Auditor’s report flags risk assessment risks at Export Development Canada

The federal auditor general says Export Development Canada has significant problems when it comes to risk management because it hasn’t kept up with evolving industry practices.

The warning comes almost 10 years after the auditor first flagged concerns about the Crown corporation, an export credit agency set up to help companies with international business deals.

The auditor’s report says the corporation has yet to implement a risk management framework which was first recommended in a 2009 audit.

The report also found problems with the appointment of the corporation’s board, pointing out that at the end of last year, the terms of eight of EDC’s 12 board members had expired, although they continue to sit.

The board is appointed by the federal government and the corporation says it will push the government to fill the positions.

The auditor general said the risk management concerns will persist until the corporation completes a transformation project that’s expected to be complete next year.

Apart from these weaknesses, the report said other things were operating well.

“In our opinion, based on the criteria established, there were significant deficiencies in the corporation’s board appointment process and in its risk management processes,” the report said.

“But there was reasonable assurance that there were no significant deficiencies in the other systems and practices that we examined.”

In its response, which was included in the report released Monday, the corporation said the risk management project will address the elements flagged by the audit.

“Notwithstanding that a more comprehensive policy framework and approach to manage risk will be addressed by the project, the corporation has in place and has periodically updated policies addressing certain operational risks, including information technology, human resources, corporate security and compliance and ethics, among others,” it said.

Canada’s hotels are asking the federal Liberal government to take a heavier hand with online rental services like Airbnb and force the platforms to collect and remit sales tax.

The Hotel Association of Canada has been lobbying the government for more than a year to make online rental services collect and remit sales taxes, estimating the cost of not doing so to be some $100 million in revenues annually from Airbnb alone, not including other rental services.

Two provinces and several Canadian cities have already taken steps to regulate such businesses.

But while federal officials have been receptive to the idea and are “critically aware” that there is an issue they need to tackle, they are struggling to find ways to tax digital services, said association president Susie Grynol.

“The government has a responsibility to keep up with the times and other governments around the world have done so, so it’s time for Canada to take some action, as well,” Grynol told a news conference Monday.

Pressure from domestic businesses has been building on the Trudeau government to apply sales taxes to online services providers like Airbnb and Netflix, arguing that different tax treatments create an unequal playing field.

Last week a Liberal-dominated Commons committee urged Ottawa to make online service providers based outside the country collect and remit sales taxes on as part of a series of recommendations to help Canada’s small businesses compete online.

The international trade committee’s report on e-commerce issues recommended the government apply sales taxes “on tangible and intangible products” sold through online platforms, and tax the profits from those sales.