of the matter which in turn will dictate the risk. The risk could be classified into three categories, namely, probable, possible, and remote. Each category should have a corresponding percentage, e.g., 100%, 50%, and 20% respectively. This will quantify the provision to be made for each item and will give the committee a better understanding of the exposure.

In the USA , having an estimated 50% or more potential risk exposure means that FIN 48 , referred to in the chapter 8, will come into play for public companies.

In accordance with Circular 230 Disclosure