Upload
kristopher-ingoldsby
View
218
Download
1
Tags:
Embed Size (px)
Citation preview
Innovative strategies for cost recovery and savings for states
Deloitte Consulting LLPMarch 2012
Copyright © 2012 Deloitte Development LLC. All rights reserved.2
Introduction
Fuel excise tax refund — Karen Warner
Bankruptcy case management — George Mitchell
Large County example — George Mitchell
Questions
Contents
Helping recover monies due the stateFuel excise tax refund
Copyright © 2012 Deloitte Development LLC. All rights reserved.4
• The federal excise tax is imposed on motor fuels such as gasoline and diesel fuel.
• State government agencies and their instrumentalities pay millions of dollars in fuel taxes, use tax-paid fuel in non-taxable manners, and are eligible for fuel tax refunds.
• The applicable fuel tax exemptions allow the state and government agencies to claim tax refunds for federal fuel excise tax paid for nontaxable use.
• Most state and city governments render similar services to the local communities similar to the services the corporations in different industries render to their customers.
• Many public sector organizations fail to claim fuel tax credits or refunds due to a complex fuel tax recovery process and limited knowledge of the complicated excise tax statutory rules.
Introduction
Copyright © 2012 Deloitte Development LLC. All rights reserved.5
Alternative Fuel Credit
An incentive tax credit of $.50 cents per gallon for certain “alternative fuels” sold for use or used as a fuel in a motor vehicle. Alternative fuels qualifying for the tax credit include, but are not limited to, liquefied petroleum gas (“propane”), compressed natural gas, and liquefied natural gas.
Off-Highway Use
Refund is available for tax-paid fuel used in a separate motor to operate special equipment such as a refrigeration unit, pump, generator, or mixing unit. Federal refund is also available for federal excise tax paid on clear diesel, if used to power auxiliary units or off-road motor vehicles, such as construction equipment.
State and local government exempt from federal excise fuel tax
Refund is available for tax paid on fuel used exclusively by a state or local government: Gasoline and CNG ($0.183/gallon) Undyed diesel, kerosene and LNG ($0.243/gallon).
Certain Intercity and Local Buses
Refund Rate of $.17 per gallon is applicable if bus is engaged in scheduled transportation along regular route OR nonscheduled transportation if seating capacity is at least 20 adults, excluding the driver.
Fuel tax refund/credit opportunities
Copyright © 2012 Deloitte Development LLC. All rights reserved.6
Comprehensive tax strategy
Copyright © 2012 Deloitte Development LLC. All rights reserved.7
Data analytics tool for indirect tax recovery process and recovery
Data security and privacy capabilities
• Proven track record on engagements with extensive experience in handling data that spans across — Classified (can be classified at Secret or Top Secret level); Sensitive but unclassified; Public open source type of data
• Data received will be transferred using SFTP protocol, treated as SBU and maintained on-shore in a secure enclave environment
The Deloitte Difference: Tools and technology
Data Analytics Platform
Rules EngineData
Visualization Geospatial Unstructured Data
Mining Case Management
Structured Unstructured Third Party/Public
Dat
a
So
urc
es
An
aly
tics
L
aye
r P
res
en
tati
on
La
ye
r
Off line reporting Web based user interface Executive Dashboard
AP, AR, Payroll, GL, Work Order Data,
PO, Disbursement, HR, Master Vendor
Ex: Oracle, SAP, JD Edwards, People Soft
Electronic images of Invoices,
E-mails, documents, data files,
journals, video/audio
Tax Rates, State Audit List,
Address Verification,
SIC codes, PEP list
Helping recover monies due the stateBankruptcy Quick Claim System
Copyright © 2012 Deloitte Development LLC. All rights reserved.9
Bankruptcy Case Management Solution• Many States are challenged to file accurate and complete claims with the Bankruptcy
Court due the fact that tax debts and other accounts receivable are tracked on a multitude of separate systems.
• Our solution automatically searches all systems, collects all open obligations and automatically files a claim with the court. This reduces the number of staff involved and increases the ability to claim and recover assets.
Deloitte’s Bankruptcy Quick Claim System
Bankruptcy Court
Electronic
File
Tax Obligations
Workers Comp
Child Support
Search Results
Approval
File Upload
As used in this document, “Deloitte” means Deloitte Consulting LLP, a subsidiary of Deloitte LLP. Please see www.deloitte.com/us/about for a detailed description of the legal structure of Deloitte LLP and its subsidiaries. Certain services may not be available to attest clients under the rules and regulations of public accounting.
Copyright © 2012 Deloitte Development LLC. All rights reserved.10
Deloitte’s Bankruptcy Quick Claim System (cont.)
Copyright © 2012 Deloitte Development LLC. All rights reserved.11
Process
Bankruptcy case management
Intake Bankruptcy Cases
Process CaseProcess Case
Post Claim Filing
Process Payments
Close Case
• Bankruptcy Court Issues Petitions
• Receive Notification of Bankruptcy
• Research Petitions• Create Bankruptcy
Candidate List• Create Bankruptcy
Case• Set Bankruptcy
Flag to Taxpayer• Bankruptcy Block to
Open Financial Items
• Update Case with Correspondence
• Receive Eligible Bankruptcy Liabilities
• Calculate P&I• Link Claims to
Bankruptcy Cases• File Proof of Claims
to Bankruptcy Court
• Bankruptcy Court Issues Judgment
• Receive Notice of Dismissal, Payment, Conversion
• Update P&I Calculation
• Update Case Status
• Write Off Discharged Receivables
• Receive Payment• Allocate Payment
to Receivables• Update
Bankruptcy Case• Link Payment to
Bankruptcy Case
• Review Case
• Wrap up Activities
• Close Case
Reporting/Dashboard — Case status
Copyright © 2012 Deloitte Development LLC. All rights reserved.12
Current challenges • Multiple agencies Involved• Mostly a paper driven process• Debts, receivables, obligations are
tracked across multiple systems• Manual research required• Limited available staff to assign to this
task• Filing the claim by the Bar Date is always
a challenge• Estimated claims are often used which
don’t stand up in bankruptcy court• Too much paperwork• Hard to process payments against
multiple obligations• Limited budget to improve process
What are the challenge that most states face?
How we address these challenges• Automatic interface with U.S. Bankruptcy
Court to import new filings quickly• Integration with key agency systems to
automatically search and find all debts and receivables
• Case management tools to review, modify and approve claims
• Only exceptions require manual effort• Automatic file upload of approved claims
to the Court• Case management tools store all
correspondence to support court documents
• Automatic payment allocation to multiple systems and debts
• No up-front costs to implement
Helping government do more with lessHow value creation helped a Large County strategically reduce its costs and improve performance and compliance
Copyright © 2012 Deloitte Development LLC. All rights reserved.14
We typically begin with a Value Creation Review that identifies the principal areas the County can extract value.
Typical value creation review
Key deliverables
Data Request
High-level workplan
Baseline Cost Model Opportunity Assessment
Prioritized Opportunities
Quantified Savings and Costs
Performance management, metrics and tools
Implementation action plans
Recommendations for prioritized opportunities
Op
po
rtu
nit
y G
atin
g P
roce
ssService Delivery Model Analysis
$98.2
$22.0
$1.2$5.3
$4.2$0.9$2.1$10.0
$3.9$27.0
$24.0
$-
$25
$50
$75
$100
Equip Reloc Severance Infrastructure Upgrades Ramp-Up Travel FG Moves Other Contingencies Outsourcing Total
Financial Performance Operational Performance
Strategic Initiative Dashboard
10%
25%
0%
15%
5%
10%
PercentComplete
Food Ingredients North America
Food Ingredients Latin America
Food Ingredients Europe
CommentsTwo Weeks Previous
Previous Week
Current Week
Project Status
E-Business
Fertilizer/Salt
Ag Producer Services
Project
10%
25%
0%
15%
5%
10%
PercentComplete
Food Ingredients North America
Food Ingredients Latin America
Food Ingredients Europe
CommentsTwo Weeks Previous
Previous Week
Current Week
Project Status
E-Business
Fertilizer/Salt
Ag Producer Services
Project
Ventures
$98.2
$22.0
$1.2$5.3
$4.2$0.9$2.1$10.0
$3.9$27.0
$24.0
$-
$25
$50
$75
$100
Equip Reloc Severance Infrastructure Upgrades Ramp-Up Travel FG Moves Other Contingencies Outsourcing Total
Financial Performance Operational Performance
Strategic Initiative Dashboard
10%
25%
0%
15%
5%
10%
PercentComplete
Food Ingredients North America
Food Ingredients Latin America
Food Ingredients Europe
CommentsTwo Weeks Previous
Previous Week
Current Week
Project Status
E-Business
Fertilizer/Salt
Ag Producer Services
Project
10%
25%
0%
15%
5%
10%
PercentComplete
Food Ingredients North America
Food Ingredients Latin America
Food Ingredients Europe
CommentsTwo Weeks Previous
Previous Week
Current Week
Project Status
E-Business
Fertilizer/Salt
Ag Producer Services
Project
Ventures
10%
25%
0%
15%
5%
10%
PercentComplete
Food Ingredients North America
Food Ingredients Latin America
Food Ingredients Europe
CommentsTwo Weeks Previous
Previous Week
Current Week
Project Status
E-Business
Fertilizer/Salt
Ag Producer Services
Project
10%
25%
0%
15%
5%
10%
PercentComplete
Food Ingredients North America
Food Ingredients Latin America
Food Ingredients Europe
CommentsTwo Weeks Previous
Previous Week
Current Week
Project Status
E-Business
Fertilizer/Salt
Ag Producer Services
Project
Ventures
(60.0)
(40.0)
(20.0)
0.0
20.0
40.0
60.0
80.0
100.0
2002 2003 2004 2005 2006 2007 2008
Year
Disc
ount
ed D
olla
rs ($
M)
Net Cash Flows Discounted Cash Flows Cumulative Discounted Cash Flows
Initial Change Mgmt Plan Confirmed Change Management Plan
Distribution of PRs in increments of $50K
# of reviews / PR and MRM resources
Average expense per PR & MRM FTEs
Number and expense of FTEs reduced when 60 – 180 days collections was moved to A
Current expense allocation from A
Number and expense of FTEs from 1 – 60 days collections
Anticipated expense allocation from A
Headcount / application (manual process)
FTEs reduced as auto decisioning increased from t% to x%
Overlap of activities in Locations A, B, C
Capacity/ throughput/operational metrics of FTEs in different locations (to determine excess capacity)
Headcount and average expense of FTEs in Locations A - D
Data Required
Personnel expense reduction net of Outsourcer A allocation
Move 1 – 60 days (remaining) collections to Outsourcer A
Net headcount reduction
–Periodic Review reduction
–MRM increase
Net personnel expense reduction
Risk exposure increase
• Raise threshold on Periodic Reviews
Headcount and personnel expenses reduction
Improvement in auto decisioningfrom x% to y %
Headcount reduced by XX
Personnel expense reduced by XX
Consolidate "Risk Activities" in Locations A, B and C into one lower cost location (either domestically or internationally) – Location A or D
I mpact / Analysis RequiredHypothesis
Distribution of PRs in increments of $50K
# of reviews / PR and MRM resources
Average expense per PR & MRM FTEs
Number and expense of FTEs reduced when 60 – 180 days collections was moved to A
Current expense allocation from A
Number and expense of FTEs from 1 – 60 days collections
Anticipated expense allocation from A
Headcount / application (manual process)
FTEs reduced as auto decisioning increased from t% to x%
Overlap of activities in Locations A, B, C
Capacity/ throughput/operational metrics of FTEs in different locations (to determine excess capacity)
Headcount and average expense of FTEs in Locations A - D
Data Required
Personnel expense reduction net of Outsourcer A allocation
Move 1 – 60 days (remaining) collections to Outsourcer A
Net headcount reduction
–Periodic Review reduction
–MRM increase
Net personnel expense reduction
Risk exposure increase
• Raise threshold on Periodic Reviews
Headcount and personnel expenses reduction
Improvement in auto decisioningfrom x% to y %
Headcount reduced by XX
Personnel expense reduced by XX
Consolidate "Risk Activities" in Locations A, B and C into one lower cost location (either domestically or internationally) – Location A or D
I mpact / Analysis RequiredHypothesis
Initial Hypotheses
Co
st m
an
agem
ent
Phase 1:
Assess Current State, Establish Baseline and Size Opportunities
Phase 2:
Refine Value Creation Recommendations
Phase 4:Implement
Phase 0: Pre-Launch
Phase 3:
Develop Action & Implementation
Plans
Copyright © 2012 Deloitte Development LLC. All rights reserved.15
A large county in the U.S. initially engaged Deloitte (at shared risk) to identify cost saving opportunities across Finance functions, and Strategic Sourcing emerged as the highest priority.
Large County example
Financial management
service assessment
• The county’s Financial Management Services Assessment Report recommended contracting with a third party to do the business process management/mapping (BPM) and redesign.
• Deloitte was engaged to identify cost savings and revenue enhancement opportunities and develop a roadmap to make these savings sustainable over time.
• Multiple cost reduction opportunities were identified; strategic sourcing was considered the highest and fastest ROI opportunities
Strategic sourcing
wave 1
Sep
–Oct
201
0A
pr–
Sep
201
1 • The County Manager announced the objective of achieving significant savings through strategic sourcing initiative
• County included $42 MM cost reduction program in its FY12 budget, $3 MM of which comes from strategic sourcing initiative
• Deloitte was engaged to execute the strategic sourcing initiative with the goal of realizing $3 MM savings in FY12 and fees to be paid from realized savings
Copyright © 2012 Deloitte Development LLC. All rights reserved.16
Phase 1 — the Financial Management Service Assessment — identified multiple ways for the County to achieve significant cost reductions.
Large County example (cont.)
Assessed Current State of Finance Function
Identified Cost Reduction Opportunities and Developed
Business Case for Change
Prioritized Opportunities for Immediately Execution
• Identified three tiers of opportunity
– Tier 1: Procurement and Accounts Payable
– Tier 2: Process Accounting, Revenue Recording and Asset Management
– Tier 3: Planning and Budgeting and Grants Management
• Developed business case supporting each tier of opportunity
• Conducted 9 workshops in core finance process areas
• Compared current state to industry benchmarks and leading practices
• Identified Procurement as the highest yielding opportunities with the greatest speed to benefit realization
• Benefits were identified in three sourcing phases:
– Phase I: <3 months — $1.6MM
– Phase II: 3-6 months — $1.3MM
– Phase III: >9 Months $11.5MM
• Elected to fund a technology fit-gap assessment from the procurement savings to identify opportunities to leverage technology and drive greater process efficiency
Copyright © 2012 Deloitte Development LLC. All rights reserved.17
Opportunities were prioritized and strategic sourcing emerged as the highest priority.
Large County example (cont.)
PR-02
PR
AP
RR
PA
GM
AM
PB
Procurement
Accounts Payable
Process Accounting:
Revenue Recording:
Grants Management:
Planning and Budgeting:
High
Low
Com
plex
ity
Time to Value= Size of Savings
PR-01
PB-01
Tier 1Common Themes• Sourcing/demand
management for specific categories
• Business process simplification
Tier 2Common Themes• Broader
sourcing/demand management
• Initial short to mid-term service delivery changes
• Targeted technology enablement
Tier 3Common Themes• Broader service delivery
model changes• Broader technology
enablement
Asset Management:
< 3 months 3-6 months > 6 months
Tier 1 Tier 2 Tier 3
PB-03
PR-03
GM-02
GM-03
PB-02AP-02
AP-01
AP-03 GM-01
PA-01PA-02
AM-02AM-01
Preliminary
Improvement Opportunities
Questions?
Copyright © 2012 Deloitte Development LLC. All rights reserved.Member of Deloitte Touche Tohmatsu Limited