B.C. ministry upgrades software to catch tax cheats

British Columbia’s Ministry of Provincial Revenue is expanding the use of a software product it says helps catch tax cheats and find payment irregularities at a fraction of the cost.

Ralph Wood, a consultant with Victoria, B.C.-based

Meridian Systems Ltd., which supports MPR’s mainframe systems and recommends technology products to buy, says the ministry is updating to the recently released version 8 of ACL Services Ltd.’s data access, analysis and reporting software. It has been using 25 standalone licences shared by about 40 people, says Wood, but recently bought 10 user-concurrent LAN-based licences, enough for about 65 users.

“By doing it standalone you’re facing one-time licensing costs of about $3,500 per user to get someone up and running, whereas now I can tell users they can have it because they’re sharing one of the existing licences,” says Wood.

ACL software reads and compares between 10,000 and 100,000 records per second from any source, whether it’s in mainframes, legacy systems or in enterprise resource planning applications such as SAP, the company says.

Auditing software such as ACL’s helps auditors monitoring various taxes, such as corporation capital, logging and sales, as well as those auditing family bonus payments against income tax records to find fraud, to do their job much more quickly and efficiently, says Wood. For example, the province has to conduct regular audits of businesses to make sure they are paying their sales taxes correctly.

“We’re not expecting to find anything but we’re required to do the audit,” says Wood. “To send a person in to IBM the hard way they could be gone a couple of months, whereas now they’re gone for a week, so there are big savings that way.”

Time is not the only thing the software helps save, however. In one case, a provincial auditor auditing the school tax system found “a couple of million dollars” in mistakes over a period.

“It’s just a records-keeping issue,” Wood says. “It’s just to handle the sheer volume of stuff you’re dealing with. When you’ve got a million properties to audit, that takes a lot of time due to the sheer volume of transactions and a product like ACL helps you get through it much more quickly.”

As well, the software will help the province track down the millions of dollars owed to it for more than 60 days at any given time, he adds. “In a lot of cases just the threat that you could do that type of audit makes the companies more forthcoming.”

According to John Verver, vice-president of the services group at Vancouver-based ACL, the main improvements in the most recent release of the company’s software are greater ease of use and a tighter link to the software’s online support services.

“We wanted to make sure the technology can be applied very effectively by the increasingly less technical user,” says Verver. “This applies increasingly in the government sector, where there’s a general familiarity with technology tools but not at the level required to do complex analysis.”

The software is designed to allow auditors to easily perform analyses of transactional data, such as examining large volumes of paid invoice data to look for duplications, gaps in sequences or anomalies in a typical series of transactions and to rapidly classify large volumes of information.

ACL, he says, is unique because it reads data directly from the source. “It has to be independent of the information systems department and in many respects independent of other technologies,” he says.

ACL is used in 37 countries in 223 departments and 500 local and regional governments across the globe. British Columbia used it to review all claims made by doctors to the province’s medical service plan in an effort to find inappropriate claims and procedures that were not billable under the plan.

By using auditing software, he says, the province not only reduced the manpower required for the job to about one-third of a full-time equivalent from a team of six full-time clerks, but it also found about $600,000 in unacceptable claims.

The software is also used to prevent money laundering. The Alberta Treasury Branch, Verver says, has implemented a series of 24 tests performed daily on every transaction that flows through the province’s banking system. It provides reports necessary for regulatory compliance and also identifying suspicious activity to help banks watch out for individuals or organizations that might be involved in money laundering.

That’s part of a trend in the industry and among governments to embed the audit process into the day-to-day business process, so organizations don’t have to wait a year or two to find out they have problems, says Verver.

“One thing we’re doing a lot of now, particularly in the consulting area, is implementing systems for continuous monitoring. Sometimes you’re going in well after the event and examining transactions and looking for problems,” he says. “The trend we’re seeing is implementing systems that continuously monitor transactions as they occur, red flag them so they can be sent off in real time to management.”

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