2017-03-29 00:00:00 Self Employed English Learn how the CFO model at the Canada Revenue Agency is centralizing financial management and saving the Canadian government $3.5 million a... https://quickbooks.intuit.com/ca/resources/ca_qrc/uploads/2017/06/business-owners-review-advice-from-CRA-CFO.jpg https://quickbooks.intuit.com/ca/resources/self-employed/what-can-you-learn-from-cfo-of-cra/ What Can You Learn From the CFO of the CRA

What Can You Learn From the CFO of the CRA

4 min read

Like many organizations, the Canada Revenue Agency has a chief financial officer, or CFO. The CFO of the CRA is in the process of consolidating the CRA’s Financial Administration Program. Using the CFO model as a framework for centralizing functions, the CFO is improving efficiency and making the organization more productive. Specifically, the CFO is focusing efforts on consistency and standardization, which is changing the CRA’s reporting structure and footprint. It’s also saving the CRA a lot of money. This presents an opportunity for you to use the CRA’s Financial Administration Program as a case study for consolidating and improving the financial administration of your own organization.

The CRA’s Department of Finance

The Department of Finance within the Government of Canada is responsible for economic, fiscal, tax, and financial sector programs. It prepares the federal budget, fiscal projections, and annual financial report; develops tax and tariff policy; designs and administers federal fund transfers between provinces and territories; represents Canada in international financial groups; and develops financial sector legislation. It’s hard enough to pack all those responsibilities into one cohesive sentence, let alone actually attempt to do them. The Department of Finance has certainly come a long way. In 1867, it was comprised of 28 officers, clerks, and messengers. The primary function was bookkeeping and the administration of public monies. Over time, and like most organizations, it grew, publishing its first budget in 1867. The budget process in 2017 is much more complex, but the changes taking place are best practices that any small business owner can replicate and implement.

The CRA Is Recognized for Innovation

The word consolidation is used a lot in corporate jargon, especially in earnings announcements. It is often used in tandem with the words consistency and standardization. All three are corporate buzzwords that have come to be synonymous with efforts to create efficiencies and cost savings in operations. Some companies hire consultants to implement efficiency programs, but you can use the CRA as a guide for best practices in financial management. The organization was selected as a 2016 finalist to receive an Award of Excellence in Public Sector Financial Management from the Chartered Professional Accountants of Canada, or CPA Canada. The award is in the category of innovation, which is one of the CRA’s primary initiatives. In the announcement, the CRA was recognized for introducing efficiencies, improving security, and increasing the integrity of financial data.

The CRA’s CFO Model

The CFO model is a term given to the government-wide push by the CFO at the CRA to formalize best practices around financial management, services, program financing, and financial reporting. As a result, the CRA established direct reporting relationships between financial management advisors at branches and the CFO. A direct reporting relationship was also established between the CFO and the five regional directors of finance and administration. These changes weren’t made to give the person in charge of organizational charts more work; they were made to solidify an organizational move toward centralization and standardization.

Cost-Savings Through Efficiencies: $3.5 million Per Year

According to CPA Canada, the implementation of the CRA’s new financial management program produced an overall savings of $3.5 million a year for the Government of Canada. The project included a cross-functional team with people from technology, accounting, sales, receivables, and operations. If you’re the small business owner who wears multiple hats, it’s important to consider the impact of changes from multiple business perspectives, including the customer. The CRA centralized functions through data entry and invoicing. Specifically, it consolidated the accounts payable function and shifted from a paper-based system to a fully automated system. The CRA improved efficiencies in accounting and payroll functions, as well as operationally. For example, one of the CRA’s largest expenses is its own accommodations. As a result, it uses square metres as a measure for tracking efficiency. It reduced its footprint by 87,500 square metres or 9.3% of inventory in 2015, and plans to reduce it by 64,500 by March 2019. The changes at the CRA affected 4,000 employees and thousands of vendors across Canada. Changes were successfully implemented with the use of strategic planning, effective communication, and tailored employee training. In other words, the CRA had planning sessions, mapped out the process, mapped out the changes in the process, and then shared the process changes with others. It then trained employees on how to implement process changes with a standard approach based in best practice sharing.

Centralization Is the Key to Efficiency

Centralization improves financial integrity and reliability by eliminating redundancies and reducing errors through manual data entry. The new system at the CRA restricts access to approximately 10 employees compared to 1,200 employees under the old system. The change reduced operational and financial risk, reduced errors, improved accountability, and increased data integrity. These efficiencies are saving the CRA over $3 million a year. One major advantage of a small business is agility, which means if the CFO at the CRA can do it, so can you.

References & Resources

Information may be abridged and therefore incomplete. This document/information does not constitute, and should not be considered a substitute for, legal or financial advice. Each financial situation is different, the advice provided is intended to be general. Please contact your financial or legal advisors for information specific to your situation.

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