Tax agency breaking own expense rules, audit shows

OTTAWA— Canada’s tax agency, which tightened rules for business lunches and other hospitality write- offs in the private sector, has been breaking its own hospitality expense rules. Anewly released audit criticizing the Canada Revenue Agency’s poor record in policing the hospitality expenses of its staff has prompted a major rewrite of internal policy. “Numerous payments were made in the absence of proper compliance with the requirements set out in the policy, procedures and guidelines,” the audit reports.

Receipts and invoices were missing, entire files disappeared and spending was not properly authorized by officials, auditors found when they examined 174 cases where the agency picked up the tab for refreshments, snacks and meals for work- related events.

It found problems in almost half ( 79) the hospitality files examined for fiscal 2003- 04.

Canadian Press obtained the June 2005 audit under the Access to Information Act. Initially, the agency refused to release the audit but did so after a complaint to the Information Commissioner of Canada prompted a formal investigation. Canada Revenue Agency spent about $ 1.8 million for more than 2,000 hospitality events in 2003- 04, and about $57 million for travel. The audit examined travel expenses by staff in Atlantic Canada, Ottawa, Quebec, southern Ontario and the Prairies. Of 157 files reviewed, 10 had “ critical errors,” such as missing receipts and signatures. That number was considered acceptable. But it found the travel policy too confusing and subject to widely varying interpretations, which triggered a rewrite expected to be done by June.

For five years, the agency has been a semi- independent unit of the federal government not bound by Treasury Board rules.

In the latest audit, investigators found numerous abuses of the agency’s hospitality policy, including instances where the commissioner did not pre- approve events costing more than $ 3,000, as required. Agency spokesperson Colette Gentes- Hawn said investigators did not cite any cases of fraud, and no employees were disciplined.

“ There was no fraudulence, or unwarranted or improperly issued claims identified in this audit,” she said.