Attached files
| file | filename |
|---|---|
| 8-K - FORM 8-K - Weatherford International Ltd./Switzerland | d438681d8k.htm |
| EX-99.1 - EX-99.1 - Weatherford International Ltd./Switzerland | d438681dex991.htm |
| EX-99.3 - EX-99.3 - Weatherford International Ltd./Switzerland | d438681dex993.htm |
| ©
2012 Weatherford. All rights reserved.
Tax Remediation Material Weakness Update
Weatherford
November 12, 2012
Exhibit
99.2 |
| 1
©
2012 Weatherford. All rights reserved.
Contents
1.
Third Quarter Accomplishments
2.
The Goal
3.
Next Steps |
| 2
©
2012 Weatherford. All rights reserved.
•
Implemented a tax accounting timeline and calendar
•
Developed and issued new tax policies and additional soon-to-be published
policies •
Focused on filing of statutory accounts and tax returns
•
Identified and improved support for related party transactions to properly
identify withholding taxes
•
Improved process to manage all income tax audits
•
Enhanced the collaboration between Tax and other Weatherford functions including
Accounting, Technology, Treasury and Legal
•
Enhanced process for performing quarterly tax accrual following US GAAP
requirements Third Quarter Accomplishments – Tax People Enhancements |
| 3
©
2012 Weatherford. All rights reserved.
•
Completed the enhancement of Corptax as Weatherford's tax subledger
•
Leveraged SharePoint as the primary tool and platform for storing documents and
data, managing key processes and projects and monitoring the operations of
the tax function •
Implemented Tax Audit Manager International technology to capture and monitor
foreign tax audit activity
•
Implemented Tax Reporting Manager technology to track the interim tax provision
process Third Quarter Accomplishments – Tax Technology
Enhancements |
| 4
©
2012 Weatherford. All rights reserved.
•
Further defined tax roles and responsibilities between the finance and tax
departments •
Developed future organizational chart and progressed recruiting for key
positions •
Since July 1
st
, 14 individuals have accepted employment to include Vice President Tax,
Assistant Vice President Planning, Assistant Vice President Federal Audits,
Senior Director Transfer Pricing and Director Tax Consolidations
•
Engaged approximately 30 external professionals from accounting firms (partners,
directors and managers) with significant income tax accounting experience
to augment the Corporate Tax
organization
on
an
interim
basis
until
full
time
staffing
is
completed
•
Engaged field teams by increasing field involvement and ownership of tax outputs
•
Implemented
an
extensive
training
program
in
all
regions
for
the
resources
involved
in
the
tax
processes during 2012
•
Engaged dedicated teams to focus on the preparation and/or review of certain key
validation processes
Third Quarter Accomplishments – Tax People Enhancements |
 5
©
2012 Weatherford. All rights reserved.
Full executive management and board of directors support
Completed tax training for over 300 internal and external resources
Developed and maintained strong coordination amongst Finance, Tax and Operations
leadership
Established and reinforced accountabilities at the region and country
levels Transformed tax to a center led, process driven and field executed
organization Engaged third party resources
Implemented new tax technology
Third Quarter Accomplishments – Success Enablers |
 6
©
2012 Weatherford. All rights reserved.
The Goal: Eliminate the Tax Material Weakness at Year-End
2012 Remediation Program structured with a goal of
establishing a sustainable strong tax function
Objectives
1.
First
priority:
Complete
all
tax
account
baseline
assessments
as
of
year-end
2011
and
file
all required financial statements
2.
Enhance the tax function, with a focus on finding the right people to establish
basis for consistent and reliable execution
3.
Enhance the existing control program over tax processes
4.
Continue cultural improvements related to roles, responsibilities and
accountabilities over controls and processes impacting tax accounting and
reporting |
 7
©
2012 Weatherford. All rights reserved.
The Goal: Complete Tax Account Baseline Assessments as of 2011
Substantially
Complete*
Complete
Borrowed Labor (Technical
Services) Payables
Home Office Expense Payables
Other Withholding Payables
*Substantially Complete: The Company has finished its processes and is following
up on certain open items and finalizing its review of the preliminary
adjustments Area of Focus
Key Activities
Status
Tax Basis Balance Sheet
(“TBBS”) including
Return to Accrual (“RTA”)
•
All Legal Entities: Reconcile and validate deferred and current income tax
accounts for every
entity and branch as of 12/31/11
•
Elimination Company: Reconciled all balances to ensure that taxes payable and
deferred taxes are valid
Uncertain Tax Positions
(“UTP”)
•
Validate all UTPs already recorded as of 12/31/11
•
Identify and assess any new unrecorded UTPs existing as of December 31, 2011
through the UTP questionnaire and other procedures
Withholding Tax Accrual
•
Calculate
and
validate
the
net
accrued
withholding
tax
amount
as
of
December
31, 2011 for each of the following intercompany payable balances:
Interest Payables
Management Fee Payables
Royalties Payables
Lease Payables
Baseline Assessment – Major Activities
A number of key activities were performed as part of the baseline validation to
identify and correct any income tax accounting issues |
 8
©
2012 Weatherford. All rights reserved.
The Goal: Vision for Hiring Tax Personnel
General Observations
Vision Elements
in Hiring Tax Personnel
•
Hire top quality individuals with the
following qualities:
Significant experience in their
functional area of expertise
Willing to put in the effort needed
to continue improvements to the
WFT tax function
Ensure fit with entire tax and
business organization
•
The tax function is broader than the tax
department
•
Key tax processes include the areas of
planning (including transfer pricing),
accounting, compliance and audits
•
Appropriate resources in all areas that
provide data to the tax function is critical
to the tax processes
•
Resources closer to the field operations
are better
Filling
tax
positions
will
take
time
since
we
must
hire
the
right
people
to
ensure
we
have
the
right
culture
needed
for
long
term
success |
 The Goal: Enhance Control Program over Tax Accounting
Key Controls
Accomplishments
•
Mapped all tax function
processes
•
Documented and currently
testing Q3 key controls
•
Developed framework for
year-end key controls to be
in documented in Q4
•
Developed plan to test
year-end key controls in
early 2013
System Validation and
Change Control
“CONSCO “-
elimination companies for USGAAP.
9
©
2012 Weatherford. All rights reserved.
16 Key Controls are in place and will be tested each period to ensure the
accurate reporting of tax financial data |
 10
©
2012 Weatherford. All rights reserved.
Next Steps
Continue to update/ issue policies and procedures
Complete remaining open items and external audit process
Complete documentation of final controls over third quarter and baseline
activity Finalize financial disclosures and update financial statements
through third quarter Formalize controls over the following:
3rd quarter hard close process
Year-end provision process
RTA and TBBS processes performed in 2013
Perform real-time testing of controls for year-end and during 2013
Execute global training program
To Meet Third Quarter Filing Requirements:
Ongoing: |
 11
©
2012 Weatherford. All rights reserved.
This presentation contains forward-looking statements within the meaning of
the Private Securities Litigation Reform Act of 1995 concerning, among
other things, Weatherford’s prospects for its operations, expectations
regarding future financial results and the resolution of our remediation of our
material weakness in internal controls over financial reporting of income
taxes, which are subject to certain risks, uncertainties and assumptions.
These include the Company’s inability to design or improve internal controls to address identified
issues; the impact upon operations of legal compliance matters or internal
controls review, improvement and remediation, including the detection of
wrongdoing, improper activities or circumvention of internal controls;
difficulties in controlling expenses, including costs of legal compliance
matters or internal controls review, improvement and remediation; impact
of changes in management or staff levels; the Company’s ability to manage
its workforce to control costs; the outcome of pending government
investigations, including the Securities and Exchange Commission’s
investigation of the circumstances surrounding the Company’s material weakness in its
internal control over financial reporting of income taxes; the outcome of
ongoing litigation, including shareholder litigation related to the
Company’s material weakness in its internal control over financial reporting of income
taxes and its restatement of historical financial statements; and other
operational and non-operational risks that are detailed in our most
recent Form 10-K and other filings with the U.S. Securities and Exchange Commission.
Should one or more of these risks or uncertainties materialize, or underlying
assumptions prove incorrect, actual results may vary materially from
those indicated in our forward-looking statements. We undertake no obligation
to correct or update any forward-looking statement, whether as a result of
new information, future events, or otherwise, except to the extent
required under federal securities laws. 11 |