Increase in Unrecognized Tax Benefits is Reasonably Possible



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| [Table of Contents](#i4a1c883199354127b0e9b0ddb9e84eb8_7) |  | Notes to Consolidated Financial Statements — (continued)(In thousands of U.S. dollars, except share and per share amounts or as otherwise disclosed) |  |
| ACCENTURE 2022 FORM 10-K |  | F-29 |
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A reconciliation of the beginning and ending amounts of unrecognized tax benefits is as follows: 

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|   | Fiscal |
|   | 2022 |  | 2021 |
| Balance, beginning of year | $ | 1,344,460  |  |  | $ | 1,238,945  |  |
| Additions for tax positions related to the current year | 356,089  |  |  | 187,741  |  |
| Additions for tax positions related to prior years | 29,060  |  |  | 115,518  |  |
| Reductions for tax positions related to prior years | (69,023) |  |  | (133,349) |  |
| Statute of limitations expirations | (62,393) |  |  | (62,614) |  |
| Settlements with tax authorities | (2,109) |  |  | (3,374) |  |
| Foreign currency translation | (126,748) |  |  | 1,593  |  |
| Balance, end of year | $ | 1,469,336  |  |  | $ | 1,344,460  |  |

For the years ended August 31, 2022 and 2021, some of the additions for tax positions related to prior years are for items that had no net impact to the consolidated financial statements. We recognize interest and penalties related to unrecognized tax benefits in our Income tax expense. During fiscal 2022, 2021 and 2020, we recognized expense of $25,369, $35,285 and $21,140 in interest and penalties, respectively. Accrued interest and penalties related to unrecognized tax benefits of $177,610 ($159,814, net of tax benefits) and $166,846 ($151,184, net of tax benefits) were reflected on our Consolidated Balance Sheets as of August 31, 2022 and 2021, respectively. As a global company, we file tax returns in multiple tax jurisdictions including the U.S. and Ireland. We have participated in the U.S. Internal Revenue Service (“IRS”) Compliance Assurance Process (“CAP”) program since fiscal 2016. CAP tax years are examined by the IRS on a contemporaneous basis so that most issues are resolved prior to filing the tax return. The years from fiscal 2021 forward remain open for examination by the IRS. The years from fiscal 2018 forward remain open for examination by the Irish tax authorities. We are currently under audit in numerous state and other non-U.S. tax jurisdictions. However, with limited exceptions, we are no longer subject to examination by those taxing authorities for years before 2014. Although the outcome of tax audits is always uncertain and could result in significant cash tax payments, we do not believe the outcome of these audits will have a material adverse effect on our consolidated financial position or results of operations. We believe that it is reasonably possible that our unrecognized tax benefits could decrease by approximately $294,000 or increase by approximately $371,000 in the next 12 months as a result of settlements, lapses of statutes of limitations, tax audit activity and other adjustments. The majority of these amounts relate to transfer pricing matters in both U.S. and non-U.S. tax jurisdictions.  
  

