Information bulletin 4—IRB Verification — What to expect
Overview of Verification
Verification is a key element of the compliance monitoring function within the IRB Policy. Industry Canada, as the IRB Authority, uses verification to closely monitor a Contractor's progress in achieving its IRB obligation.
Contractors are required to submit an annual IRB Report to the IRB Authority, outlining its activities that year and its claims for IRB credit. The IRB Report is then reviewed and verified by IRB Managers to ensure that the business activities have indeed taken place as reported. Following verification, the IRB Authority can confirm the amount of IRB credits that are awarded for that year.
The following information provides clarity for IRB Contractors and their Canadian IRB Recipients regarding what to expect during IRB verification.
What to expect if you're a Contractor (IRB Obligor)
- At the first IRB verification, the Contractor should expect to provide a detailed overview of their IRB record-keeping system and for the IRB Manager to test it through some random sampling. This exercise allows the IRB Manager to develop a good level of knowledge and confidence in the Contractor's system and to discuss best practices.
- At any verification, the Contractor should expect to provide detailed documentation proving that individual business activities have taken place as reported. This documentation could include: purchase orders, shipping/receiving documents, proof of payment, sales records, etc. The responsibility to keep and produce this documentation rests with the Contractor, not the IRB Recipient.
- While verification usually takes place with the Contractor, some projects have several Eligible Parties with whom the Prime Contractor is sharing a significant portion of their IRB obligation. In these cases, verification activities may take place with Eligible Parties, if the IRB Manager and/or the Contractor believe it is necessary and appropriate.
- Checks into the Canadian Content Value (CCV) take place directly with IRB Recipients, independent of the Contractor, in order to ensure the Canadian company can protect its commercially sensitive information. However, Contractors should expect the IRB Manager to alert them as to the identity and approximate timing of CCV checks.
- The time required for IRB Managers to review and verify an IRB Report varies from project to project. Several factors can influence the verification timeline, such as transaction volume and complexity, scheduling pressures and the responsiveness of companies to requests for information from the IRB Manager. Contractors should expect to receive, early on, a proposed timeframe for the verification and to be able to discuss it with their IRB Manager.
What to expect if you're a Canadian IRB Recipient
- Confirming CCV is the one area where the IRB Manager will engage directly with Canadian IRB Recipients. All other verification activities take place with the Contractor.
- IRB Recipients should have already provided the Contractor with their CCV percentage. During verification, Recipients may be asked by the IRB Manager to explain it.
- CCV checks are a regular part of the IRB Manager's due diligence process. Canadian IRB Recipients should not assume that they have been targeted due to a problem or mistake.
- A CCV check is independent of the Contractor. The IRB Authority recognizes that a Recipient's detailed CCV information is often commercially sensitive and confidential, so these details are not shared with the Contractor or anyone else.
- For CCV checks, IRB Managers routinely use a variety of methods, such as: phone calls, email exchanges and/or on-site meetings.
- For all CCV checks, Recipients should expect to provide: a general overview of how they calculated their CCV; a breakdown of costs associated with their product/service; and details on any items sourced outside of Canada.
- Once contacted by an IRB Manager, IRB Recipients are encouraged to respond in a timely manner. Any delays related to a CCV check have an impact on the amount of IRB credits that can be awarded to the Contractor that year.
- Once a CCV check is concluded, Canadian Recipients can take advantage of the opportunity to engage with the IRB Manager, learn more about the IRB Policy and discuss how to take better advantage of IRB business opportunities.
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