Directive on Public Money and Receivables

Requirements and controls for the effective and efficient management of public money and receivables in order to minimize the risk of loss, error, fraud or improper consumption.
Date modified: 2017-04-01

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1. Effective date

  • 1.1This directive takes effect on .
  • 1.2This directive replaces the following Treasury Board policy instruments:
    • Directive on Receipt, Deposit and Recording of Money ()
    • Directive on Losses of Money or Property ()
    • Directive on Receivables Management ()
    • Directive on Financial Management of Pay Administration, subsections 6.5 and 6.6 ()
    • Directive on Accountable Advances ()
    • Directive on Loans and Loan Guarantees ()
    • Directive on the Use of the Consolidated Revenue Fund for Crown Corporations, subsection 6.2 ()

2. Authorities

3. Objectives and expected results

4. Requirements

Receipt, deposit and recording of public money

  • 4.1In relation to the receipt, deposit and recording of public money, the chief financial officer (CFO) is responsible for the following:
    • 4.1.1Ensuring that all public money received is safeguarded and recorded accurately;
    • 4.1.2Ensuring that all public money received is promptly deposited in the Consolidated Revenue Fund to the credit of the Receiver General for Canada;
    • 4.1.3Ensuring that periodic reconciliations are conducted between receipts and records of deposits;
    • 4.1.4Ensuring that discrepancies noted in reconciliations are investigated, accounted for and resolved;
    • 4.1.5Ensuring that the department adheres to the banking arrangements established by the Receiver General;
    • 4.1.6Ensuring that segregation of duties is implemented between individuals who have responsibilities for receipts, deposits, recording of public money, credit granting, invoicing, collections and debt write-offs, subject to the following:
      • 4.1.6.1If organizational structure, materiality or cost-effectiveness considerations do not allow for such segregation of duties, ensuring that alternative control measures are implemented and documented;

    Fiscal year considerations

    • 4.1.7Recording the following in the accounts of a fiscal year that just ended:
      • 4.1.7.1Public money received by March 31 that is not credited by the Bank of Canada or any other financial institution to the Receiver General; and
      • 4.1.7.2Public money received after March 31 that impacts on an appropriation as specified in the Year End Timetable and Procedures issued by the Receiver General;
    • 4.1.8Recording receipts of public money as refunds of previous year’s expenditures when the receipts:
      • 4.1.8.1Relate to expenditures made in a prior fiscal year; and
      • 4.1.8.2Do not impact on an appropriation of the fiscal year that just ended;
    • 4.1.9Crediting refunds of Goods and Services Tax (GST), Harmonized Sales Tax (HST) or Quebec Sales Tax (QST) to the applicable refundable advance accounts of the current fiscal year;

    Security deposits

    • 4.1.10Safeguarding and managing security deposits received from contractors authorized according to the Government Contracts Regulations;
    • 4.1.11Paying simple interest on security deposits received from contractors deposited to the Consolidated Revenue Fund;
    • 4.1.12Ensuring that interest paid on contractors’ security deposits (a statutory expenditure) is recovered from the Department of Finance Canada;
    • 4.1.13Ensuring that other security deposits that are received in respect of any debt, obligation, or claim are managed according to the legislation that authorizes the acceptance of such security deposits; and

    Fraudulent receipt

    • 4.1.14Notifying the departmental Chief Security Officer immediately of any suspected fraudulent receipts.

Losses of public money or property

  • 4.2In relation to the losses of public money or property, the CFO is responsible for the following:
    • 4.2.1Establishing, monitoring and maintaining a risk-based departmental system of internal control to prevent losses of public money and property and detect them in a timely manner;
    • 4.2.2Ensuring that losses of public money and property are promptly and accurately recorded in the accounts of the department for applicable transactions;

    Recovery of loss

    • 4.2.3Ensuring that a claim is prepared against those responsible for a loss of public money or property when the loss is recoverable;
    • 4.2.4Including the following elements in the claim, when applicable, in addition to the value of the loss of public money or property calculated as specified in the Public Accounts Instructions issued by the Receiver General:
      • 4.2.4.1The financing costs associated with the loss of public money that involves a fraudulent receipt or an unauthorized expenditure;
      • 4.2.4.2Additional costs incurred or revenue lost as a result of public property not being available for its intended purpose;
      • 4.2.4.3The cost of recovery proceedings or enforced recovery; and
      • 4.2.4.4The GST/HST, the QST, PST and any other applicable taxes, levies or duties;
    • 4.2.5Taking action to promptly recover any losses or shortages, including a cash shortage in petty cash, from the holder or custodian of an accountable advance unless all of the following conditions have been met:
      • 4.2.5.1The prescribed procedures were followed and the public money was properly secured; and
      • 4.2.5.2No act or omission on the part of the holder or custodian contributed to the loss;
    • 4.2.6Ensuring, when a manager of the holder or custodian of the advance assumes full or partial responsibility for the loss or shortage, that the following is confirmed in writing:
      • 4.2.6.1The manager failed to ensure that adequate facilities and procedures were in place;
      • 4.2.6.2The manager failed to provide adequate direction, instruction or supervision; or
      • 4.2.6.3The manager allowed inappropriate practices to occur;
    • 4.2.7Recovering any losses or shortages promptly from the holder or custodian of the advance and/or that individual’s manager, when both share responsibility, and apportioning the recovery based on their respective culpability; and

    Charging of loss

    • 4.2.8Charging the loss of public money to a departmental appropriation when a disbursement is required to replenish a petty cash or change fund, if:
      • 4.2.8.1The loss is not the responsibility of the holder or custodian of the advance according to the conditions provided in subsection 4.2.5 of this directive; and
      • 4.2.8.2Approval is provided by a person with the appropriate delegated signing authority.

Receivables

  • 4.3In relation to receivables, the CFO or the senior departmental managers designated by the deputy head are responsible for the following:
    • 4.3.1Ensuring that receivables are minimized, to the extent possible, by requiring payment in advance or at the time that goods and services are provided;
    • 4.3.2Granting credit only when it is an operational requirement;
    • 4.3.3Ensuring that debtors are fairly treated and informed of their rights and obligations under applicable acts, regulations, policies and directives;
    • 4.3.4Ensuring that all receivable transactions and related allowances for doubtful accounts are promptly and accurately recorded in the accounts of the department;

    Collection

    • 4.3.5Taking timely and cost-effective collection actions to pursue receivables, such as the use of a set-off;
    • 4.3.6Ensuring that upon request by another department or agent Crown corporation, the following information concerning a person that has a debt due to the Crown is provided to it (unless specifically prohibited by departmental or program legislation):
      • 4.3.6.1The person’s last known address and telephone number;
      • 4.3.6.2The name and address of the person’s last known employer; and
      • 4.3.6.3Any payment coming due to the person; and

    Debt deletion

    • 4.3.7Taking timely action for write-off, remission or forgiveness of debts, or waiver of interests or administrative charges, when a receivable is not settled in full.

Employee departure process

  • 4.4In relation to the employee departure process, the CFO is responsible for the following:
    • 4.4.1Ensuring, as part of a departure process, that an employee returns all public money owed, including outstanding accountable advances and any public property, before leaving the department; and
    • 4.4.2Ensuring, in collaboration with compensation services, that when a departing employee owes public money or has not accounted for public property, that a process is put in place to take recovery action and, if necessary, establish an account receivable.

Accountable advances

  • 4.5In relation to accountable advances, the CFO is responsible for the following:
    • 4.5.1Ensuring that accountable advances are issued only when required, used for the purpose for which they were issued, properly safeguarded, and reported on a timely basis;
    • 4.5.2Seeking authority from Public Services and Procurement Canada to establish a standing advance unless separate authorities are available through departmental or program legislation;
    • 4.5.3Charging temporary accountable advances to a departmental appropriation;
    • 4.5.4Replenishing standing advances to their original value unless a decrease, increase or complete recovery is justified;
    • 4.5.5Ensuring that segregation of duties is implemented between individuals who are responsible for managing accountable advances, maintaining accounts receivable records, and verifying and certifying accounts for payment and requisition payments, subject to the following:
      • 4.5.5.1If organizational structure, materiality or cost-effectiveness considerations do not allow such segregation of duties, ensuring that alternative control measures are implemented and documented;

    Petty cash and change fund

    • 4.5.6Ensuring that petty cash funds are not used to make change and that petty cash or change funds are not used to provide salary advances, cash cheques or make loans;
    • 4.5.7Ensuring that petty cash expenditures are not split into two or more transactions in an attempt to avoid the limits prescribed by the Accountable Advances Regulations;
    • 4.5.8Ensuring that the custody of a petty cash or change fund is assigned to an individual and that an acknowledgement of responsibilities for the fund is documented; and
    • 4.5.9Ensuring that petty cash or change fund accounts are reconciled when a transfer between fund custodians takes place.

Loans and loan guarantees

  • 4.6In relation to loans and loan guarantees, the CFO is responsible for the following:
    • 4.6.1Reviewing the terms and conditions of loans and loan guarantees before seeking approval from the Minister of Finance when the authorizing legislation does not detail the terms and conditions or the authority to modify terms and conditions.
  • 4.7In relation to loans and loan guarantees, senior departmental managers are responsible for the following:
    • 4.7.1Ensuring that terms and conditions for loans and loan guarantees are established, documented and appropriately authorized;
    • 4.7.2Ensuring that the terms and conditions not detailed in authorizing legislation for:
      • 4.7.2.1Loan programs for a class of recipients and loans for named recipients are approved by the Governor in Council on the recommendation of the Minister of Finance; and
      • 4.7.2.2Loan guarantee programs for a class of recipients and loan guarantees for named recipients are approved by the Minister of Finance;
    • 4.7.3Ensuring that loans and loan guarantees are structured to cover potential losses from non-performing loans, when appropriate and feasible;
    • 4.7.4Undertaking a periodic review of loan and loan guarantee program terms and conditions to validate a program’s continuing relevance and operating criteria;
    • 4.7.5Conducting, in collaboration with the CFO, a periodic review of all loans and loan guarantees to determine the following:
      • 4.7.5.1Compliance with agreement terms and conditions;
      • 4.7.5.2A forecast of repayment potential;
      • 4.7.5.3Provision for bad debt and any amounts to be written off;
      • 4.7.5.4Appropriate accounting and reporting; and
      • 4.7.5.5Any valuation adjustments required;
    • 4.7.6Ensuring that the net balance owing to the government from each loan recipient, including a repayment schedule and applicable interest provisions, is readily accessible in accounting records;
    • 4.7.7Applying the amount of any repayment to the entire sum of interest due at the time of each instalment, and then to the principal (unless the loan terms and conditions specify otherwise);
    • 4.7.8Ensuring that the appropriate instrument is used to obtain parliamentary authorization of loan guarantees, i.e.:
      • 4.7.8.1Loan guarantees for named recipients that can be listed individually in the Estimates may be authorized through an appropriation act; and
      • 4.7.8.2Loan guarantee programs are authorized through separate program legislation;
    • 4.7.9Ensuring that loan guarantee agreements include a provision whereby actual or expected defaults are communicated by the lenders to departmental officials in a timely manner; and
      • 4.7.9.1When advised of an actual or expected default, follow-up action is to be taken immediately to ensure that the loan is recovered to the fullest extent possible.

Use of the Consolidated Revenue Fund for Crown corporations

  • 4.8In relation to the use of the Consolidated Revenue Fund for Crown corporations, a senior officer of Department of Finance Canada, designated by the deputy head, is responsible for ensuring the following:
    • 4.8.1Loans, advances and investments by the Government of Canada to a Crown corporation are authorized by legislation through an appropriation act or other act of Parliament;
    • 4.8.2Loans and advances to a Crown corporation are made only when the following criteria are met:
      • 4.8.2.1There is reasonable certainty that the principal will be repaid; and
      • 4.8.2.2An acceptable rate of interest for loans, as established by the Minister of Finance, can be paid without seeking further parliamentary appropriations;
    • 4.8.3The deferment of a loan repayment until the start of operations is assessed where loans for capital expenditures to a Crown corporation are made before the relevant construction is completed; and
    • 4.8.4Investments in a Crown corporation are made only when the following criteria are met:
      • 4.8.4.1The Crown corporation is self-sustaining;
      • 4.8.4.2A return that is equivalent to the Crown’s cost of borrowing will be earned over time; and
      • 4.8.4.3There is reasonable certainty that the investment will be recovered.

5. Roles of other government organizations

  • 5.1Not applicable.

6. Application

7. References

8. Enquiries


Appendix A: Definitions

accountable advance (avance comptable)

Refers to:

  1. A sum of money advanced to a person from an appropriation; and
  2. A sum of money advanced to a person from the sum of money described in paragraph a) for which the person is accountable and includes imprest funds and working capital advances administered under an imprest system. [Accountable Advances Regulations, section 2]
change fund (fonds d’appoint)
The cash provided to a cashier or other individual for the purpose of making change. [Accountable Advances Regulations, section 2]
class of recipient (catégorie de bénéficiaires)
Includes persons, organizations, or both (e.g., corporations, other governments) that meet the established eligibility criteria of an approved program.
forgiveness (renonciation)
The deletion of a debt related to a non-budgetary expenditure that extinguishes the debt, waives the right of Her Majesty to reinstate the debt, and permits both the Crown and the debtor to remove the debt from their accounts.
holder or custodian (détenteur ou dépositaire)
The individual to whom an accountable advance has been issued or who is responsible for the advance.
loan (prêt)
A financial asset of the government represented by a promise by a borrower to repay a specific amount, at a specified time or times, or on demand, usually with interest.
loan guarantee (garantie d’emprunt)
A promise that the government will repay a lender (e.g., a bank or other financial institution providing credit or funding to another party) the amount guaranteed, subject to the terms and conditions of an agreement, if the borrower defaults. The guarantee will reduce the lender’s risk and should enable the borrower to obtain a loan at a lower interest rate or obtain a loan that might not otherwise have been obtainable.
petty cash fund (petite caisse)
Cash kept on hand under an imprest system for the purpose of making small payments in cash. [Accountable Advances Regulations, section 2]
public money (fonds publics)

All money belonging to Canada received and collected by the Receiver General or any other public officer in his or her official capacity or any person authorized to receive or collect such money. Public money includes the following:

  • Duties and revenues of Canada;
  • Money borrowed by Canada or received through the issue or sale of securities;
  • Money received or collected for or on behalf of Canada; and
  • All money that is paid to or received or collected by a public officer under or pursuant to any act, trust, treaty, undertaking or contract, and is to be disbursed for a purpose specified in or pursuant to that act, trust, treaty, undertaking or contract. [Financial Administration Act, section 2]
public property (biens publics)
All property (including data), other than money, belonging to Her Majesty in right of Canada. [Financial Administration Act, section 2]
receivables (comptes débiteurs)
Financial claims incurred through the tax system or arising from accrued revenues transactions, expenses overpayments and other recoverable payments that will result in a future inflow of cash.
remission (remise)
The deletion of a debt related to a budgetary expenditure that involves the cancellation of or release from an otherwise enforceable debt, tax, fee or penalty.
security deposit (dépôt de garantie)

Includes:

  • A bill of exchange that is payable to the Receiver General and certified by an approved financial institution or drawn by an approved financial institution on itself;
  • A government guaranteed bond; or
  • Such other security as may be deemed appropriate by the contracting authority and approved by the Treasury Board. [Government Contracts Regulations, section 2]
self-sustaining corporation (société financièrement autonome)
A Crown corporation that is judged to be able to finance its operations and capital programs from internally generated funds and from funds that it could raise in the capital markets on its own credit.
set-off (compensation)
The reduction of a claim by deducting the amount of a valid compensating claim. A set-off by the federal government may be enacted by a specific statute or regulation or under the authority of section 155 of the Financial Administration Act.
standing advance (avance permanente)
An accountable advance issued in a specified amount for an indeterminate period and replenished to that specific amount each time an accounting for expenditures is made. [Accountable Advances Regulations, section 2]
waiver (dispense)
A form of debt deletion involving only the interest and/or administrative charges related to a debt and done in accordance with sections 9 and 12 of the Interest and Administrative Charges Regulations.
write-off (radiation)
An accounting action that reduces the amount of accounts receivable of a department or agency regarding a debt, or a part of a debt, that has been determined to be uncollectible. It does not forgive the debt or release the debtor from the obligation to pay; neither does it affect the right of the Crown to enforce collection in the future.
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