Survey of Regulatory Compliance Cost

Detailed information for 2011

This survey provides data on the current cost of regulatory compliance for small and medium-sized businesses, in meeting key information obligations that are the responsibility of various levels of government.

Data release - June 17, 2013

• Questionnaire(s) and reporting guide(s)
• Description
• Data sources and methodology
• Data accuracy

Description

This survey is being conducted in order to measure regulatory compliance costs for small and medium-sized businesses in meeting key regulatory requirements that are the responsibility of various levels of government. The survey results are intended to help determine whether efficiency measures introduced by government are reducing the compliance burden facing businesses.

The survey is a key component to the Paperwork Burden Reduction Initiative (PBRI). The PBRI was established in response to the Budget 2004 commitment to create a working group of government officials and small business representatives that would make measurable reductions in paperwork burden.

The survey consists of two components: the main component and the service provider component. The main survey collects detailed information on the time spent and the salaries of the people within the business involved in preparing and submitting information relating to individual regulations. As well, it collects a list of outsourced activities (including non-regulatory) and the total cost for the activities being outsourced to external service providers.

The service provider component of the survey collects information on the time spent by service providers to complete various regulatory requirements, perform accounting activities, and provide financial advice on behalf of business clients. Data are collected for each of three types of service providers (accounting firms, tax preparation specialists and bookkeeping and payroll services).

The information from service providers is essential in order to be able to allocate the total dollar costs of all outsourced services reported in the main survey across the eleven regulatory requirements of interest. Without this information, a very significant portion of regulatory costs would be missing from the main survey estimates.

The ten regulations in-scope for this survey are: Payroll Remittances, Record of Employment, T4 Summary/individual T4's, Workers' Compensation (remittances and claims), T1/T2 Income Tax Filing, Federal/Provincial Sales Taxes, Corporate Tax Installments, Corporate Registration, Mandatory Statistics Canada Surveys, Municipal and Provincial Operating Licences and Permits.

Reference period: The calendar year or the 12-month fiscal period for which the final day occurs on or between April 1st of the reference year and March 31st of the following year.

Collection period: Varies each iteration, but generally for three months shortly after the reference year.

Subjects

• Business performance and ownership

Data sources and methodology

Target population

Main component

The target population includes all establishments that are on the Business Register (BR) that meet the following conditions:

1- Establishments in specific industries, identified by the North American Industry Classification System. They include manufacturing (31, 32, 33), retail trade (44, 45), professional, scientific and technical services (54), accommodation services (72), and other services (except for public administration) (81).

2- Establishments with fewer than 500 employees.

3- Establishments with revenue greater than $30,000 and less than $50,000,000.

4- Establishments located in the Territories are excluded.

The establishment was selected as the sampling unit so that the resulting data set would capture the costs associated with regulations which differ from one province to another.

Service providers component

The target population includes all establishments that are on the Business Register (BR) that meet the following conditions:

1- Establishments belonging to the industry group 5412 Accounting, Tax Preparation, Bookkeeping and Payroll Services in the North American Industry Classification System (NAICS).

2- Establishments with revenue greater than $30,000.

3- Establishments located in the Territories are excluded.

• Additional documentation

Instrument design

An initial draft of the survey questionnaire was jointly designed by Statistics Canada and Industry Canada in 2004, after consultation with various stakeholders in both the private and public sectors. Early in 2005, Industry Canada commissioned Phoenix Strategic Perspectives, a private sector consulting firm, to conduct focus group tests of the questionnaire in various Canadian cities in both official languages. The results of the focus groups were then incorporated into the questionnaire.

Subsequently, Statistics Canada conducted a pre-test of the revised questionnaire. This type of qualitative testing is a necessary evaluation of the survey collection instrument that is carried out for complex questionnaires. Unlike focus group testing, pre-test respondents are required to complete the questionnaire and then discuss the process in one-on-one interviews. The pre-test was conducted in May 2005 and results of the test indicated a need to revise the questionnaire further and conduct another pre-test in July 2005. The questionnaire that evolved from the second pre-test was used in the national survey in the fall of 2005.

Prior to the 2008 iteration of the survey, minor changes were made to the main survey questionnaire based on suggestions from Industry Canada and other stakeholders.
For 2011, the paper questionnaires were adapted to electronic questionnaires and were retested. While much of the content of the 2011 questionnaires was similar to the 2008 versions, the structure and flow of the questions were changed. The new questionnaires were easier to fill out and had automatic edits included.

Main component

Notable changes were made in the type and wording of the questions between 2008 and 2011 for the main component. The changes included:
1- The first two questions on size and revenue were worded quite differently in 2011.

2- Definitions were added to the questions for each regulation and the wording of the submissions questions was different in a number of cases.

3- The two regulations (municipal operating licences and permits and provincial operating licences and permits) in 2008 were combined into one regulation (municipal and provincial operating licenses and permits) in 2011.

4- One more regulation (Other government regulations) was added in 2011 questionnaire.

5- Capital costs associated with compliance were collected in 2011 for the first time.

Service provider component

Changes to the service provider component included:

1. In 2008, the questionnaire collected average time in terms of both hours and days per year. In 2011, the questionnaire only collected average time in terms of hours. This was done to help to improve the data quality.

2. Similar to the main component, the two regulations (municipal operating licences and permits and provincial operating licences and permits) in 2008 were combined into one regulation (municipal and provincial operating licenses and permits) in 2011 for the service provider component.

Sampling

This is a sample survey with a cross-sectional design.

Main Component

Statistics Canada's Business Register was used as the survey frame for the target population of all private sector, for-profit establishments with fewer than 500 employees and gross revenues of more than $30,000 and less than $50,000,000 in Canada. The sampling frame contained 703,579 establishments.

The sample size for the main survey was 30,001 establishments and was stratified by region (Atlantic Canada, Quebec, Ontario, Prairies and British Columbia), as well as by size of establishment where size was based on number of employees. The latter variable was used to stratify the sample in order to obtain good estimates for different employment size groups, a priority for Industry Canada. The employment size groups were:

- 0 employees
- 1 to 4 employees
- 5 to 19 employees
- 20 to 99 employees
- 100 to 499 employees.

Service provider component

For service providers, the sampling frame contained 33,629 establishments and the sample size for the survey was 5,000 establishments. The sample for the service provider component was stratified by region (Atlantic Canada, Quebec, Ontario, Prairies and British Columbia), industry (541212 - Accounting Firms, 541213 - Income Tax Preparation Services, 541215 - Bookkeeping, Payroll and Related Services) and by revenue. A take-all stratum of high-revenue units and a take-some stratum were created for each region and industry cell.

Data sources

Data collection for this reference period: 2012-01-05 to 2012-03-31

Responding to this survey is voluntary.

Data are collected directly from survey respondents.

Data were collected via electronic questionnaires.

A pre-contact was done initially to confirm the correct contact at all sampled establishments, to obtain an e-mail address for those contacts, and to confirm that individual respondents were in-scope. Subsequently, all in-scope respondents were e-mailed an invitation to participate in the survey, with links to the electronic questionnaire application and instructions on how to access the application. At least two phone follow-up attempts and four e-mail follow-up attempts are made to all respondents in order to convince them to return their questionnaires.

View the Questionnaire(s) and reporting guide(s).

Error detection

Edits were applied to detect errors and inconsistencies in data reported for both the main and service provider components of the survey. Edit rules were applied to the collected data as it was entered in the electronic questionnaire, as well as when the data were entered into the Blaise collection system. Additional edit rules were identified by subject matter experts and applied to the data after collection. Edit rules were also incorporated into the imputation system to detect and resolve any remaining errors, as well as to ensure that the imputed data were consistent.

Imputation

Nearest neighbor donor imputation was used to correct for partial non-response present in the returned questionnaires for both the main and service provider components of the survey. This imputation method involves replacing one or more missing values from a respondent, called receiver, by values provided by one or more respondents, called donors. For the main component, nearest donor(s) were determined based on size (revenue or number of employees closest to the receiver's) and region. The imputation group was first defined at the finest level of detail (size by region) and then more aggregated donor groups were used until a successful donor was found. For the service provider component, nearest donor(s) were determined based on size (revenue or number of employees closest to the receiver's) and other characteristics (region and service provider type). The values selected for imputation had to pre-established edit rules (post-imputation edits). Statistics Canada's generalized system Banff was used for imputation.

When regulatory submissions were prepared externally for a sampled unit, information on the individual costs associated with each regulation had to be imputed using a combination of the two components of the survey. The total cost of work performed externally for all regulations was available in the main component of the survey for each type of service provider. Information from the service provider component was used to allocate the total cost of work performed externally to the various regulations. This was done using information on service costs and the time spent on each regulation, assuming that the proportion of time spent on a regulation was a good indication of the proportion of the cost generated by this regulation.

For the service provider component, respondents normally had to provide information on the time spent providing services for a typical client. The times indicated by each respondent in the service provider component were used to derive average proportions of time used to complete submissions for each combination of regulation, service provider type, region and client group size. This information was used to impute the average proportions of time applicable to the regulations indicated by each respondent to the main component. In each case, the information for the type(s) of service provider(s) indicated was used for the region and size group to which the respondent in the main component belonged. Using the average proportions of time (P) obtained from the service provider component and total external cost (C) for each service provider type from main component, the external cost for each regulation and service provider type was imputed for each respondent by multiplying C by P.

Estimation

A complete file of weighted micro data was created for all sampled establishments in the survey population for which data were reported or imputed. Weights were adjusted by a factor to account for total non-response so that the final estimates would be representative of the entire survey population. Weighted estimates were produced using the Generalised System of Estimation.

Quality evaluation

At the individual data record level, consistency edits were applied during post-collection data processing. Outliers in the 2011 data were identified and analysed to avoid contaminating the survey results. Efforts were made where possible to ensure that the edits, outlier detection and analysis in 2011 were similar to what was done in 2008 in order to maximise data comparability. However, some improvements were also made. Reported data from the 2011 survey were compared with those from 2008 survey for businesses which were included in both iterations in order to detect errors and evaluate the quality of the data. Inconsistencies were investigated and resolved.

Where possible, estimates have been compared with data published for the 2005 and 2008 iterations of the survey.

Under a work-in-progress agreement, subject matter specialists in Industry Canada have had an opportunity to review and provide feedback on the survey results. Their review contributes to the overall quality of the final estimates.

Disclosure control

Statistics Canada is prohibited by law from releasing any information it collects which could identify any person, business, or organization, unless consent has been given by the respondent or as permitted by the Statistics Act. Various confidentiality rules are applied to all data that are released or published to prevent the publication or disclosure of any information deemed confidential. If necessary, data are suppressed to prevent direct or residual disclosure of identifiable data.

In order to prevent any data disclosure, confidentiality analysis was done using the G-CONFID system. G-CONFID was used for primary confidentiality as well as for the secondary suppression (residual disclosure). Direct disclosure or primary confidentiality occurs when the value in a tabulation cell is composed or dominated by few enterprises. Residual disclosure occurs when confidential information can be derived indirectly by piecing together information from different sources or data series.

Revisions and seasonal adjustment

This methodology does not apply to this survey.

Data accuracy

The data accuracy indicators used for the Survey of Regulatory Compliance Costs are the standard error and the coefficient of variation. The standard error is a commonly used statistical measure indicating the error of an estimate associated with sampling. The coefficient of variation is the standard error expressed as a percentage of the estimate.

The collection response rate was 34.6% for the main component of the survey. For the service provider component, the collection response rate was 38.3%.