Tax practice risk: Are you covered?

Tax issues are some of the biggest sources of risk – and litigation – for practitioners. New resources can help you benchmark and improve how you manage tax risk within your practice.

For Chartered Professional Accountants (CPAs), personal integrity, ethical behaviour and quality control are crucial. All our members are bound to follow CPA Canada’s Rules of Professional Conduct but, where tax practice is concerned, some more specific guidance can be helpful. Now CPAs who provide tax services, whether as a specialty or as part of general practice, have an opportunity to better assess the quality of their tax engagements and practices, protect their own interests and ensure they meet the highest standards of professional and business conduct.

Task risk questionnaire

CPA Canada’s Tax Risk Questionnaire is a practical, easy-to-use self-assessment tool. It poses a series of questions about the scope and types of tax services you provide and the risk mitigation controls that you currently employ (or do not employ) in your practice. Once the questions are answered, the tool generates a report with a tax risk rating, along with an explanation of the factors that contributed to your rating and, if needed, suggestions and best practices for improving your tax risk management.

The Tax Risk Questionnaire will also allow CPA Canada to gather and collate information from completed questionnaires on an anonymous, aggregated basis. CPA Canada will use the information to identify areas of common risk, develop consistent guidelines for tax engagements and improve professional development resources and services (for example, courses, webinars, checklists, correspondence templates).

Tax risk management guide: Risks identified and practice aids

As an added feature, the questionnaire includes helpful cross-references to relevant information in CPA Canada’s Tax Risk Management Guide. Formerly entitled the Tax Practice Manual, the guide’s new name signals the latest edition’s sharper focus and expanded information on reducing risk exposures and incorporating best practices. If the questionnaire flags an area of potential risk or if you’re simply interested in best practices in a particular area, you can follow links from the questionnaire to the guide for immediate access to information and proven solutions.

A subscription to the Tax Risk Management Guide is needed to enable this optional function. Downloading the questionnaire entitles you to a free, one-month trial.

Special acknowledgement to Dan Jakubowicz and Helen Lakkotrypis for developing the Tax Risk Questionnaire; to Joseph Macdonald for work on developing the software; to CPA Alberta for permission to use the tax practice review guidance on which some of the current questionnaire is based, to CPA Canada Professional Liability Plan Inc. (formerly AICA) for providing input on the questionnaire’s content; and to Nancy J. Bullis and Brian J. Wilson for their work on updating and expanding the Tax Risk Management Guide.

I strongly encourage all small and medium practitioners to complete the questionnaire and see how your tax controls measure up. I also urge you to share your results with CPA Canada so we can continue to improve our guidance and standards for all professionals practising tax across Canada.

Keep the conversation going

I want to hear from you. What steps do you take to ensure tax risk within your practice is appropriately controlled? How could CPA Canada further improve our guidance and tools to help you manage and mitigate tax practice risk? You can keep the conversation going by posting a comment below.

CPA Canada’s Tax Blog is designed to create an exchange of ideas on tax policy and practice issues and their impact on those who practise tax. Your comments can provide helpful input into the public interest advocacy positions developed by CPA Canada.

About the Author

Gabe Hayos, FCPA, FCA, ICD.D

Vice-president, Taxation, CPA Canada