“Tax in particular is either right or wrong, so we considered that there was no scope for error in creating this product. Our approach to include accounting in this also meant that our offering is fully comprehensive and, we believe, is therefore unique in the market,” he says. The benefit for NCS is “bringing a true value-added product and benefits to customers, thereby deepening our relationships and partnerships and of course maximising our stakeholder returns,” Lester says. Return on investment is confidential, however Lester says “it’s fair to say that what we earn out of providing this service is small by comparison to the benefit our clients derive”.

The propagation functionality when applied to both tax and accounting is complex because it has to work for every investment instrument in which clients are invested: such as complex derivatives, foreign exchange contracts, fixed interest securities, and equities. NCS believes that an implementation which excludes part of the portfolio or the accounting functionality misses some of the benefits on offer, and significantly reduces efficiency by having a single fund-level portfolio for the whole fund representing the total fund accounting and tax position.

“It’s only when this one single fund-level position is maintained that complete and robust reconciliation between accounting and tax positions can be maintained,” Lester explains. “The ongoing challenge is that the propagation functionality remains compliant for all new accounting and tax changes. Accordingly, NCS ensures all projects for tax and accounting changes include a propagation component and that this is thoroughly tested before any implementation,” he says.

Join the discussion