Non-Resident Tax and Excise / Other Levies Transaction Flow-Through Audits

Final Report

Corporate Audit and Evaluation Branch
October 2009


Executive Summary

The Canada Revenue Agency (CRA) is responsible for assessing and collecting a broad range of taxes on behalf of the federal, provincial and territorial governments. Within CRA, the Assessment and Benefit Services (A&BS) Branch is functionally responsible for administering the assessment and revenue payment processes, while the Finance and Administration (F&A) Branch is responsible for ensuring that these revenues are appropriately accounted for and reported.

In 2004-2005, at the request of F&A, the Internal Audit Division (IAD) of the Corporate Audit and Evaluation Branch (CAEB) developed a cyclical audit plan to support CRA in meeting its responsibilities with respect to the accounting and reporting of revenues. The plan set out a systematic approach to provide F&A with assurance, over time, of the accuracy and completeness of CRA financial data on tax revenues and the adequacy of controls for preventing and detecting errors. 

The focus of the audit work carried out under the cyclical plan has been substantive testing, mostly in the form of transaction data flow-through audits of revenue streams. The flow-through audits were first carried out in 2005-2006 and to date have covered revenues from T1 (individual income tax), T2 (corporation income tax), T3 (trust income tax) and T4 (source deductions). The findings of the T1, T2, and T4 audits were reported in 2006. The findings of the T2 Phase 2 (which provided additional coverage of the federal, provincial, and territorial revenues for T2) and the T3 audits were reported in 2008. Results from the most recently completed flow-through audits of the non-resident tax and excise / other levies transactions are summarized in this report.

Objective: The objective of the non-resident tax and excise / other levies transaction flow-through audits was to provide assurance with respect to the accuracy and appropriateness of the automated flow of revenue data, from their respective source documents to the relevant CRA processing systems through to CRA’s corporate accounting system, the Revenue Ledger (RL).

The audit was conducted in accordance with the International Standards for the Professional Practice of Internal Auditing.

Conclusion: Results of the non-resident and excise / other levies audits showed that transaction data for both these revenue streams flowed accurately and appropriately through CRA’s automated systems, from the source documentation of the selected returns through to the respective RL accounts.

Although not directly related to the flow of data through the automated systems, one inconsistency of note was found in the manner in which non-resident tax revenue is presented in the annual CRA financial statements. It is presented as a separate line item in the financial statement for Administered Activities and is based on the amounts reported on the non-resident information summary returns. These are used only for reporting withholding tax and management agreed that the line title in the financial statement for 2008-2009 Administered Activities would change to “Non-Resident Withholding Taxes” in order to better reflect what is in actual fact included.

Introduction

The Canada Revenue Agency (CRA) is responsible for assessing and collecting a broad range of taxes on behalf of the federal, provincial, and territorial governments. Within CRA, the Assessment and Benefit Services (A&BS) Branch is functionally responsible for administering the assessment and revenue payment processes, while the Finance and Administration (F&A) Branch is responsible for ensuring that these revenues are appropriately accounted for and reported.

In 2004-2005, at the request of F&A, the Internal Audit Division (IAD) of the Corporate Audit and Evaluation Branch (CAEB) developed a cyclical audit plan to support CRA in meeting its responsibilities with respect to the accounting and reporting of revenues. The plan set out a systematic approach to provide F&A with assurance, over time, of the accuracy and completeness of CRA financial data on tax revenues and the adequacy of controls for preventing and detecting errors. 

The focus of the audit work carried out under the cyclical plan has been substantive testing, mostly in the form of transaction data flow-through audits of revenue streams. These audits involve verifying the accuracy of data throughout CRA’s assessment and accounting systems, by tracing information reported on tax returns and schedules through the relevant processing system(s) and on to the general ledger accounts in the Revenue Ledger (RL).

The flow-through audits were first carried out in 2005-2006 and to date have covered revenues from T1 (personal income tax), T2 (corporation income tax), T3 (trust income tax) and T4 (source deductions). The findings of the T1, T2, and T4 audits were reported in 2006; and the findings of the T2 Phase 2 (which provided additional coverage of the federal, provincial, and territorial revenues for T2) and the T3 audits were reported in 2008.

Two more audits were initiated in 2008-2009 for the non-resident tax and the excise and other levies revenue streams. Total revenues reported for non-resident withholding tax revenue in the 2007-2008 CRA Annual Report to Parliament was approximately $5.7B and for excise and other levies it was $9B. The findings for the two audits are summarized and formally presented in this report. 

Focus of the Audit

The objective of the non-resident tax and excise / other levies transaction flow-through audits was to provide assurance with respect to the accuracy and appropriateness of the automated flow of revenue data, from their respective source documents to the relevant CRA processing systems to CRA’s corporate accounting system, the RL.

The audit was conducted in accordance with the International Standards for the Professional Practice of Internal Auditing.

Methodology

Audit planning and testing for the non-resident tax and excise / other levies transaction flow-through audits was carried out separately between October 2008 and January 2009. Work on both audits included the development of a suitable sampling plan and the random selection of information returns for analysis and tracing of the flow of reported amounts. The sample sizes were designed to be sufficient for verifying the accuracy and completeness of the flow of the data through automated systems where each item is subject to the same system logic and predefined business rules during processing.

The transaction data reviewed was the most recent available at the time of the audits based on filing period end dates. Non-resident audit transactions were taken primarily from the 2007 calendar year database while the data for the excise and other levies audit was selected from the period July 2007 to June 2008.

The lines of enquiry used for both audits were the same as in the previous flow-through audits. An initial review of the samples was carried out to assess the accuracy of the input of transaction data from the source documents and the processing of this data through the relevant assessment and accounting systems. The same information was then traced further to verify amounts that were appropriately posted to taxpayer accounts and the revenue accounts in the RL. Any inconsistencies identified during the conduct of the respective audits were communicated to and addressed by F&A and the appropriate program area at the time they became known. The validity of returns’ assessments and the effectiveness of systems access controls were not assessed as part of this audit.

More detailed information about the sample selection, testing and results of the audits are provided in Appendix A and Appendix B respectively. 

Findings, Recommendations and Action Plans

1.0 Effectiveness of source systems as they relate to the accuracy and appropriateness of data input and processing

1.1  Non-Resident Tax

Source documentation against which non-resident tax withholding amounts were traced and verified were the NR4 and T4A-NR Summary returns and remittance slips. The automated source systems through which information provided on these documents were traced included the Information Declaration System (INFODEC), Payroll Deductions, Accounting and Collections System (PAYDAC); Non-Resident Source Deductions System (NRSD); and Financial Input Processing (FIP) System.

A random sampling approach was used in identifying non-resident information returns for review. The tax withheld amounts that had been reported on the resulting 308 sample returns selected were then compared to the assessment and accounting data available in the INFODEC, PAYDAC and NRSD systems.

Overall, no errors were identified in the samples reviewed with respect to the accuracy of the flow of data through the source systems. Amounts reported on the NR4 and T4A-NR summary returns were appropriately processed in INFODEC and posted to the client accounts in the PAYDAC and NRSD systems. Program areas responsible for these systems provided appropriate responses and clarifications to queries related to any differences that were noted during the analysis, e.g., incorrect mapping of an account, posting of negative amounts due to adjustments or reassessments.

During the audit, it was noted that some procedures connected but not directly related to the flow of transaction data were being applied inconsistently which could potentially have an impact on the accuracy of CRA’s reporting of non-resident tax revenue. These procedures were related to INFODEC and included notable delays in the input of the paper returns in the sample and the use of a system default date when returns were filed before they were due rather than the actual date received. The Information Returns Processing Section (IRPS), in the A&BS Branch responsible for INFODEC was advised and has since updated field procedures in both these areas.

A random sample of 52 remittance vouchers for non-resident revenue payments were also selected to review the information processed in FIP. No errors were found in the data in FIP related to these vouchers. Payment information received from FIP was correctly posted to PAYDAC and NRSD.

1.2  Excise and Other Levies

Source documentation used in the reporting and payment of excise and other levy amounts were traced and verified to the assessed data in the applicable CRA systems including the Other Levies Assessing System (OLAS), Excise Refunds and Rebates System (ERRS), Financial Input Processing (FIP), and Standardized Accounting System (SA).

A sample of 179 returns was randomly selected to proportionally cover the programs under review including Excise Duty, Excise Tax, Air Travellers’ Security Charges, Insurance Charges and Softwood Lumber. The sample size was calculated on the basis of the number of transactions per program in the period under review and adjusted if necessary in order to include a minimum of 30 samples from each program.

An additional 72 Excise Rebates and Refunds claim samples were randomly selected to review claims processed from the Excise rebates and refunds program and 50 remittance vouchers (10 each from above programs) were selected to review the information processed in FIP.

Results of the review indicated that once the data had been input, there were no notable differences found with the completeness and accuracy of data as it flowed through the source systems for the returns, rebate and refund claims and remittance vouchers. The postings to SA were consistent with assessments in OLAS for excise and other levies amounts and were allocated to the appropriate client account for all samples tested. The excise and other levies program areas provided appropriate responses and clarifications to queries related to any differences that were noted during the analysis. The transactions in question were checked again in OLAS and SA to confirm the validity of clarifications received from the program areas.

2.0  Effectiveness of the RL system processes as they relate to the accuracy and appropriateness of the data posted in the RL

2.1 Non-Resident Tax

The review of the data captured in RL for the 308 sample non-resident withholding tax information returns found that it accurately reflected the data recorded in the INFODEC, PAYDAC and NRSD systems.

The non-resident account numbers from sample returns were searched to identify relevant non-resident revenue posted in RL accounts. The amounts recorded in the RL accounts for the sample transactions were then traced to the assessed data in INFODEC. The results indicated that the flow of non-resident withholding tax data to the RL was accurate and complete.

An inconsistency was found in the manner in which the non-resident information in RL was subsequently used in the preparation of the annual CRA financial statements. Non-resident tax revenue is a separate line item in the CRA financial statements for Administered Activities and it is currently based on the total amount reported on the NR4 and T4A-NR summary returns. These returns however, are only used to account for non-resident withholding tax and do not include non-resident assessments and refunds which are processed using T1, T2 and T3 returns.

Recommendation

For a fair presentation in the financial statements, disclosure of non-resident tax income should include data from all reporting sources and not only withholding tax. Alternatively, consideration could be given to amending the line item in the CRA Financial Statements for Administered Activities from “Non-Resident Tax Revenue” to “Non-Resident Tax Withholding Revenue”.

Action Plan

Revenue Accounting, Reporting and Analysis Division (RARAD) of F&A branch agreed that a change should be made in the reporting of non-resident revenue and indicated that for the 2008-2009 Statement of Administered Revenues the line titled Non-Resident Tax will be amended to read "Non-Resident Withholding Taxes" [Note 1] . This will better describe the amounts reported as being Non-Resident withholding taxes only, and not revenues collected from non-resident taxpayers as a result of them filing individual, corporate or trust tax returns in Canada.

2.2 Excise and Other Levies

Overall, no differences were detected in the excise and other levies amounts posted to the RL from the OLAS and ERRS systems for the sample returns. For all samples tested, assessment data sent to the RL from the source systems were accurately posted to the appropriate accounts.

Conclusion

Results of the non-resident and excise / other Levies transaction flow-through audits showed that the transaction data for both these revenue streams flowed accurately and appropriately through CRA’s automated systems; from the source documentation of the selected returns through to the respective RL accounts.

Although not directly related to the flow of data though the automated systems, one inconsistency of note was found in how non-resident tax revenue is reported in the annual CRA financial statements. It is currently presented as a separate line item in the financial statement for Administered Activities and is based just on the amounts reported on the NR4 and T4A-NR summary returns. These returns are used only for reporting withholding tax and management agreed that the line title in the financial statement for 2008-2009 Administered Activities should be changed to “Non-Resident Withholding Taxes” in order to better reflect what is in actual fact included.

Appendix A  

Revenue Stream: Non-Resident Tax
Source Documents:

  • NR4 and T4A-NR Summary returns; and
  • Non-Res. Remittance slips.

The NR4 information return is filed by Canadian residents, agents (such as a bank, trust company, or credit union), or any other payer who is responsible for withholding and remitting non-resident Part XIII withholding tax. These amounts include pensions, annuities, investment income, and interest, dividends, rents, royalties, and estate or trust income. The NR4 information return includes NR4 Summary and all related NR4 slips.

The T4A-NR information return is filed in respect of payments made for Fees, Commissions, or Other Amounts Paid to Non-Residents for Services Rendered in Canada. A T4A-NR information return consists of T4A-NR slips and the related T4A-NR Summary.

Processing Systems:

  • Information Declaration System (INFODEC) - supports capture, amendment and storage of 28 different third party information returns provided to CRA by employers (T4), financial institutions (T5), Trust companies (T3) and government agencies.
  • Financial Input Processing (FIP) - records, validates, combines and balances revenue payments received from taxpayers.
  • Revenue Ledger (RL) – consolidated general ledger system with summary accounts organized for tracking, controlling and reporting revenue information fed from operational ledgers.
  • Rapid Information for District Offices System (RAPID) - national mainframe menu system used as a means of accessing NR4 and T4A-NR summary returns.
  • Payroll Deductions, Accounting and Collections System (PAYDAC) - revenue accounting system, where T4A-NR information gets posted to client accounts.
  • Non-Resident Source Deductions System (NRSD) - is responsible for the administration of Part XIII source deductions (NR4).

Audit Methodology:

  • NR4 and T4A-NR tax withholding summaries were randomly selected for tracing from the total summaries processed in the calendar year 2007. INFODEC (Information Declaration) processing data, as of October 2008, was used as the source of information in the sample selection.
  • NR4 and T4A-NR summaries were sampled separately to review the accuracy of the flow of data in the individual streams. A total of 155 NR4 summary returns and 153 T4A-NR summary returns were selected.
  • Amounts reported on the summary returns were compared to the total of the amounts recorded on the individual slips covered by the summary to verify accuracy.
  • A separate sample of 52 remittance vouchers (26 each for NR4 and T4A-NR) was randomly selected to review payment information processed through FIP.
  • Copies of 15 NR4 summaries and 15 T4A-NR summaries that had not yet been entered into the systems were also randomly selected from the mail received bins at the Ottawa Technology Centre, to verify the accuracy and timeliness of the data inputting.

Audit Testing and Results – Data Accuracy Summary

Data Flow

 Tax Payments

NR4 and T4A-NR Summary Returns

Source documentation to Assessing

… Posting in FIP 

… Posting in INFODEC

Audit Testing:

NR4:

(a) The sample of 155 NR4 summary returns selected were made up of:

  • 99 paper returns;
  • 22 electronic returns; and
  • 34 amended returns.

Withholding tax amounts on the paper and original electronic returns were traced to the assessed data in INFODEC.

(b) The 34 amended returns were direct data entries (DDE) and source documents were not available for comparison to INFODEC data.

Results:

(a) For the 121 returns that could be traced, the information between the source documents and system data was consistent.

Single instance of an inconsistency was satisfactorily explained and did not impact the accuracy of the flow of data. (One NR4 submitted in 2006 was not processed until 2008.)

(b) NR4 summary assessments generally have zero or positive amounts but four of the amended (DDE) samples had negative amounts in INFODEC. It was confirmed these were reversals of original assessments.

T4A-NR:

(a) The random sample of 153 T4A-NR summary returns selected included:

  • 129 paper returns;
  • 4 electronic filings; and
  • 20 amended returns.

The tax amounts on paper and original electronic returns were traced to assessed data in INFODEC.

The 20 amended returns were direct data entries (DDE) and source documents were not available for comparison to INFODEC data.

(a) Input of data from all 153 T4A-NR source documents to the INFODEC system was generally without error.

An assessed amount in INFODEC for one paper return was different than reported on the document. A further review in the system revealed that the error had subsequently been corrected by way of a reassessment equal to the difference in amount.

Assessing to Accounting

… to PAYDAC, NRSD 

…to NRSD (NR4), PAYDAC (T4A-NR)

Audit Testing:

NR4:

(a) The accuracy of the INFODEC posting of the 99 paper and 22 electronic NR4 samples was verified against client accounting data in the NRSD system.

(b) The accuracy of the INFODEC data for the 34 amended returns was verified against the entries in NRSD.

Results:

(a) The assessed data for the 99 paper and 22 electronic NR4 samples was appropriately posted to client accounts in the NRSD system.

(b) Data for the 34 amendment returns in INFODEC corresponded to the financial accounting information recorded in NRSD.

T4A-NR:

The accuracy of the INFODEC posting for the 153 sample T4A-NR summary returns were verified against the client accounting data in PAYDAC (RAPID) system.

 

Posting of data from the 153 sample T4A-NR summary returns to PAYDAC was appropriate.

Initially, 4 DDE records did not match the data posted to PAYDAC. Further review showed that these samples were amendments to the original returns that had been processed earlier and only the difference in amounts was therefore posted to clients’ accounts.

Payments - Withholding Tax:

Twenty-six remittance vouchers each for NR4 and T4A-NR were selected to verify the information processed through FIP.

Account numbers, receipt date, processing date and amounts recorded on the remittance vouchers were traced to client accounts in NRSD for NR4s and in PAYDAC for T4A-NRs.

There were no errors observed between the data from the remittance vouchers and information processed in the FIP system.

Two of the NR4 and four T4A-NR accounts did not have payments processed in FIP. These accounts had either a $0 assessment or had amounts transferred from other accounts.

For the samples with payments in their accounts, payment information received from FIP was correctly posted to PAYDAC, NRSD.

Assessing and Accounting to RL

… from FIP

… from INFODEC, PAYDAC, NRSD

Audit Testing:

Tax-withheld amounts processed in INFODEC were matched to the amounts posted to RL for the sample for:

  • NR4 returns (99 paper, 22 electronic and 34 amended); and
  • T4A-NR (129 paper, 4 electronic and 20 amended)

Results:

Amounts reported on the NR4 and T4A-NR sample summary returns were correctly posted to the appropriate revenue accounts in the RL.

All samples that had tax withheld amounts in INFODEC matched the amounts posted to RL. Summaries with tax withholding amount of $0 and no net tax amount payable were not posted to RL.

Payments - Withholding Tax

The amounts on sample remittance vouchers were further reviewed to verify if payments processed in FIP matched to what was posted in RL. 

For the samples with payments in their accounts, payment information received from FIP was correctly posted to RL.

Additional Observations – Timeliness and financial reporting


Data Flow – Source documents from Mailroom … to FIP,PAYDAC, NRSD and RL

Audit Testing:

Copies of 15 NR4 summaries and 15 T4A-NR summaries were randomly selected from the mail received bins at the Ottawa TC, to verify the accuracy and timeliness of data processing in INFODEC and posting of transactions to PAYDAC, NRSD and RL. 
 

Results:

There were no errors observed in the data posted from the mailroom sample to PAYDAC, NRSD and RL from INFODEC.

Two of the NR4 summaries had been filed in US dollars, which were properly converted to Canadian dollars at the time of data input and processing.

There were notable delays in the input and processing of the paper returns in INFODEC. All 15 NR4 samples and five of the 15 T4A-NR samples were processed after the Service Level Agreement (SLA) requirement of 90 days.

It was also noted that when 2008 T4A-NR summaries with instalments had been filed in the year 2008 before they were actually due, INFODEC recorded the received date of the returns as “28/02/2009”, the system default date. Use of a future date could adversely affect any subsequent received date related calculations and can cause confusion in responding to taxpayer queries.

The Information Returns Processing Section (IRPS), in the A&BS Branch responsible for INFODEC was advised and has since updated field procedures in both these areas aimed at ensuring timely input of returns and use of correct receipt date.

Data Flow – Non-Resident Tax Information to Financial Statements

Audit Testing:

Mapping of non-resident tax revenue accounts was verified against FRA (Financial Reporting Accounts) 41134 used by (PWGSC) to prepare the Federal Financial Statements. 

 

 

Results:

Most NR4 and T4A-NR summary returns are processed in the year following the one to which they apply (e.g., summaries for calendar year 2007 are processed in fiscal 2008-09).

RARAD confirmed that accrual methodologies were used to take this timing difference into account for the fiscal year-end financial statements.

Amount reported in the FRA 41134 for the fiscal year ending March 31, 2007 did not appear to include the non-resident related RL account # 44272 – Tax GL other TDA Applied.

RARAD subsequently confirmed it had been mapped and included in the FRA 41134 for the 2007-08 fiscal reporting.

Non-Resident tax revenue reported in the CRA Financial Statements for Administered Activities are primarily derived from non-resident withholding tax reported on NR4 and T4A-NR summary returns and do not include assessments from non-resident T1, T2 and T3 returns. However, assessment data from Non-resident T1, T2 and T3 tax returns can for the most part be split out and information on them compiled separately.

RARAD confirmed that these are not included and indicated it could be very difficult to reallocate all T1, T2, T3 tax assessed to N/R for financial reporting purposes.


The following RL revenue accounts were reviewed as part of this flow-through audit to trace Non-Resident tax withholding data and to analyze the Non-Resident tax revenue reported in the CRA financial statements.

RL Account

RL Account Name

45062

NON RESIDENT TAX REVENUE

44890

T4A-NR REVENUE

44272

TAX GL-OTHER TD APPLIED

44808

N/R-FED.DED 126(2.21

45063

EST NON RES TAX

45209

PART XIII.I ADDITIONAL TAX PAYMENT

45210

PART XIII.2 TAX APPLIED

45215

PART XIII.2 TAX ASSESSMENTS

Appendix B  

Revenue Stream: Excise and Other Levies

Source Documents :

  • Excise and other levies information returns;
  • Excise Rebates and Refund claims; and
  • Excise and other levies remittance slips.

Processing Systems:

  • Other Levies Endorsing System (OLES) and Other Levies Assessing System (OLAS) are components of the automated application delivering the Excise and Other Levies program.
  • Excise Refunds and Rebates System (ERRS) is used to process refund/rebate claims for Excise Tax, Excise Duty and Air Travellers Security Charge. ERRS interfaces with RL. ERRS is not integrated with OLAS.
  • Financial Input Processing (FIP) - records, validates, combines and balances revenue payments received from taxpayers.
  • Revenue Ledger (RL) – consolidated general ledger system with summary accounts organized for tracking, controlling and reporting revenue information fed from operational ledgers.
  • Standardized Accounting System (SA) - integrated business (operational) accounting application for CRA programs including excise and other levies.

Audit Methodology:

  • July 2007 to June 2008 processing data (based on period end date) was used to randomly select 179 excise and other levies returns for verification of the accuracy of the information processed. These samples were selected from following programs: Excise Duty, Excise Tax, Air travellers’ Security Charges, Insurance Charges and Softwood Lumber Charges.
  • A proportional sample size was calculated using the percentage count of transactions processed based on program IDs. The sample size was adjusted as necessary in order to include a minimum of 30 samples under each program.
  • A total of 50 remittance vouchers (10 each from above programs) were randomly selected to review the information processed from FIP system.
  • A total of 72 Excise refund or rebate claims from 2007 were randomly selected to review the information processed in the ERRS system. Samples included all claim types.

Audit Testing and Results – Data Accuracy Summary

Data Flow

 Tax Payments

Excise and Other Levies returns

Source documentation to Assessing

… Posting in FIP 

… Posting in OLAS

Audit Testing:

The sample of 179 excise and other levies returns selected was made up of:

  • 56 Excise Duty returns;
  • 30 Excise Tax returns;
  • 30 Air travellers’ Security charge returns;
  • 30 Insurance charge returns; and
  • 33 Softwood Lumber charge returns.

Business number, received and filing period end dates and net amount payable from returns were traced to the assessed data in OLAS.

Nine of the insurance charge returns were notional assessments and did not have source documents for comparison to OLAS data.

Results:

For 165 of the 170 returns that could be traced, the information between the source documents and system data was consistent.

The remaining five out of the 170 were excise duty transactions involving annual endorsement fees charged by CRA for which source documents are not required.

One Air Travelers Security charge return was reported and paid in US dollars but the amount was properly converted to CDN dollars before processing in OLAS.

Assessing to Accounting

… to SA

… to SA

Audit Testing:

Accuracy of the OLAS posting of the 179 excise and other levies returns samples were verified against client accounting data in SA.

Results:

The assessed data for all 179 sample returns was appropriately posted to client accounting in SA except as follows.

Four endorsement fees transactions were posted to non-filing periods in SA but were posted to the right client accounts.

Tax Payments:

Fifty random sample remittance vouchers (10 each from above programs) were selected to review the information processed in FIP system Account number, receipt date, processing date and amount were then traced from FIP to client accounts in SA.

 

There were no errors observed in the data input from 46 of the payment vouchers and the information processed in FIP.

Four accounts related to insurance charges did not have payments processed in FIP. These accounts had amount transfers from other accounts.

Samples with payments in their accounts had payment information correctly posted to SA.

Assessing and Accounting to RL

… from FIP

… Posting from OLAS to RL

Audit Testing:

Excise and other levies amounts processed in OLAS were matched to the amounts posted to RL for the sample.

Results:

The net amounts reported on the excise and other levies returns were correctly posted to the appropriate revenue accounts in the RL.

All amounts of notional assessments and endorsement fees were appropriately posted to RL accounts.

Tax Payments:

The amounts on sample remittance vouchers were further reviewed to verify if payments processed in FIP matched to what was posted in RL. 

 

For the samples with payments in their accounts, payment information received from FIP was correctly posted to RL.

Data Flow – Excise Refunds and Rebates…. Posting in ERRS to SA and RL

Audit Testing:

Source documents for the sample of 72 Excise refund or rebate claims matched to ERRS data for accuracy of data input.

Accuracy of the ERRS posting of the 72 claim samples was verified against client accounting data in SA.

Accuracy of the SA posting of the 72 claim samples was verified against data in RL. 

Results:

There were no errors observed in the data input from 50 of the 72 claims to ERRS.
The difference between the source documents for 22 claims and the ERRS data was attributable to the interest portion or to an audit adjustment.
Amounts that could be traced to SA were posted correctly to the clients’ accounts. Adjustments were posted to clients’ accounting in SA only when accounts had refunds with transfer requests from clients or balances owing in excess of $1,500. 

ERRS data for the 72 claims were posted to RL appropriately.

The following RL revenue accounts were reviewed as part of this flow-through audit to trace excise and other levies data and to analyze the excise and other levies revenue reported in the CRA financial statements.

RL Account

RL Account Name

49115

INSURANCE PREMIUMS DOMESTIC

49868

REFUND - SWL CHARGE ON DUTY DEPOSITS

49330

EXCISE TAX ON GASOLINE

49148

GASOLINE AND DIESEL REBATE

49332

EXC. TAX AVIATION FUEL TAX REBATE - DOMESTIC

49333

EXC. TAX AVIATION FUEL

49334

EXCISE TAX DIESEL FUEL - DOMESTIC

49357

REBATE EXC. TAX ON GASOLINE

49366

REF. EXCISE TAX DIESEL FUEL

49520

EXCISE DUTIES CIGARS - DOMESTIC

49521

EXCISE DUTIES CIGARETTES -< 1361 G/M - DOMESTIC

49522

EXCISE DUTIES MANUFACTURED TOBACCO - DOMESTIC

49523

EXCISE DUTIES RAW LEAF TOBACCO - DOMESTIC

49524

EXCISE DUTIES CIGARETTES > 1361G/M - DOMESTIC

49525

EXCISE DUTIES TOBACCO STICKS - DOMESTIC

79012

CASH CLEARING - SA


Footnotes

[Footnote 1]
IAD has confirmed that the change in the title has been made in the 2008-2009 Administered Revenues Statement.
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