This article follows our article published on 10 March in respect of IRD email policy.
IRD’s policy, in respect of staff sharing spreadsheets with stakeholders, doesn’t contain much guidance. We suggest a number of simple improvements to support “Better Public Services”.

The applicable rules published by IRD in February and my comments were as follows:

Email rule OTA comment
On request IRD may share a working copy of a document Extremely helpful; if only staff would follow it
Spreadsheets must be ‘cleansed’ and formulas checked Overly onerous. IRD also make errors in spreadsheets. The two parties need to work collaboratively
IRD says say non encrypted (non zipped) attachments must be password protected But why? No passwords on faxes or snail mail which from time to time IRD does misaddress

 

IRD assures me that there are no other “secret” rules, however there are a number of errors consistently made by IRD staff. It is strange that staff around NZ have come up with the same barriers (excuses) simultaneously.

Security

IRD rules say that formulas must be checked and spreadsheets must be ‘cleansed’. Cleansed seems to mean ‘make it as difficult as possible for other parties to use the information’.

IRD staff put various barriers in place that limit our ability to work with the information they provide:

  • IRD staff will often replace formulas with numbers – e.g. there will be a column of numbers and a total at the bottom; instead of including the sum formula, they show the total as another number. The result is of course that we change one of the numbers in the column, and the total doesn’t change.
  • IRD remove links between numbers. For example they may have one calculation with a total, that total then links into another part of the spreadsheet, but IRD will put a fixed number in the second spreadsheet instead of the link. The result is that the first calculation changes, the second one won’t change.
  • IRD locking a spreadsheet so that we can’t make any changes, including fixing errors that IRD have made.
  • IRD locking a spreadsheet so that we can’t insert a new tab to carry out our own calculations.
  • IRD locking down a spreadsheet so that we can’t even print to paper or a PDF for further examination or analysis.

The stupid thing is that an Excel expert can get around all of those such as;

  • we can manually insert formulas to replace the numbers that IRD have put in place
  • we can manually insert links to connect various parts of the spreadsheet
  • we can copy the offending spreadsheet into a new spreadsheet and recover all the information
  • in an extreme case we could do a screen print to an image, use a text recognition program to extract all the data, and reproduce the same spreadsheet.

With a little bit of time, we could produce a spreadsheet that looks exactly the same as IRD’s, and even manipulate it to make it look like it was generated by IRD. We could but we don’t. We try to make it as easy as possible for both parties.

I.e. all of IRD’s “security” systems have achieved nothing beyond wasting our time, IRD’s time and taxpayer funds.

Use of templates

There are some calculations that IRD use in the same way thousands of times per year. Examples include;

  • taking taxpayer financial statements and adjusting reported profit to meet what IRD believe are more appropriate and believable gross profit percentages
  • the same exercise in respect of the amount of cash sales to total sales
  • asset accretion or source and disposition calculations.

For no reason, that I can fathom, IRD staff build these calculations from the ground up each time. IRD does not appear to use any templates whatsoever. The result is that staff use different methodologies and often have errors in spreadsheets. If IRD had some standard templates, they could eliminate a huge amount of work and a huge number of errors.

My recommendations to IRD

  • I’ve already written in respect of IRD’s confusion between encryption and zipping. I’m still waiting for an intelligent comment on that.
  • IRD should explicitly prohibit all of the barriers noted above, except perhaps using a password (although again I really don’t think that achieves anything anyway).
  • IRD needs to adopt a mind-set that tax advisors are not the enemy from which information should be withheld, instead we are actually working with IRD for the benefit of all parties involved including being as efficient as possible.
  • Put your staff through basic Excel training.
  • Support the government’s directive for Better Public Services – more action and measure the right stuff.

I have provided this article to IRD for comment and am awaiting a helpful response.