Auditor-General Karen Hogan will review the project known as the CBSA Assessment and Revenue Management system, which has been in development for more than a decade.Adrian Wyld/The Canadian Press
Auditor-General Karen Hogan is planning to audit a recently launched $526-million system at Canada Border Services Agency, a federal body that collects billions of dollars each year in import duties.
The system’s rollout is an effort to modernize the out-of-date software accounting platforms that are used to collect duties and taxes from commercial importers, which at roughly $40-billion annually represent the federal government’s second-largest source of revenue after income taxes.
The audit has not yet been publicly announced and the timing hasn’t been finalized, but the Auditor-General’s office confirmed to The Globe and Mail that an audit will be launched.
“This audit topic was identified through our regular audit planning process, which considers factors such as risk, significance, and public interest,” said spokesperson Claire Baudry, adding that a motion from the Commons international trade committee in December requesting such an audit was also a factor.
The audit will review the project, known as the CBSA Assessment and Revenue Management system, or CARM. It has been in development for more than a decade and has been implemented in phases in an effort to address and fix potential problems and provide importers with time to adapt to the new system.
The phases included an initial launch internally in May, 2024 before it became the official system of record in October. A further deadline of May, 2025 was set for importers to post a financial security, which is an amount based on their importing activity.
Some business groups say there are many technical issues with the new system, prompting delays and frustration for importers at a time when U.S. President Donald Trump’s tariffs are already creating headaches for Canadian companies engaged in cross-border trade.
The border agency relied heavily on Deloitte, a private-sector consulting firm, to develop the system. The agency’s first contract with Deloitte was agreed to in 2013. Since then, the agency says the total value of its CARM contracts with Deloitte has reached $402.4-million as of June 25, of which $398.8-million has been paid to the company.
The agency told MPs last year that the original 2010 cost estimate for the new system was $370-million and that the total approved budget is $526-million.
The Commons committee on international trade studied the issue and released a report last year summarizing industry concerns about the transition to the new system.
The Canadian Association of Importers and Exporters told MPs last year that its members believed the system was not ready and advance testing was “filled with errors and confusion.”
Some business groups say issues with the rollout of the system have led to delays at the border and financial burdens for Canadian importers.Ryan Remiorz/The Canadian Press
CBSA officials have long maintained that the legacy system is in need of urgent replacement and that industry concerns can be addressed.
In a statement to The Globe, the agency said the new system eliminates cumbersome and time-consuming paper-based processes and will help it target compliance and enforcement efforts.
“The Canada Border Services Agency has been engaged with the Office of the Auditor General on her audit of the implementation of the CBSA Assessment and Revenue Management and look forward to participating in their audit of the CARM system once scheduled,” said agency spokesperson Guillaume Bérubé in a statement. He added that the launch of CARM followed years of consultation, development and planning.
Some industry participants had warned of “chaos” at the border once the new system launched, but one key stakeholder says the worst-case scenarios have not materialized.
Janine Harker, president of the Canadian Society of Customs Brokers, said the system has not led to major disruptions at the border but importers still face many technical problems in trying to process their goods.
Many businesses rely on customs brokers to help them navigate the requirements of bringing goods into the country.
Ms. Harker said that at any given time, her organization has 25 to 30 issues with the CARM system that it is working on with the border agency to resolve.
She said it is often smaller importers who face the most challenges.
“It’s a disproportionate amount of pain for a small amount of imported goods,” she said. “They may not import a high dollar value amount of goods, but the process for them is just overwhelming.”
Ms. Harker said she welcomes the news of an independent audit and hopes it will review the government’s decision-making behind the large-scale project.
“It’s not delivering as promised. So I think any opportunity to sort of shine a light on how we got to where we are is going to be most welcome,” she said.
Other business groups say their members continue to face challenges working with the CARM system.
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Gaphel Kongtsa, director of international policy at the Canadian Chamber of Commerce, says issues with the rollout have led to delays at the border, goods being returned to sender and financial burdens for Canadian importers.
“We cannot afford such a disruption to cross-border trade at a time when businesses are already struggling with tariffs and increased compliance costs,” he said in an e-mail, adding that the chamber is hopeful a thorough review by the Auditor-General will help address issues that are hindering efficiency.
Similarly, Dan Kelly, president of the Canadian Federation of Independent Business (CFIB), said in an e-mail that he’s hoping the news of the audit will cause the CBSA to rethink its approach and consider an exemption for small businesses.
He said the system has in fact created “chaos” for his members, who are placing dozens of calls a week to the CFIB.
“To do this at a time of great trade uncertainty with the U.S. seems like cruel and unusual punishment,” he said.
The border agency managed the rollout while it was facing intense scrutiny over its use of private IT contractors on the ArriveCan app project for cross-border travellers.
The ArriveCan app attracted considerable attention because of the fact that it began as an $80,000 project and grew to an estimated $59.5-million, according to a separate Auditor-General’s report.
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In response, the agency has said it is working on reducing its reliance on outside contractors.
Another parliamentary committee has heard evidence from a former senior CBSA official that the Deloitte-led CARM project was “not going well.”
Former agency director-general Cameron MacDonald told MPs in November, 2023 that the agency selected IT staffing company GCStrategies instead of Deloitte to develop ArriveCan because senior officials weren’t happy with Deloitte’s performance on the CARM project.
“My understanding is that all the VPs had been told that they could not work with Deloitte until the current project was back on track,” he said. He also said that “Deloitte was in a timeout penalty box, so to speak.”
Former agency officials who were senior to Mr. MacDonald at the time rejected that account.
“No one was in the penalty box, and there’s no evidence to support this,” John Ossowski, who was CBSA president from December, 2016 until July, 2022, told MPs during a January, 2024 committee appearance.
Deloitte did not respond to a request for comment.
Deloitte Partner Louise Upton told MPs in October that the system was ready to launch at that time and said importers wanted the certainty of a clear plan to move ahead with the new approach.
“The system we’re replacing is over 30 years old,” she said.