Thank you, Mr. Chair. Thank you for the opportunity to discuss our audit of the offshore banking.
I am accompanied today by Heather Miller, the director who was responsible for this audit.
For our chapter on offshore banking, we focused our activities on the Liechtenstein bank list. This list was received by the Canada Revenue Agency from an informant in 2007. The agency has since received other similar lists.
We looked at whether the agency had a sound approach to deciding who to audit on the Liechtenstein list. We also examined the agency's audit files on those taxpayers, to see whether the agency followed its standard procedures.
In addition, we examined how the agency used the intelligence gained from this project to change how it finds Canadian taxpayers who may have unreported income in offshore accounts. We also looked at the changes to procedures for auditing this type of taxpayer.
The agency had not audited every taxpayer on the list. Nevertheless, we found the work it had conducted was sufficient, given that some names on the list were not Canadian residents and some could not be identified. Without additional information, there was little more the agency could have done.
The agency followed its standard procedures in most of the audits and conducted them without undue delay. We found that standards had not been established for the time it should take to complete files. As a result, we could not conclude on whether any delays caused by the agency were excessive. Standards for completing files on time would allow staff to gauge when their work may be taking too long or when they may need to change priorities.
We also found that the agency agreed to waive its ability to refer taxpayers for criminal investigation in some cases. It did so in exchange for information it may not otherwise have received. For example, by making these arrangements the agency learned how the offshore accounts were set up. Agency management told us that these agreements were only being used for the Liechtenstein list and that they were not being offered to those on subsequent lists. We are concerned, however, because we found that agency staff continued to make such agreements with some taxpayers whose names appeared on a more recent list.
We recommended that the agency analyze how it makes agreements with taxpayers it is auditing to ensure that these agreements reflect agency project and program objectives.
Since receiving the Liechtenstein bank list the agency has received additional lists and information about taxpayers who may be Canadian residents and who may have offshore accounts. As well, changes in legislation will give the agency access to information about international fund transfers of more than $10,000. The agency needs to formalize its approach to dealing with the increase in its workload resulting from these developments.
We recommended that the Canada Revenue Agency ensure that its objectives and audit procedures for offshore accounts reflect lessons learned. They should be documented and understood by staff so that staff members are ready for the projected increase of work in this area. The agency agreed with our recommendations and made several commitments in its response. We received a copy of the action plan the agency submitted to the committee and found it consistent with our recommendations.
Mr. Chair, this concludes my opening remarks.
We would be pleased to answer the committee's questions.