CPA Survey on Net Worth Audits: The results are in!
In our last edition of The Blachford Brief, we asked CPAs across Canada to complete a survey about their experience and confidence responding to CRA Net Worth Audits (“NWAs”). Our goal was to receive 100 responses. You nearly doubled that with 191.
In this article, we explain the purpose of our survey and the results. We also reveal the survey respondents who won the three $100 gift cards to The Keg.
Why we wanted to hear from you
The CRA is increasingly using NWAs when they believe a business owner has underreported their sales. But the courts have described this audit technique as a “blunt instrument” and “inherently inaccurate”, as such, they often produce flawed results. For business owners who are subject to a NWA, the outcome is disempowering, stressful, and enraging.
At Blachford Tax Law, we specialize in responding to large and complex reassessments. So, we thrive at helping business owners who are facing NWAs. We are always, however, looking for ways to be more strategic in how we approach tax disputes and collaborate with CPAs. We also think a lot about the user experience of our clients.
For these reasons, in January 2023, we launched an in internal project to evaluate and improve the processes we employ when responding to a NWA. To identify areas for innovation, we interviewed clients, senior CRA officials, and CPAs. But we also knew we needed quantitative data from a broad sample size to know how to best serve you and your clients who ever may face a NWA.
This is why we sought your perspective.
What you told us
If you have little or no experience with NWAs and do not feel knowledgeable about this CRA audit technique, you are not alone.
Of the 191 CPAs who responded to the survey, 45% had never worked on a NWA and 47% had only worked on a NWA once or twice. Only 8% of respondents had worked on a NWA many times.
Similarly, 77% are either “not knowledgeable” or “a little knowledgeable” about NWAs, and only 5% were “very knowledgeable”.
We believe that representing a business owner who is facing a NWA requires satisfying three responsibilities: (1) identifying CRA’s errors and oversights; (2) helping the business owner navigate the tax dispute process (preparing arguments, meeting deadlines, satisfying procedural requirements, negotiating effectively); and (3) providing the client with a positive user experience throughout.
Most CPAs reported that they were “not at all confident” or “not confident” in their capacity to satisfy these three responsibilities for business owners facing a NWA.
Consequently, the vast majority of CPAs reported they would refer a client facing a NWA to a trusted expert (26%) or collaborate with a trusted expert in representing the client (63%).
These responses are not surprising given how busy CPAs have become and how specialized and demanding NWAs are.
Finally, we wanted to know whether, given CRA’s increasing use of NWAs, you would value a 1-hour presentation on the fundamentals of a NWA. Your answer was resounding:
We will tell you how we intend to meet this demand in the next edition of the Blachford Brief.
Who won the three $100 gift cards to The Keg
Blachford Tax Law’s, Ella Sui, dawned a new cap – and she has had many – to serve as our official “Gift Card Lottery Umpire”. After conducting a scrupulous procedure, using a little-known Microsoft Excel function, the following CPAs won the lottery:
Celine Fu from Hendry Warren LLP, Ottawa
Curtis Johnston from C.R. Johnston Professional Corporation, Alberta
Janusz Pietryga from J.A. Pietryga CPA, Ottawa
Congratulations to the winners and thanks to all of you who provided us with this valuable information. We will put it to good use.