Internal Audit – Accounts Receivable National Inventory

Final Report
Audit, Evaluation, and Risk Branch
May 14, 2026

On this page

• Executive summary
  • Summary of recommendations
  • Management response
• Introduction
• Focus on the internal audit
  • Importance
  • Objective
  • Scope
  • Internal audit criteria and methodology
• Findings, recommendations, and action plans
  • ARNI collections program – Strategic goals and objectives
  • Alignment of Headquarters and regional strategic objectives
  • ARNI collections program support system
  • Performance measurement and management
• Acknowledgement
• Appendices
  • Appendix A: Internal audit criteria and methodology
  • Appendix B: Glossary

Executive summary

The Canada Revenue Agency’s (CRA) mandate is to administer tax, benefits, and related programs, and to ensure compliance on behalf of governments across Canada, thereby contributing to the ongoing economic and social well-being of Canadians with a vision of being a world-class tax and benefits administration that is trusted, fair, and helpful by putting people first. This mandate is supported by the Collections and Verification Branch’s (CVB) mandate to protect the integrity and fairness of Canada’s tax system for all Canadians by delivering national validation, compliance, and collection programs.

Within the CVB, the Collections Directorate is responsible for the development and direction of the national collections programs that collect tax debts and other levies on behalf of the federal, provincial, and territorial governments, as well as on behalf of other government departments and agencies. The Initial Intervention and Resolution Division is accountable for providing functional direction and developing national guidelines, policies, and procedures in supporting and enhancing operational strategies for the Accounts Receivable National Inventory (ARNI). The ARNI currently contains all tax debt accounts under $1,000,000 that have been automatically risk scored and allocated to ARNI officers. These accounts are segmented into T1 regular accounts, business accounts, T1 accounts with employment income greater than $40,000, vulnerable population accounts, and deceased taxpayer accounts.

The objective of the internal audit was to provide the Commissioner, CRA management, and the Board of Management with assurance that controls are in place and working as intended for effective risk scoring and file allocation, and for timely, progressive, and appropriate collection actions on accounts in the ARNI collections program.

Overall, the internal audit team concluded that there are controls in place for effective risk scoring and file allocation, and timely, progressive, and appropriate collection actions on accounts in the ARNI collections program. However, there are limited processes in place to monitor and confirm that these controls are working as intended and address identified performance issues. The internal audit team also identified some areas that can be improved so that the ARNI collections program can better achieve its strategic and operational goals and objectives.

The internal audit team found the following:

• There are gaps in management controls, which hinder the ARNI collections program’s capacity to improve and understand the program’s achievement
• The ARNI Quality Assurance and Quality Review (Headquarters (HQ)/regions) tools and guidance are in place and support timely, appropriate, and progressive collection actions in the ARNI collections program.
• There are control gaps that limit the support provided to the regional program managers and negatively impact the ability of the Decision Support System (Tracking Tool) to effectively and efficiently risk scoring and allocating ARNI accounts in a way that enhances the churn of accounts, i.e., the rate of account resolution.
• The gaps in the reporting processes do not allow for timely, actionable, and complete information, which limits the decision-making capacity at the regional level and may negatively impact inventory management and the improvement of the churn of accounts.

Summary of recommendations

1. 1. The CVB, in collaboration with regional program advisors, should:
      1. identify, measure, and monitor ARNI-specific outputs that affect account churn, resolved accounts, and dollars collected
      2. clearly define “account churn,” both qualitatively and quantitatively
      3. set expectations for officers, including numerical guidance on effective account churn rates
      4. implement responsive regional reporting to track performance and support decision making.
   2. The CVB should develop and communicate the strategic and performance objectives of the ARNI Taxpayer Services function, along with the associated performance measures and indicators.
   3. The CVB should develop and implement a documented process that outlines the roles and responsibilities for documenting, monitoring, sharing, and assessing the actual outcomes against the intended outcomes of the business rules (maintained by the Algorithm Workload Maintenance Section and the Telephony and Automated Strategies Section) to ensure alignment with business needs.
2. The CVB should support and promote the use of the Decision Support System across the Collections Directorate and the regional operations team in order to improve the ARNI collections program and the collections continuum.
3. The CVB, in collaboration with regional program managers, should:
   1. clearly define and document roles and responsibilities at the HQ, regional, and local levels as they pertain to the ARNI collections program’s performance monitoring and measurement controls, with particular emphasis on effective inventory management controls that facilitate program delivery at the regional and local levels.
   2. Develop and implement a formal process to monitor, assess, and address, where necessary, the regional activities (for example, the collapsing of inventories) that impact the effective and efficient allocation and churn of ARNI accounts.

Management response

The CVB agrees with the recommendations in this report and has developed related action plans. The Audit, Evaluation, and Risk Branch has determined that the action plans appear reasonable to address the recommendations.

Introduction

The Canada Revenue Agency’s (CRA) mandate is to administer tax, benefits, and related programs, and to ensure compliance on behalf of governments across Canada. This is supported by the Collections and Verification Branch’s (CVB) mandate to protect the integrity and fairness of Canada’s tax system for all Canadians by delivering national validation, compliance, and collection programs.

Within the CVB, the Collections Directorate is responsible for the development and direction of the national collections programs that collect tax debts and other levies on behalf of the federal, provincial, and territorial governments, as well as on behalf of other government departments and agencies. The Initial Intervention and Resolution Division provides functional direction and develops national guidelines, policies, and procedures to support and enhance operational strategies for the Accounts Receivable National Inventory (ARNI).

ARNI is a national program with ARNI collections contact officers located in all regions at tax centres, national verification and collections centres, and tax services offices.

Focus of the internal audit

This internal audit was included in the 2024-2025 Risk-Based Assurance and Advisory Plan (Mid-Year Update), which was approved by the Board of Management (Board) in September 2024. The Assignment Planning Memorandum was approved by the Commissioner following the Audit, Finance, and Risk Committee meeting on March 24, 2025.

In line with the CVB’s priority of delivering core programs while pursuing transformation to better serve Canadians, this internal audit reviewed the ARNI collections program.

Importance

This internal audit is important because it provides assurance that key controls over the ARNI collections program are in place and working as intended to efficiently and effectively resolve tax debt accounts less than $1,000,000. In the 2024 to 2025 fiscal year, the ARNI collections program was responsible for the resolution of 171,796 accounts, and $8,291,460,000 in cash collected.

The internal audit supports CVB senior management in taking appropriate action to enhance the operational excellence of the ARNI collections program and ultimately improve collection results.

Objective

The internal audit objective was to provide the Commissioner, CRA management, and the Board with assurance that controls are in place and working as intended for effective risk scoring and file allocation, and for the timely, progressive, and appropriate collection actions on accounts in the ARNI collections program.

Scope

The internal audit covered the extent to which the CVB and its regional operations team have controls in place to monitor and address the ARNI workload. The internal audit focused on resource utilization, inventory management, and account resolution.

The period covered in this internal audit is from April 1, 2022, to December 31, 2024.

Internal audit criteria and methodology

The internal audit criteria and methodology can be found in Appendix A.

The examination phase of the internal audit took place from January 2025 to March 2025.

The internal audit was conducted in accordance with the International Standards for the Professional Practice of Internal Auditing, as supported by the results of the quality assurance and improvement program.

Findings, recommendations, and action plans

ARNI collections program – Strategic goals and objectives

Background

The collections continuum should support an overarching strategic approach to the CRA’s collection activity. This approach would enable the CVB to better understand and consider the impacts of collection actions and decisions in one workload and the resulting collectability impacts on workloads further along in the continuum. The Collections Directorate relies on documented policies, procedures, and tools to ensure responsible decision making, and the established governance controls should enable these decisions to be assessed and monitored for their impacts on the ARNI collections program at regional and national levels.

The internal audit team expected to find that:

• policies, processes, and procedures were in place and working as intended to ensure strategic goals and objectives of the ARNI collections program are aligned with the production and performance targets
• key performance indicators were defined, quantified, communicated, and monitored at the national and regional levels to identify gaps in processes or procedures that may hinder the achievement of program goals
• ARNI activities were documented and clearly supported the strategic objectives of the program
• controls were in place to assess, monitor, or address the impact of established automated processes (referred to as business rules) throughout the Collections Directorate on the ARNI inventory levels
• mechanisms were in place to ensure that regional processes, such as collapsing inventories, referrals to “complex” workloads, write-offs, and local inventory management solutions, do not negatively impact the allocation or churn of ARNI accounts
• the policies and procedures for the ARNI Taxpayer Services function, which is focused solely on answering phone calls and providing service to Canadians, were aligned with those of the ARNI collections program
• the mandate of the ARNI Taxpayer Services function clearly documents how it supports the strategic objectives of the ARNI collections program.

Findings

The internal audit team found that the performance measure of account churn (the rate at which accounts are resolved) is not formally defined. However, the CVB has verbally communicated the concept of account churn, which appears to be well understood across the regions and Headquarters (HQ). Since completing the examination phase of this internal audit, the CVB has also shared a formal definition of account churn with the regions.

The churn report produced by HQ does not always accurately reflect the movement of accounts out of the ARNI inventory or align with the reported ARNI production results in a way that completely reflects program performance. One example of information that is not included in the churn report is an account that is removed from an agent’s inventory when a payment arrangement is recorded. The account is not included as part of the monthly churn report until the outstanding amount is fully paid, a period that could last up to 24 months.

In addition, the internal audit team found no alignment between the objectives of the ARNI Taxpayer Services function, which is focused on service, and those of the ARNI collections program, which is measured on files resolved and cash collected. None of the key performance indicators within the ARNI Taxpayer Services function directly contribute to account churn, cash collected, or account resolution.

The internal audit team also found that there are no documented roles or responsibilities in place to assess, monitor, or address the impact of business rules throughout the Collections Directorate on the ARNI inventory. Although HQ program managers understand they are responsible for the business rules, no documented processes and expectations exist related to the development and implementation of the business rules. Moreover, no process exists to assess the impacts of business rules and compare the intended outcomes to the actual outcomes of the business rules.

Finally, the internal audit team found that limited controls are in place to identify, monitor, assess, and address the impacts of regional processes on the allocation and churn of ARNI accounts (such as referrals to more “complex” workloads and the collapsing of inventories). No documented role exists in HQ or the regions for developing, monitoring, or assessing regional processes and their impact on the churn of accounts.

Why it matters

During the course of the internal audit, the CVB shared a formal definition of account churn with the regions. However, if there are significant gaps in the data collected, account churn may not be the basis for a complete measurement of program performance.

There are no ARNI Taxpayer Services function key performance indicators that directly contribute to account churn, cash collected, or account resolution. The absence of documented ARNI Taxpayer Services function policies or procedures that clearly align with the strategic objectives or production goals of the ARNI collections program will hinder HQ and regional program management’s ability to assess the success of the ARNI Taxpayer Services function activities or provide functional and operational direction.

Additionally, a documented process for the creation of business rules throughout the Collections Directorate, and for the roles and responsibilities for monitoring and assessing the actual outcomes against the intended outcomes would provide some assurance that the business rules are facilitating rather than hindering the effectiveness of the ARNI collections program.

Alignment of HQ and regional strategic objectives

Background

In carrying out the mandate of the Collections Directorate for the development and direction of the national collections programs, the collaboration between the Resource Allocation and Monitoring Division, the Collections Technology Division, and the Initial Intervention and Resolution Division is essential. The Initial Intervention and Resolution Division is accountable for providing functional direction and national guidelines, policies, and procedures to tax centres, national verification and collections centres, and tax services offices responsible for the ARNI. The Resource Allocation and Monitoring Division is accountable for ensuring program efficiency and effectiveness and quality assurance. In particular, the Quality Assurance Section’s mandate is to support continuous improvement of quality assurance for all collections programs in the Collections Directorate.

The internal audit team expected to find that the Resource Allocation and Monitoring Division, specifically the Quality Assurance Section, had processes and procedures in place to support the management of the ARNI collections program. The internal audit team also expected to find that documented processes and procedures were in place to facilitate an agile and comprehensive communication and feedback mechanism, allowing for HQ support of the strategic and operational priorities.

Findings

The internal audit team found that an HQ quality assurance process is in place and that local quality reviews carried out by team leaders and quality and program assurance officers are aligned and support the continuous improvement of the ARNI collections program. Processes, procedures, and tools exist to support appropriate, timely, and progressive collection actions in the ARNI collections program. The National Programs Section and the Quality Assurance Section continue to work on specifying the measurement and definitions used to ensure consistency in the appropriateness, timeliness, and progressive nature of collection actions.

Why it matters

Consistent understanding and execution of appropriate, timely, and progressive collection actions in the ARNI collections program across all regions would support improved analysis of taxpayer interactions and behaviours. Greater consistency in collection actions would also enhance performance measurement and management.

ARNI collections program support system

Background

The Collections Technology Division is part of a collaborative effort that is essential in achieving the Collections Directorate’s mandate to develop and direct the national collections programs. The Algorithm Workload Maintenance Section prioritizes the development of additional functionalities with the algorithms and the Decision Support System (formerly known as the Tracking Tool). The Decision Support System serves as an authorized CRA system, designed to oversee the distribution of accounts and inventory while ensuring adherence to the established business rules. The system was developed to collect relevant data that meets the business intelligence needs of the national collections programs, aiding in the achievement of the ARNI collections program’s strategic goals and objectives.

The internal audit team expected to find that the Decision Support System, including account risk scoring and account allocation, had been implemented, was working as intended, and met the objectives of the ARNI collections program. The internal audit team also expected to find that a documented process was in place on how to use the data collected through the Decision Support System to improve both the Decision Support System and the ARNI collections program.

Findings

The internal audit team found that limited controls are in place to facilitate an enterprise-level continuous improvement in the effective allocation of lower risk, low complexity accounts to the ARNI workload by the Decision Support System. The Decision Support System was designed and is supported by the Algorithm Workload Maintenance Section to oversee the distribution of accounts and inventory while ensuring adherence to the established business rules of the collections programs.

The internal audit team also found that limited controls are in place to define, assess, or monitor the allocation of files to the “right” ARNI agents. The regions have developed and implemented local tools to meet their production and quality objectives and have been directed that data generated by the Decision Support System is not to be used for reporting or decision making at the regional or HQ levels. Any business intelligence that is produced by the Decision Support System is not documented, and it is unclear whether there is a process on how to use that information to improve the ARNI collections program.

It is also unclear what impact the ongoing implementation of the Collection Verification Workload Management System has on the Decision Support System’s ability to work as intended and meet the objectives of the ARNI collections program.

Why it matters

The implementation of the Collection Verification Workload Management System is ongoing, and the onboarding of ARNI is scheduled for 2030. This may result in less emphasis on interim solutions.

The absence of an enterprise-level Decision Support System to develop efficient and effective collection strategies and optimize workflows based on taxpayers’ unique situations and previous behaviours significantly reduces the ARNI collections program’s capacity to generate meaningful and timely business intelligence. An immediate impact of a limited Decision Support System is the continued need for manual intervention to reallocate accounts in ARNI and to other workloads. In the long term, this can lead to incomplete, inaccurate, and unreliable business intelligence, resulting in less reliable actionable information used to improve the ARNI collections program and other collection programs.

Performance measurement and management

Background

The Collections Directorate Integrated Business Plan with perspectives to 2022-25 noted that the Directorate may experience challenges in developing and maintaining a stable, repeatable, and effective annual planning cycle that supports effective results-based management. As the functional lead for the regions, the Directorate is dependent on the regions to deliver. This structure relies on timely, accurate, and complete reporting to facilitate consistent data-based performance measurement and management.

The internal audit team expected to find that the current key performance indicators were aligned with the strategic goals and objectives of the ARNI collections program and accurately reflect the program’s performance. Key performance indicators that accurately reflect the program’s performance allow for timely decision making and accurate comparison and analysis of program results to the other CVB collection programs.

The internal audit team expected to find that mechanisms were in place to help manage the ARNI collectors’ inventories that contribute to the goal of inventory churn. Further, the internal audit team expected to find that the strategic objective of account churn was supported by policies, procedures, and tools in place at the HQ, regional, and local levels to identify and address any challenges with inventory management.

Finally, the internal audit team expected to find that the ARNI HQ and regional performance reports and dashboards accurately and completely communicated the program’s production and that the ARNI reporting process enabled access to timely actionable data at the regional and local levels.

Findings

The internal audit team found that the program performance measures of the ARNI collections program are incomplete in their reflection of the program’s actual function, deliverables, and performance.

Processes are not in place to monitor payment arrangements with cash collected at or below the $2,500 minimum balance, which are recorded and reported as being collected as part of the automated strategies workload. If an account is resolved, it is recorded as “resolved” by the automated strategies workload.

An internal audit analysis of accounts reported as “resolved while unassigned” or “self-resolved” in the 2023 to 2024 fiscal year found that 20% of the accounts had previously been assigned to ARNI collectors, representing approximately $604,902,836 in cash collected.

There is no process to track, monitor, or manage the assigned agent inventories that are collapsed and then become unassigned. For example, in the 2023 to 2024 fiscal year, there were 611 collapsed inventories consisting of 128,958 accounts that went from “assigned” to “unassigned” and that were added to the ARNI inventory.

The current challenges in risk scoring and account allocation means there will be a continued need to refer files allocated to ARNI to more “complex” District Allocation Code (DAC) 2 and DAC 4 workloads; consequently, the number of files manually referred to DAC 2 or DAC 4 workloads will likely increase if account churn remains a program objective.

There is no definition or documented criteria for what constitutes a complex account; the term “complex” seems to be a proxy for an account requiring more time and resources. As a result, the required steps prior to a “DAC up” request are not in place to verify the complexity of the account, but they are in place to complete the “groundwork” for the DAC 2 and DAC 4 workloads, saving time spent on the file at these levels. The resources spent on the “groundwork” needed for files to be referred to more complex workloads by ARNI staff is not monitored, measured, or credited as production in any way.

The internal audit team also found that limited mechanisms are in place at the HQ and regional levels to facilitate the effective management of ARNI assigned inventory to align with the goal of inventory churn. For instance, an internal audit analysis of the ARNI inventory showed that 56% of payment arrangements were suspended at least once. No mechanism appears to be in place to measure, monitor, or address the frequency of suspended payment arrangements at the HQ or regional levels, potentially impacting the program’s ability to improve account churn.

Lastly, the internal audit team found that limited controls are in place to identify, monitor, assess, and address the impacts of regional processes, such as referrals to DAC 2 and DAC 4 workloads and the collapsing of inventories, on the allocation and churn of ARNI accounts.

Why it matters

An incomplete or inaccurate reflection of program performance from current indicators impacts decision making at the HQ and regional levels. The collaboration of HQ and regional program managers to identify, measure, and monitor the ARNI-specific outputs and activities that impact account churn, the resolution of accounts, and the cash collected may improve the alignment of the key performance indicators and the program’s strategic goals and objectives. For example, if the goal is improved efficiency and effectiveness of account churn, the metrics should reinforce and promote quicker and more effective account resolution, as well as reducing the rate of broken payment arrangements.

Additionally, the identification and mitigation of inventory management challenges directly impacts account churn, cash collected, and account resolutions within the ARNI collections program. Clearly defined roles and responsibilities at the HQ, regional, and local levels for identifying, analyzing, and mitigating challenges related to effective inventory management will facilitate the achievement of ARNI collections program goals and objectives.

Acknowledgement

The Audit, Evaluation, and Risk Branch would like to acknowledge and thank the CVB, and the Atlantic, Quebec, Ontario, and Western regions for the time dedicated and the information provided during the course of this engagement.

Appendices

Appendix A: Internal audit criteria and methodology

Internal audit criteria

Based on the Audit, Evaluation, and Risk Branch’s risk assessment, the following lines of enquiry were identified:

Internal audit methodology

• Documentation review: Reviewed documentation from the CVB and the Atlantic, Quebec, Ontario, and Western regions to verify that plans, policies, and procedures are documented, communicated, and followed.
• Data analytics: Analyzed data obtained from the Algorithm Workload Management Section, the Decision Support System, the Revenue Enforcement Management and Information Tracking System, and various data tables within the CRA data marts.
• Interviews: Conducted interviews with select staff within the CVB and the Atlantic, Quebec, Ontario, and Western regions

Appendix B: Glossary

Account churn

The number of accounts in ARNI assigned inventory that have been removed from collections inventory relative to the volume of accounts in ARNI assigned inventory.

Accounts Receivable National Inventory (ARNI)

The ARNI is part of the CRA’s CVB. It functions as a centralized inventory system that helps direct taxpayer files to the most appropriate collection strategy based on risk and complexity.

Account resolution

In the context of the ARNI collections program, accounts are resolved if the account is fully paid, the account is written off, or the account is transferred to a more “complex” workload/higher DAC level.

Automated strategies

Automated collection actions that occur at the beginning of the collections process, prior to assignment to contact or collections agent.

Collapsing inventory

In the context of the ARNI collections program, a collections contact officer is assigned an inventory of 225 accounts, this inventory is transferred back to the ARNI unassigned inventory when the officer leaves the CRA.

District allocation code (DAC) level

The DAC level is the segmentation of the collections workload based specific characteristics (i.e., deceased persons) or complexity (i.e., insolvency workload)