Final Report

Audit, Evaluation, and Risk Branch

January 2019

Executive summary

This study is a follow-up to the Audit, Evaluation, and Risk Branch’s 2014 External Administrative Correspondence Evaluation. The objective of this study is to provide the Canada Revenue Agency’s (CRA’s) Commissioner, senior management, and Board of Management with an independent assessment of the progress that the CRA has made since 2014 with respect to improving external administrative correspondence sent to Canadians.

External administrative correspondence is personalized correspondence that the CRA generates for an individual, a business, or their authorized representatives. This correspondence includes notices, statements, and letters but excludes standardized returns, forms, and guides.

Based on recommendations of the 2014 evaluation, the Assessment, Benefit, and Service Branch created and implemented the External Administrative Correspondence Project to improve correspondence for Canadians and centralize review work. This project was completed in 2 phases. The present study is limited to changes made to correspondence in the first phase of the project, which reviewed 75% of the total correspondence (by volume) issued by the CRA.

Overall, since the 2014 evaluation, the CRA has improved its external administrative correspondence. One of the key changes that the CRA has made is clarifying the required actions taxpayers must take. All correspondence within the scope of Phase 1 of the External Administrative Correspondence Project went through plain language and verse reviews to ensure the use of consistent wording and language. In addition, the Assessment, Benefit, and Service Branch applied a more common “look” and “feel” to all correspondence, with only slight variations to account for individual program and system differences. These improvements aim to help taxpayers better engage with the CRA. Public opinion research conducted by the CRA and finalized in August 2017 indicated that taxpayers reacted positively to the changes.

The evaluation team recognizes the improvements that have been made to the administration and production of external administrative correspondence since the 2014 evaluation. However, as stated in the 2014 evaluation report, the CRA’s systems limit the extent to which certain improvements can be made. The age and limited functionality of CRA legacy systems don’t allow for extensive changes to the content, format, or design of the external administrative correspondence that they generate.

Currently, the Assessment, Benefit, and Service Branch and the Public Affairs Branch are considering a permanent governing body to oversee the continuous maintenance and modernization of correspondence. This governing body will ensure that external administrative correspondence responds to taxpayer needs and expectations, keeps pace with changes in legislation and technology, and supports the CRA’s focus on correspondence as a core business priority and service initiative.

Recommendation

The Assessment, Benefit, and Service Branch and the Public Affairs Branch, in consultation with the Chief Service Officer, should formalize a central governing body for the administration of external administrative correspondence that includes all of the following:

• the appropriate level of authority for decision making
• the ability to assess system-wide costs to modify correspondence
• a dispute resolution process to resolve differences between stakeholders

Management response

The Assessment, Benefit, and Service Branch and Public Affairs Branch agree with the recommendations in this report and have developed related action plans. The Audit, Evaluation, and Risk Branch has determined that these action plans appear reasonable to address the recommendation.

1. Introduction

This follow-up study was first included in the Board of Management approved Risk-Based Audit and Evaluation Plan 2016-2019. The Management Audit and Evaluation Committee approved the Follow-up Study Framework on May 8, 2018. Two issues were identified for the follow-up study:

• administration of external administrative correspondence
• understandability of external administrative correspondence

Appendix A includes a detailed description of each.

2. Background

This study is a follow-up to the Audit, Evaluation, and Risk Branch’s 2014 External Administrative Correspondence Evaluation. The objective of this report is to provide the Canada Revenue Agency's (CRA’s) Commissioner, senior management, and Board of Management with an independent assessment of the progress that the CRA has made since 2014 with respect to improving external administrative correspondence for Canadians.

External administrative correspondence is personalized correspondence that the CRA generates for an individual, a business, or their authorized representatives. This correspondence includes notices, statements, and letters but excludes standardized returns, forms, or guides.

Each year, the CRA sends out approximately 130 million pieces of correspondence to taxpayers and their representatives. Numerous letter creation systems and over 40 input systems generate external administrative correspondence. This correspondence ensures that taxpayers have the information they need to comply with Canada’s tax laws and that they can access the benefits available to them.

In 2014, the External Administrative Correspondence Evaluation concluded that the CRA’s external administrative correspondence was difficult to read and understand due to its complex structure, formal tone, and use of technical language.

In response, the Assessment, Benefit, and Service Branch initiated the External Administrative Correspondence Project with the assistance of the Public Affairs Branch, the Information Technology Branch, and other stakeholders. The goal of this project was to improve the clarity, readability, accessibility, and understandability of written external administrative correspondence. Due to the large volume of correspondence that needed to be reviewed, the External Administrative Correspondence Project was designed to be completed in 2 phases. Phase 1 of the project ended in 2017 and cost $7.5 million. It addressed the top 20 types of external administrative correspondence, which constitute approximately 75% of the CRA’s external correspondence (by volume). The scope of the present follow-up study is limited to the results of Phase 1.

Phase 1 focused on the review and revision of 22,000 verses in English and French as well as 75 redesigned templates. These templates included the following:

• notice of assessment or notice of reassessment
• corporate income tax assessment or reassessment
• Canada Child Benefit (CCB) notice
• statement of account for current source deductions (PD7A)
  • with extra remittance voucher
  • for monthly remitter
  • for threshold 1 remitter
  • for threshold 2 remitter
  • for quarterly remitter
• Goods and Services/Harmonized Sales Tax Credit (GST/HST) notice

The CRA recognizes the importance of correspondence as a core business priority in its corporate business plan:

One of the most important ways the CRA serves Canadians is by clearly communicating tax-related information in plain language and telling them about any action they should take. The CRA has already simplified 75% of the millions of notices and letters we send annually. Over the planning period, we will simplify more of our notices, statements and letters to make it easier for Canadians to understand their tax obligations. We will also simplify tax and benefit forms so it will be easier for Canadians to complete and send these forms to the CRA.^{Footnote 1}

3. Evaluation methodology

This study looked at improvements made to the administration and understandability of external administrative correspondence between 2015 and 2017. The evaluation team conducted a document review, internal interviews, and an external review. Appendix A provides additional information on the methods and their limitations.

4. Findings

Taxpayers’ understanding of their tax obligations is paramount to ensuring that they comply with them. Therefore, the CRA communicates with taxpayers through external written correspondence to ensure that they have the information that they need. The 2014 External Administrative Correspondence Evaluation stated that the CRA could improve correspondence by making it easier to read and understand and that such improvements would:

• result in better service
• streamline and simplify the presentation of notices, statements, and letters
• and potentially increase tax compliance

Since 2014, the CRA has improved the delivery model and quality of external administrative correspondence. Correspondence now has a more common “look” and “feel,” with only slight variations to account for individual program and system differences. In addition, all correspondence underwent plain language and verse reviews to ensure the use of consistent wording and plain language.

The following sections outline the steps that the CRA has taken since the 2014 evaluation to improve the administration and understandability of external administrative correspondence.

4.1 The CRA centralized its administration of external administration correspondence.

In the CRA’s previous model, each independent program autonomously managed the production and delivery of external correspondence; no centralized enterprise approach was in effect (see Figure 1). Because the CRA administered correspondence using as many as 15 letter creation systems and over 40 input systems, the decentralized approach was especially challenging. As noted in the 2014 evaluation, this model presented several administrative issues, including:

• an inconsistent approach to the production and delivery of correspondence
• an inconsistent application of language and formatting rules
• system incompatibility problems^{Footnote 2}

In Phase 1 of the External Administrative Correspondence Project, the project team developed a new centralized model. In this new model, a branch that administers multiple programs relies on the External Administrative Correspondence Project team to manage the administration of each output of correspondence with the other stakeholders. In other words, the project team acts as a governing body that effectively manages revisions to be made to existing or newly created correspondence, including communication between programs and key internal and external stakeholders (see Figure 2).

The policies and procedures that were put in place following the External Administrative Correspondence Project ensured a standardized process for revising all correspondence. Because of the new centralized external correspondence delivery model, the CRA was able to improve the design, language, tone, and clarity of its external administrative correspondence in a consistent manner. The model also disentangled the previous model’s web of communications that was required to administer correspondence. These changes simplified and improved the way in which the CRA delivers correspondence to Canadians.

In order to develop the new model, the project team leveraged numerous multi-disciplinary teams to involve stakeholders in the project. The multi-disciplinary teams included representatives from internal and external stakeholders and from various levels of the CRA.

Internally, early in the project’s planning process, the project team held consultations with stakeholders from across the CRA. Externally, the project team consulted with stakeholders who would be directly affected by changes made to correspondence in order to ensure functionality within their systems and processes.

4.2 The CRA improved the overall understandability of external administrative correspondence.

Following the 2014 evaluation and an independent assessment in 2015, the CRA improved the understandability of its external correspondence in the following ways:

• using cleaner, larger, and more modern fonts
• boldfacing headings and key terms
• using simpler and clearer language (including less legal terminology)
• using personal pronouns
• reducing the length of notices
• placing key information on page 1 of a document (what the document is about, why the taxpayer is receiving it, and whether any action is required)

An independent assessment conducted in 2017 using focus groups with taxpayers, businesses, and their authorized representatives validated that these changes indeed improved the understandability of the CRA’s external correspondence. Independent external subject matter experts and taxpayers who participated in the focus groups found that the many modifications made to the former versions of the notices were improvements and “are likely to encourage a reader’s engagement.”

The 2014 evaluation revealed that the information-technology systems and infrastructure in place made it challenging to administer external administrative correspondence. The age and limited functionality of CRA legacy systems didn’t allow for much flexibility in making changes to the content, format, or design of the external administrative correspondence that they generate. Many of the challenges experienced when modifying correspondence still exist and can be attributed to the limited functionality of these systems.

The methodology used for the present study included an external assessment of correspondence that was revised as part of Phase 1 of the External Administrative Correspondence Project. This external assessment (2018) replicated work completed in 2014 and included a series of recommendations for improving correspondence sent to taxpayers. The previous review, which was conducted as part of the 2014 evaluation, didn’t include recommendations.

The recommendations in the 2018 external review provide an independent assessment of the CRA’s revised external administrative correspondence and outline additional opportunities for improvements to external administrative correspondence. An analysis revealed that some of the 2018 recommendations were in effect at the start of this follow-up study while other recommendations couldn’t be incorporated due to current business rules, system limitations, legislative requirements, or conflicts with government policy and guides. Of the 17 recommendations, only 6 remain to be implemented. The External Administrative Correspondence team agreed to assess these recommendations and to continue addressing them in their ongoing efforts to improve correspondence, where feasible.

4.3 Although the CRA has made progress in the administration and understandability of external administrative correspondence, opportunities exist for further improvement.

Phase 1 of the External Administrative Correspondence Project was successful in making improvements to correspondence. However, stakeholders identified several challenges that arose during the project’s implementation.^{Footnote 3} Many of these challenges are common in horizontal projects of this size, with this degree of reach, and with this volume of correspondence.

Project management challenges included the following:

• The project team had difficulty properly planning the project due to the short timelines that they had for revising the CRA’s correspondence following the publication of the 2014 evaluation.
• Sharing information through the new communication model was at times difficult for the External Administrative Correspondence Project team due to some programs’ preference for pre-existing practices.
• Unclear roles and responsibilities for the project led to reduced accountability among project stakeholders and to delays in the coordinators receiving input. No formal dispute resolution process was in place to resolve differences in opinion.

Systemic challenges included the following:

• A lack of available expertise caused delays throughout the project. Training was necessary to ensure personnel had the required skills to use the new software. Additionally, the level of subject matter expertise required to modify correspondence wasn’t readily available within the CRA. As a result, consultants were enlisted to provide the necessary expertise.
• The project team lacked authority to make changes to correspondence, which hindered their ability to implement recommendations supported by independent external experts and public opinion research.
• System incompatibility prevented the implementation of certain modifications to the design and layout of correspondence.

The project team was successful in overcoming many of the challenges noted. These challenges now serve as lessons learned.

4.4 Going forward

In 2016, the CRA developed its own style guide. The Public Affairs Branch played a key role in the development of this guide. It provides information on writing standards and guidelines for CRA correspondence. The 4-part guide outlines the design, language, mechanics, and layout principles for the creation of all paper and online correspondence from the CRA. During interviews, the Public Affairs Branch confirmed that it would revise the style guide on a quarterly basis to assist the Assessment, Benefit, and Service Branch and other CRA areas with work related to external administrative correspondence.

Currently, the Assessment, Benefit, and Service Branch and the Public Affairs Branch are considering a permanent governing body to oversee the continuous maintenance and development of correspondence. This body would include a centralized office of responsibility for all correspondence, paper and electronic, and their related workloads. An opportunity exists to implement the outstanding recommendations from the independent third-party reviews noted in this report.

This external administrative correspondence program office will:

• build on the processes of the External Administrative Correspondence Project to become the Assessment, Benefit, and Service Branch’s central hub for comprehensive correspondence services
• regularly evaluate all correspondence
• identify and correct any issues with correspondence

Without centralizing correspondence activities, the CRA risks reverting to the previous fragmented approach, which directly reduces the quality of service that taxpayers receive. The inclusion of the CRA’s Chief Service Officer in future plans to improve correspondence might help the CRA to improve horizontality.

The CRA recognizes the ongoing need to review and modernize correspondence to keep pace with taxpayer needs and expectations, changes in legislation, and advances in technology. This recognition will also allow the CRA to focus on the importance of correspondence as a core business priority, as specified in the CRA’s corporate business plan.

Recommendation

The Assessment, Benefit, and Service Branch and the Public Affairs Branch, in consultation with the Chief Service Officer, should formalize a central governing body for the administration of external administrative correspondence that includes all of the following:

• the appropriate level of authority for decision making
• the ability to assess system-wide costs to modify correspondence
• a dispute resolution process to resolve differences between stakeholders

Management response

The Assessment, Benefit, and Service Branch, along with the Public Affairs Branch, agree with the recommendations in this report and have developed a related action plan, including:

• Implementing a governing body, overseen by the Public Affairs Branch, which has the appropriate decision making authority to ensure that External Administrative Correspondence standards and plain language are consistently applied and to continuously assess system-wide costs to modify Agency correspondence.
• Establishing an External Administrative Correspondence Steering Committee made up of representatives from across the Agency and chaired by the Public Affairs Branch whose mandate will be to resolve issues related to the application of External Administrative Correspondence standards.
• Continuing the work completed by the External Administrative Correspondence project within the Assessment, Benefit, and Service Branch, by creating a governing section responsible for overseeing all Assessment, Benefit, and Service Branch correspondence. This will include changes to current correspondence and the development of new correspondence.

The Public Affairs Branch and the Assessment, Benefit, and Service Branch representatives will be working towards implementing the above recommendations by April 2019. Once the details and framework are finalized, the Public Affairs Branch and the Assessment, Benefit, and Service Branch will be reaching out to the Chief Service Officer for final approval and direction.

5. Conclusion

This follow-up study revealed that the CRA notably improved the administration and understandability of external administrative correspondence. A common “look” and “feel” was applied to all Phase 1 correspondence, with only slight variations to account for individual program and system differences. In addition, all correspondence went through plain language and verse reviews to ensure that consistent wording and plain language standards were used. Taxpayers recognized these improvements as a step toward the CRA providing clear and understandable external administrative correspondence.

The evaluation team recognizes the improvements that have been made to the administration and production of external administrative correspondence since the 2014 evaluation. As stated in the 2014 evaluation report, the CRA’s systems limit the extent to which certain improvements can be made. The age and limited functionality of CRA legacy systems doesn’t allow for extensive changes to the content, format, or design of the external administrative correspondence that they generate.

6. Acknowledgements

In closing, we would like to recognize and thank the Assessment, Benefit, and Service Branch and the Public Affairs Branch for the time they dedicated and the information they provided during the course of this engagement.

Appendix A: Evaluation issues and methodology

A.1 Evaluation issues

The evaluation team identified 2 evaluation issues for the purposes of this follow-up:

Issue 1: Has the program made progress in increasing the understandability of external administrative correspondence since the 2014 evaluation?

• How were the various stakeholders consulted to increase the understandability of external administrative correspondence?
• What progress was made to improve overall clarity, readability, appearance of external administrative correspondence to meet the needs of Canadians?
• Were there any barriers to addressing the main findings identified in the 2014 Evaluation under issue 1 (correspondence needs to be clear and understandable)?

Issue 2: Has the program made progress in its administration of external administrative correspondence since the 2014 evaluation?

• To what extent has the CRA modernized and redesigned its processes to better deliver external administrative correspondence?
• Were there any barriers to addressing the main findings identified in the 2014 Evaluation under issue 2 (administration could be improved)?

A.2 Methodology

This follow-up study used the following methods:

Document review: a review of CRA documentation related to the External Administrative Correspondence Project

Internal interviews: interviews with CRA management and staff from the Assessment, Benefit, and Service Branch and the Public Affairs Branch

External review: a replication of the assessment of the revised Phase 1 external correspondence using SiegelVision (the same independent third-party contractor that was used for the 2014 External Administrative Correspondence Evaluation Study) to assess progress made toward improving correspondence for Canadians

A.3 Limitations of the methodology

Document review: Considering the limited scope of this study, document review was limited to internal program documentation directly related to the External Administrative Correspondence Project. In addition, some of the findings in this report are corroborated by a research piece prepared for the Assessment, Benefits, and Service Branch and conducted by a third-party supplier. The evaluation team didn’t complete a detailed review of the methodology that the supplier used to reach their conclusions.

Internal interviews: In accordance with the limited scope of this study, interviews were conducted with the Assessment, Benefit, and Service Branch and the Public Affairs Branch. Other stakeholders weren’t interviewed as part of this study.

External review: The external research firm engaged to review the CRA correspondence wasn’t able to compare the revised correspondence to the original. As a result, an independent assessment of the overall improvement to external administrative correspondence wasn’t possible.

Appendix B: Glossary