Evidence of meeting #13 for Finance in the 39th Parliament, 1st session. (The original version is on Parliament’s site, as are the minutes.) The winning word was audit.
Principal, Office of the Auditor General of Canada
It really depends on the size of the account and the risk as the agency measures it.
Liberal
Massimo Pacetti Liberal Saint-Léonard—Saint-Michel, QC
So what should we be looking at as an average collection? For certain industries it's 30 days, 60 days. What should Revenue Canada be looking at for a goal? Should it be a year, two years? I would think a year would be reasonable. Wouldn't that be the question, not what the amount is?
Auditor General of Canada
I think it's up to Revenue Canada to determine their own service standards. Again, we didn't look at that, but we're saying the longer you wait, the more difficult it is to collect. To have 50% over two years, they are obviously confident that they will get most of that, because the allowance for doubtful accounts was what....
Liberal
Massimo Pacetti Liberal Saint-Léonard—Saint-Michel, QC
One final question.
Before you decide what part of the agency you're going to audit, how is that done? Do you choose two aspects of the agency every year? How is that determined?
Auditor General of Canada
We do a plan for three to five years. We do this for all the major departments and go through and look at what are the major risks, or the achievement of the department's or agency's objectives. Then we try to focus on the areas where we think the risk is highest.
We have been largely focused in the last two years, as I mentioned, on the risk to the integrity of the system and how they manage that compliance activity. We are currently doing about two to three audits a year consistently in the agency.
Liberal
Massimo Pacetti Liberal Saint-Léonard—Saint-Michel, QC
So who will audit their five-year plan, to make sure they achieve it?
Auditor General of Canada
I presume that would be up to parliamentarians to hold them to account for what they've said in their plan.
Conservative
Dean Del Mastro Conservative Peterborough, ON
Thank you.
Just to continue with what I was asking previously, are there any additional considerations for your department to deal with the Canada Revenue Agency compared to when it was the department of revenue? Is it different? Is it more difficult? Is it less difficult?
Auditor General of Canada
We obviously do a lot more work on the financial audit side, given that there are two financial statements that we have to express opinions on each year. There is also the assessment of the agency's performance report; that's a new requirement, which we did not do previously.
For the rest of it, I would say that we always audited the collection of revenues for the purposes of the public accounts of Canada. But the accounting method has changed as well. Rather than being strictly cash, it's now on an accrual basis, so that has brought its own challenges and complexities. But the others--the ongoing performance audits--are very similar to what would have been done in the past.
Conservative
Dean Del Mastro Conservative Peterborough, ON
Okay, that's great.
On overall revenues, there was an indication that overall revenues have grown by about 48% from 1997--I'm not seeing it in here--and that debts have actually climbed by about 88%. Does that show that maybe they might be undermanned, or there may be challenges that we haven't found?
Auditor General of Canada
The main concern we had was that the agency wasn't able to explain why the debts were increasing faster than the tax revenues. If they don't understand that, I would think it would be hard, then, for them to target certain areas. We were really saying that they needed to have a better understanding of that and that they needed to have the information base and analysis to be able to understand that.
Conservative
Dean Del Mastro Conservative Peterborough, ON
So it's not necessarily human-resource-based, then; it could be something else.
Auditor General of Canada
I wouldn't jump to that conclusion. I think the analysis has to happen first.
Conservative
Dean Del Mastro Conservative Peterborough, ON
This next thing may be beyond the scope of your opinion or auditing. Some provinces have a harmonized sales tax. For business, small business in particular, this is simpler, because it's only one process you actually have to go through. I'm just curious: how is that working in those provinces? Is it something that you feel other provinces could or should look toward doing? This would be just an opinion; I'm not asking you to come out and dictate what they should be doing.
Conservative
Auditor General of Canada
What happens--Mr. Hood and Marian can correct me--is that there are agreements, for example, in the province of Quebec, that the Government of Quebec will collect GST on behalf of the federal government. In the other provinces, the federal government collects for the provinces. We have tried to have some efficiency within the system for the collection of those amounts.
Conservative
Dean Del Mastro Conservative Peterborough, ON
I appreciate that: avoid the thorn bushes, so to speak.
I would just come back to small business. I know our economy is really built on small businesses. In some areas, small businesses were happy with the CRA; in other areas, they were not. They're not happy with the frequency of audits. In particular, these audits aren't turning up a great deal of uncollected GST and so forth. And the length of the audits would seem to me are almost getting into a bit of harassment. I mean, a nine-day audit for GST, on average, seems to be an awfully long time.
Maybe you could comment on that.
Auditor General of Canada
I'm not really sure that we can comment on that. We did an audit on the audits of small and medium businesses. I'm not sure...that wasn't an issue that came up.
Auditor General of Canada
I think we did talk about the training of people, and the audit coverage, that they actually weren't, I think, doing all the audit coverage they had planned in many of the areas.
