6 Bank Covenant Reporting tax and accounting engagements in full — what the client came to us with, what we did, and what it was worth. Each one is specific to bank covenant reporting work, not a general example.
Case Study 1 · CRA review defended
$104,000 Proposed Adjustment Withdrawn In Full — Corporation with an Outside, Toronto
Client: A corporation with an outside minority shareholder · Where: Toronto, Ontario · Engagement: 5 weeks, fixed fee
Adjustment withdrawn$104,000
File closed in5 weeks
Penalties assessedNone
The situation
A corporation with an outside minority shareholder in Toronto, Ontario received a proposal letter opening a review of bank covenant reporting. The CRA had identified a bank asking for a review engagement while the file only supported a compilation and proposed an adjustment of $104,000, with 30 days to respond.
What we did
We treated the response as an evidence exercise rather than an argument. We compressed the close to 45 days by moving reconciliations into the monthly cycle, so the covenant deadline stopped being a scramble, then indexed every supporting document against the specific line the auditor had questioned.
The result
The proposed adjustment was withdrawn in full — all $104,000 of it. The file closed in 5 weeks with no change to the assessed amounts and no penalty.
Case Study 2 · Missed incentive claimed
$57,000 Credit Claim Filed And Accepted Without Adjustment — Co-Operative Reporting to Members, Mississauga
Client: A co-operative reporting to members · Where: Mississauga, Ontario · Engagement: 4 weeks, fixed fee
Claim value$57,000
AcceptedWithout adjustment
RepeatableAnnually
The situation
A co-operative reporting to members in Mississauga, Ontario assumed the credits did not apply to a business its size. A bonding limit capped because the last statements were prepared on a cash basis meant they had applied all along.
What we did
We identified the qualifying activity, built the documentation to support it, and prepared a due-diligence-ready statement set with supporting schedules for each material balance.
The result
$57,000 recovered. Because the eligibility analysis is on file, the same claim can be repeated each year with a fraction of the effort.
Case Study 3 · Sale and succession
Share Sale Restructured, $460,000 Less Tax On Closing — Not-For-Profit with a Bylaw, Winnipeg
Client: A not-for-profit with a bylaw audit requirement · Where: Winnipeg, Manitoba · Engagement: 3 weeks, fixed fee
Tax saved on closing$460,000
PriceAs agreed
Post-closing adjustmentsNone
The situation
A not-for-profit with a bylaw audit requirement in Winnipeg, Manitoba was preparing to sell. Due diligence surfaced passive assets sitting inside the operating company, disqualifying the shares, which would have reduced the price or killed the deal outright.
What we did
We cleaned up the historical file, upgraded the engagement to a CSRE 2400 review, completed the additional procedures, and delivered a package the lender accepted without conditions, and prepared the due-diligence package the buyer's advisers actually asked for.
The result
The deal closed at the agreed price. $460,000 of tax was saved against the structure originally proposed, with no post-closing adjustment.
Case Study 4 · Backlog brought current
Collections Halted And $84,000 Cut From A 7-Year Backlog — Business Applying for Government, Halifax
Client: A business applying for government funding · Where: Halifax, Nova Scotia · Engagement: 6 weeks, fixed fee
Balance reduced by$84,000
Backlog cleared7 years
CollectionsHalted
The situation
By the time a business applying for government funding in Halifax, Nova Scotia called, 7 years were outstanding and the CRA had assessed on estimates. Underneath it sat a buyer’s due-diligence list that the existing statement package could not answer.
What we did
We reconstructed the records year by year and converted the records to the accrual basis, restated the comparative year with proper disclosure, and rebuilt the statement package around the bonding company’s requirements. Each filing replaced an arbitrary assessment with a real one.
The result
The account is current. Filing on real numbers rather than CRA estimates reduced the balance by $84,000, and a relief application addressed part of the accumulated interest.
Case Study 5 · Structure rebuilt
Corporate Structure Rebuilt For $69,000 Of Annual Savings — Company Refinancing Its Operating, Burnaby
Client: A company refinancing its operating line · Where: Burnaby, British Columbia · Engagement: 5 weeks, fixed fee
Saving per year$69,000
DocumentationComplete
Transfer basisRollover
The situation
The structure at a company refinancing its operating line in Burnaby, British Columbia had been set up years earlier for a business that no longer existed, and a bonding limit capped because the last statements were prepared on a cash basis had become expensive.
What we did
We compressed the close to 45 days by moving reconciliations into the monthly cycle, so the covenant deadline stopped being a scramble. The reorganisation used the rollover provisions rather than a taxable transfer, so no tax fell due on the restructuring itself.
The result
$69,000 of annual saving, achieved on a tax-deferred basis. The minute book, elections and valuations are all in the file.
Case Study 6 · Objection and relief
$137,000 Of Penalties And Interest Cancelled On Relief — Franchisee Reporting to Its, Kitchener
Client: A franchisee reporting to its franchisor · Where: Kitchener, Ontario · Engagement: 6 weeks, fixed fee
Penalties and interest cancelled$137,000
Relief groundsAccepted
AssessmentAdjusted to filed position
The situation
An assessment of $137,000 landed at a franchisee reporting to its franchisor in Kitchener, Ontario following a desk review. The auditor had not seen the records behind a bank asking for a review engagement while the file only supported a compilation.
What we did
We prepared a due-diligence-ready statement set with supporting schedules for each material balance, then set out the legislative basis for the position alongside the documents supporting it.
The result
$137,000 of penalties and interest was cancelled under the taxpayer relief provisions, and the underlying assessment was adjusted to match the filed position.
Reviewed for the 2025 tax year by Udit Gupta, Certified Tax Accountant. Figures describe representative engagements of this type; outcomes depend on your own facts. Client names and identifying details are omitted for confidentiality.
