Guideline on Common Financial Management Business Process 3.1 - Manage Procure to Payment

Alternate Formats

Executive Summary

This guideline is part of a set of guidelines designed to assist departments in implementing common financial management business processes.

This guideline presents the "should be" model for Manage Procure to Payment, which involves operational or capital procurement using a purchase order or other type of contract. It describes roles and responsibilities, recommended procedures in the context of the Financial Administration Act, other legislation, and Government of Canada policy instruments.

Figure 1. Manage Procure to Payment - Level 2 Process Flow

Figure 1. Manage Procure to Payment - Level 2 Process Flow
Text version: Figure 1. Manage Procure to Payment - Level 2 Process Flow

Note A: The Diamond symbol found in Figure 1 symbol indicates that all three subprocesses should be completed before proceeding to the Manage Contracts subprocess group.

Note B: When the purchase is determined to be an asset, the cost of deliverables is an input to the following Materiel/Finance Interactions domain processes: Manage Other Capital Assets (Business Process 4.1), Manage Real Property (Business Process 4.2) and Manage Inventory (Business Process 4.3).

As illustrated in Figure 1, the Manage Procure to Payment business process comprises nine subprocesses (3.1.1 to 3.1.9) that are arranged in six subprocess groups as follows.

Manage Requirements is the start of the Manage Procure to Payment business process, beginning with the approved budget and approved plan from Manage Planning and Budgeting (Business Process 1.1), or an ad hoc requirement. It involves defining requirements, determining the corresponding expenditure initiation authority, and preparing requisitions for goods and services. Depending on the nature of the requirement, coordination may be required between asset/materiel management services, the manager defining the goods and services required, and the manager with delegated spending authority to initiate expenditures.

Control Commitments involves ensuring that there is a sufficient unencumbered balance as well as creating and updating commitments prior to entering or amending the contract pursuant to section 32 of the FAA. Control Commitments connects to three subprocess groups: Manage Requirements, to create the commitment; Manage Contracts, if there are amendments to the contract; and Manage Payables, to close the commitment on the payment of the final invoice for the contract. The manager is accountable for Control Commitments, in accordance with department-specific policy.

Manage Contracts involves creating and/or amending the contract as well as determining and exercising the appropriate transaction authority. Most of these activities are considered materiel management in nature rather than financial, but they provide important context and link the financial and contracting processes. The role accountable for the transaction authority will depend on whether the authority has been delegated to the department or whether it rests with the Department of Public Works and Government Services.

Administer Contracts and Deliverables is a point of integration with the business processes from the Materiel/Finance Interactions domain for the management of assets. It involves monitoring the contract, receiving and accepting deliverables (part of account verification in support of section 34 of the FAA), monitoring financial performance, and resolving vendor issues. Most of these activities are materiel management in nature rather than financial, but they provide important context and link the financial and contracting processes. Responsibility for administering the contract is shared among several organizational roles, while the manager is ultimately accountable for the outcome.

Manage Payables involves handling invoices, completing account verification, and providing certification authority, pursuant to section 34 of the FAA. The manager is responsible and accountable for these activities.

Manage Payments ends the Manage Procure to Payment business process and involves the performance of quality assurance activities where applicable, exercising payment authorization pursuant to section 33 of the FAA, completing and submitting payment requisitions, and finalizing payments. When quality assurance is not performed, the process proceeds to Manage Post-Payment Verification (Business Process 8.1). When quality assurance is performed, the process proceeds to Manage Financial Close (Business Process 8.2). Financial services is responsible for managing payment requisitions, certifying payments (section 33 of the FAA), and recording payments, while the Banking and Cash Management Sector of the Receiver General is responsible for issuing payments.

Throughout the Manage Procure to Payment business process, there are instances where the vendor master data file will need to be updated; the connection points to Manage Vendor Master Data File (Business Process 7.1) are provided in Manage Contracts (Subprocess 3.1.5), Administer Contracts and Deliverables (Subprocess 3.1.6), and Manage Payables (Subprocess 3.1.7).

1. Date of Issue

This guideline was issued on January 10, 2012.

2. Context

This guideline is part of a set of guidelines designed to assist departments in developing departmental business processes that are common across the Government of Canada, in support of the objectives of the Policy on the Stewardship of Financial Management Systems and the Directive on the Stewardship of Financial Management Systems.

This guideline presents the "should be" model for Mange Procure to Payment, describing roles and responsibilities and recommended activities from a financial management perspective. Most activities are financial in nature, but in certain cases non-financial activities are included in order to provide a comprehensive description. The recommended activities comply with the requirements of Financial Administration Act, other legislation, and Government of Canada policy instruments.

Recognizing that the deputy head is ultimately responsible for all aspects of financial management systems within his or her department, standardizing and streamlining financial management system configurations, business processes and data across government provides significant direct and indirect benefits relative to the quality of financial management in the Government of Canada.

By establishing a common set of rules in place of many, standardization reduces the multitude of different systems, business processes and data that undermine the quality and cost of decision-making information. As government-wide standardization is increased, efficiency, integrity and interoperability are improved.[1]

3. Introduction

3.1.1 Scope

This guideline defines Manage Procure to Payment, which begins with the identification of procurement need and ends with a finalized payment issued by the Receiver General. This common financial business process focuses on expenditures that involve operational or capital procurement using a purchase order or other type of contract.

The scope of this guideline covers the following six subprocess groups:

  • Manage Requirements;
  • Control Commitments;
  • Manage Contracts;
  • Administer Contracts and Deliverables;
  • Manage Payables; and
  • Manage Payments.

Other operational expenditures, such as travel-related expenditures, are described in Manage Travel (Business Process 3.2). Expenditures or payments not involving formal procurement contracts, expenditures related to second and subsequent payments for multi-year contracts, non-pay employee-related transactions, and payments related to the relocation of employees are described in Manage Other Payments (Business Process 3.3). Payments to other government departments are described in Manage Interdepartmental Settlements (Business Process 2.2).

Some financial management activities described in the business process are also related to internal controls. The intent is neither to provide a complete listing of controls, nor to produce a control framework; however this model may enrich a department's control framework.

3.1.2 Structure of the Guideline

The remainder of this guideline is structured as follows: Section 4 provides an overview of the organizational roles that carry out Manage Procure to Payment. Section 5 presents a detailed description of the Manage Procure to Payment business process, including subprocess groups, subprocesses, activities, and responsible organizational roles. Appendix A provides definitions of terminology used in this guideline, and relevant abbreviations are listed in Appendix B. Appendix C describes the methodology used in the guideline, and Appendix D elaborates on the roles and responsibilities outlined in Section 4. Purchases made with an acquisition card, which are considered a variation of the Manage Procure to Payment business process, are described in Appendix E.

The following references apply to this guideline.

3.2.1 Acts and Regulations

3.2.2 Policy Instruments

3.2.3 Other References

4. Roles and Responsibilities

Figure 2 depicts the organizational roles involved in the Manage Procure to Payment business process, grouped by stakeholder category.

Figure 2. Roles Involved in Manage Procure to Payment

Figure 2. Roles Involved in Manage Procure to Payment
Text version: Figure 2. Roles Involved in Manage Procure to Payment

For the purpose of this guideline, a role is an individual or a group of individuals responsible, accountable, consulted or informed (RACI) for an activity. Because of differences among the various departments and agencies, the role may not correspond to a specific position, title or organizational unit. The roles and responsibilities are briefly described in subsections 4.1 to 4.4 and are explained in more detail in Appendix D.

The following organizational roles act in support of legislation, such as the Financial Administration Act (FAA) and the Federal Accountability Act, and define policy and/or processes that are to be followed.

  • Office of the Comptroller General - Financial Management Sector is the policy authority for financial management;
  • Office of the Comptroller General - Acquired Services and Assets Sector is the policy authority for the management of real property and materiel, investment planning, project management, and procurement across the government;
  • The deputy head is responsible for providing leadership by demonstrating financial responsibility, transparency, accountability, and ethical conduct in financial and resource management, including compliance with legislation, regulations, Treasury Board policies, and financial authorities;[2]
  • Department of Public Works and Government Services - Acquisitions Branch sets policy and procedures for acquisitions; and
  • Receiver General - Accounting Banking and Compensation Branch provides directives and guidance to federal departments and agencies on government accounting, payment and deposit.

The following organizational roles act in response to financial management (i.e., Office of the Comptroller General - Financial Management Sector and deputy heads) policy and process requirements.

  • The corporate finance role supports deputy heads and chief financial officers in meeting their financial management accountabilities by developing, communicating, and maintaining the departmental financial management framework, and providing leadership and oversight on the proper application and monitoring of financial management across the department;[3]
  • The strategic and corporate planning role coordinates input into the departmental strategic, integrated, and operational planning processes defined within the department and in support of central agency requirements;
  • The financial services role carries out the day-to-day transactional financial management operations; and
  • The responsibility centre manager - financial management role is responsible and accountable for exercising the following delegated authorities:
    • Initiating expenditures;
    • Controlling commitments pursuant to section 32 of the FAA;
    • Entering into contracts (transaction authority);
    • Performing account verification and certification pursuant to section 34 of the FAA.

When the organizational roles of responsibility centre manager - financial management and responsibility centre manager - acquisitions are performed by the same individual, due consideration should be given to adequate separation of duties in the Manage Procure to Payment process.[4] Please note that within the context of this guideline, the responsibility centre manager is also referred to as "the manager."

The following organizational roles act in response to policy and process requirements for the management of real property and materiel, investment planning, project management and procurement across the government. These roles are not financial in nature but are included in order to provide a comprehensive description.

  • The corporate contracting and materiel role responds to the Policy Framework for the Management of Assets and Acquired Services and to the requirements of its associated policy instruments and processes for deputy heads and contracting authorities delegated to the department. This role also addresses department-wide requirements for procurement of goods and services;
  • The asset/materiel management services role carries out the day-to-day transactional asset and acquired services operations; and
  • The responsibility centre manager - acquisitions role defines requirements for goods and services, participates in the selection of vendors, and monitors contract performance. Where the responsibility centre manager - financial management and the responsibility centre manager - acquisition roles are performed by the same individual, due consideration should be given to adequate separation of duties in the Manage Procure to Payment process.[5] Please note that within the context of this guideline, the responsibility centre manager is also referred to as "the manager."

The following organizational roles provide a central service to other government departments.

  • The Department of Public Works and Government Services - Acquisitions Branch is responsible for procuring goods and services for the Government of Canada unless the right to do so has been assigned by law or delegated to another department by the Minister.[6] Acquisitions Branch provides a variety of services to departments, assists at each stage of the procurement cycle, and offers tools that simplify and accelerate the acquisition of goods and services; and
  • The Receiver General - Banking and Cash Management Sector is responsible for managing the treasury functions of the government. These functions include issuing most payments on behalf of the government and controlling the government's bank accounts.

5. Process Flows and Descriptions

Appendix C describes the methodology used in this section.

As illustrated in Figure 3, the Manage Procure to Payment Level 2 business process comprises nine subprocesses (3.1.1 to 3.1.9) that are arranged in six subprocess groups: Manage Requirements, Control Commitments, Manage Contracts, Administer Contracts and Deliverables, Manage Payables, and Manage Payments.

Figure 3. Manage Procure to Payment - Level 2 Process Flow

Figure 3. Manage Procure to Payment - Level 2 Process Flow
Text version: Figure 3. Manage Procure to Payment - Level 2 Process Flow

Note A: The Diamond symbol found in Figure 3 symbol means that all three subprocesses should be completed before proceeding to the Manage Contracts subprocess group.

Note B: When the purchase is determined to be an asset, the cost of deliverables is an input to the following Materiel/Finance Interactions domain processes: Manage Other Capital Assets (Business Process 4.1), Manage Real Property (Business Process 4.2) and Manage Inventory (Business Process 4.3).

The subprocesses within each subprocess group and the roles and responsibilities relevant to each process are summarized below.

Manage Requirements

  • Determine Requirements (Subprocess 3.1.1): Based on the approved budget and the approved plan, or an ad hoc requirement, the need for a good or service is identified, and requirements, such as type of goods, quantity, and estimated costs, are defined by the manager.
  • Determine/Exercise Expenditure Initiation Authority (Subprocess 3.1.2): The manager requesting the requirement should ensure that he or she has been delegated the appropriate expenditure initiation authority, and exercise or obtain that authority.[7] Typically, this subprocess is performed concurrently with Verify Unencumbered Balance (Subprocess 3.1.3) and Manage Commitments (Subprocess 3.1.4), pursuant to section 32 of the Financial Administration Act (FAA).

Control Commitments

  • Verify Unencumbered Balance (Subprocess 3.1.3): Before preparing the requisition, the manager needs to ensure that a sufficient unencumbered balance is available in an appropriation.[8]
  • Manage Commitments (Subprocess 3.1.4): After confirmation of a sufficient unencumbered balance is established, a commitment is recorded and updated according to department-specific policy[9] by one of the following:
    • Asset/materiel management services;
    • Corporate contracting and materiel;
    • Financial services; or
    • The manager.

Manage Contracts

  • Manage Contracts (Subprocess 3.1.5): Most activities are materiel management in nature rather than financial, but they provide important context and link the financial and contracting processes. Based on specifications from the approved requisition, a vendor is selected in accordance with materiel management business processes. The manager should ensure that he or she has been delegated the appropriate transaction authority, and exercise or obtain that authority.[10] The contract is created as appropriate, and the final output is the approved contract.

Administer Contracts and Deliverables

  • Administer Contracts and Deliverables (Subprocess 3.1.6): This subprocess involves monitoring the contract, receiving and accepting deliverables (part of account verification in support of section 34 of the FAA), and managing issues. The manager, supported by asset/materiel management services, is accountable for administering the contract. Receiving deliverables involves the physical receipt of goods or deliverables and the acceptance or rejection of goods or services based on damage, quantity, or other criteria, as defined by the terms and conditions of the contract.

Manage Payables

  • Manage Payables (Subprocess 3.1.7): Following receipt of the invoice, account verification pursuant to section 34 of the FAA is performed. Certification authority is exercised by the manager,[11] and a request for payment is prepared and sent to financial services.

Manage Payments

  • Perform Payment Authority (Subprocess 3.1.8): Manage Payments starts with the receipt of a request for payment. During the payment process, quality assurance is performed by financial services as part of exercising payment authority pursuant to section 33 of the FAA.[12]
  • Issue Payment (Subprocess 3.1.9): The payment requisition is sent to the Receiver General for payment issuance. The payment requisition files are edited and validated, and payments are released by the Receiver General. The Receiver General produces a generic return file containing unique payment references for control purposes. The payment records are updated in the departmental financial and materiel management system[13] by financial services, and Manage Procure to Payment (Business Process 3.1) ends. When quality assurance is not performed, the process proceeds to Manage Post-Payment Verification (Business Process 8.1). When quality assurance is performed, the process proceeds to Manage Financial Close (Business Process 8.2).

Although the use of an acquisition card is not mandatory, it is strongly encouraged when the purchase is within delegated transaction authority and it is efficient, economical and operationally feasible to do so.[14] An alternative flow is provided in Appendix E to illustrate the process when an acquisition card is used.

Manage Requirements is the start of the Manage Procure to Payment business process, beginning with the approved budget and approved plan from Manage Planning and Budgeting (Business Process 1.1), or an ad hoc requirement. It involves defining requirements, determining the corresponding expenditure initiation authority, and preparing the requisition for a good or service.

A key aspect of this subprocess group is the coordination of the work of the responsibility centre manager - financial management, the responsibility centre manager - acquisitions, and asset/materiel management services. In some cases, the roles of responsibility centre manager - financial management and the responsibility centre manager - acquisitions are performed by the same individual. However, there may be situations when the individual does not have all the delegated authority for exercising financial and spending authorities or where the individual's delegated authority is not sufficient for a particular requisition. In these cases, the roles of responsibility centre manager - financial management and the responsibility centre manager - acquisitions are performed by different individuals.

5.2.1 Determine Requirements (Subprocess 3.1.1)

Based on the approved budget and the approved plan, or an ad hoc requirement, the need for a good or service is identified; requirements, such as type of good or service, quantity, statement of work or tasks, dates required and estimated costs, are defined by the manager; and the appropriate procurement vehicle options are selected. Figure 4 depicts the Level 3 process flow for Determine Requirements.

Figure 4. Determine Requirements (Subprocess 3.1.1) - Level 3 Process Flow

Figure 4. Determine Requirements (Subprocess 3.1.1) - Level 3 Process Flow
Text version: Figure 4. Determine Requirements (Subprocess 3.1.1) - Level 3 Process Flow

5.2.1.1 Activities

The degree of complexity involved in defining requirements for goods and services will depend on the type of good or service required and/or the procurement vehicle selected. Based on the approved budget and expected outcomes as detailed in the approved plan, or an ad hoc requirement, the need to acquire resources is identified by the manager (Activity 3.1.1.1 - Identify Goods/Services Needed). Responsibility centre managers with delegated expenditure initiation authority are usually the initiators of the Manage Procure to Payment business process.

The detailed specifications for goods or services to be acquired are then identified (Activity 3.1.1.2 - Define Requirements). A requisition for procurement is drafted, detailing the type of good or service, the item description, the estimated cost, quantity and milestones.

It is important to examine the nature of the purchase to ensure that tangible assets that should be capitalized are identified early in the procurement process and that the financial coding is correct. Such assets may be acquired, constructed or developed and would also include leasehold improvements and betterments to existing assets. Accounting Standard 3.1 - Treasury Board - Capital Assets provides guidance on how to determine which tangible assets should be capitalized.

The financial coding against which the expenditure is to be charged is then identified, including the appropriate responsibility centre, authority, appropriations (operations and maintenance versus capital) and subactivity.

Based on the defined requirements, the appropriate procurement vehicle options are identified (Activity 3.1.1.3 - Examine and Select Procurement Vehicle Options). Typically, items of low-dollar value can be purchased with an acquisition card or a call-up against a standing offer; items of high-dollar value require a formal bidding process.

Discussions between the manager, functional specialists, asset/materiel management services, and the Department of Public Works and Government Services - Acquisitions Branch may be required to define the requirements more precisely and to clarify the contracting options and constraints, the nature of the goods/services, the duration of the contract and the date of delivery, the estimated cost, and the specific requirements (e.g., the level of security clearance and official languages). Functional specialists may also be consulted (e.g., Environment Canada when performing an environmental assessment, the Royal Canadian Mounted Police when procuring security-related goods or services, and IT specialists when purchasing or developing computer software or hardware).

The purchaser should also consult the Common Services Policy, which specifies that departments are to obtain goods and certain services through common service organizations unless a department has been delegated the procurement authority through other Treasury Board policies, by specific Treasury Board exemption, by specific departmental legislation, or in the provisions of the Common Services Policy.

5.2.1.2 Roles and Responsibilities

For this subprocess, there are typically two potential scenarios relating to accountability. In scenario one (S1), asset/materiel management services is accountable for the purchase of certain types of goods or services as described in department-specific policy. In scenario two (S2), the responsibility centre manager - acquisitions is accountable.

Table 1 provides an overview of roles and responsibilities, using the Responsible, Accountable, Consulted, and Informed (RACI) approach. These roles and responsibilities are further described in Appendix D.

Table 1. Determine Requirements (Subprocess 3.1.1) - RACI
Activity Related Data Responsible Accountable Consulted Informed Authoritative Source

Legend

AMS:
asset/materiel management services
CM:
corporate contracting and materiel
DFMS:
departmental financial and materiel management system
RCM-A:
responsibility centre manager - acquisitions
SCP:
strategic and corporate planning
3.1.1.1 Identify Goods/Services Needed
  • Approved budget
  • Requisition (description, type of goods/services, estimated cost, quantity, etc.)

S1: RCM-A

S2: RCM-A

S1: AMS

S2: RCM-A

S1: CM, SCP

S2: AMS, SCP

S1: CM

S2: AMS

S1: DFMS

S2: DFMS

3.1.1.2 Define Requirements
  • Date(s) required
  • Financial coding (authority, object, subactivity, responsibility centre, etc.)
  • Requisition (description, type of goods/services, estimated cost, quantity, etc.)

S1: RCM-A

S2: RCM-A

S1: AMS

S2: RCM-A

S1: CM

S2: AMS, CM

S1: CM

S2: AMS, CM

S1: DFMS

S2: DFMS

3.1.1.3 Examine and Select Procurement Vehicle Options
  • Date(s) required
  • Requisition (description, type of goods/services, estimated cost, quantity, etc.)
RCM-A RCM-A AMS, CM AMS, CM DFMS

5.2.2  Determine/Exercise Expenditure Initiation Authority (Subprocess 3.1.2)

The manager requesting the requirement determines the appropriate expenditure initiation authority, and exercises or obtains that authority. Figure 5 depicts the Level 3 process flow for Determine/Exercise Expenditure Initiation Authority.

Figure 5. Determine/Exercise Expenditure Initiation Authority (Subprocess 3.1.2) - Level 3 Process Flow

Figure 5. Determine/Exercise Expenditure Initiation Authority (Subprocess 3.1.2) - Level 3 Process Flow
Text version: Figure 5. Determine/Exercise Expenditure Initiation Authority (Subprocess 3.1.2) - Level 3 Process Flow

Within the Manage Procure to Payment business process, there are two types of authority: spending and financial. Spending authority comprises expenditure initiation authority, commitment authority (Verify Unencumbered Balance (Subprocess 3.1.3) and Manage Commitments [Subprocess 3.1.4]) and transaction authority (Manage Contracts [Subprocess 3.1.5]).[15] Financial authority comprises certification authority and payment authority, pursuant to sections 34 and 33 respectively of the FAA.[16] The level of authority is based on the department's delegation of authorities in accordance with the delegation documents approved by the minister and the deputy head, where expenditure initiation authority is defined as "the authority to incur an expenditure or to make an obligation to obtain goods or services that will result in the eventual expenditure of funds. This [authority] includes the decision to order supplies or services."[17]

5.2.2.1 Activities

When defining requirements, the manager should determine the appropriate expenditure initiation authority[18] by consulting the delegation documents (Activity 3.1.2.1 - Determine Required Expenditure Initiation Authority). When the manager does not possess the required expenditure initiation authority, he or she should obtain the signatures of those with delegated authority (Activity 3.1.2.2 - Exercise or Obtain Authority). In some situations, the manager may not obtain the authority to initiate the expenditure, in which case the procurement requirement may be redefined or the expenditure initiation process ends.

Certain complex situations may arise for large projects, such as the acquisition of real property, the undertaking of new projects, or purchases related to a major Crown project, which may require project or expenditure initiation approval from outside the department. For example, new projects of high-dollar value or high risk will require the manager to ensure that the authority is adequately based on the asset and/or the service to be acquired and is consistent with the assessed level of complexity and risk.[19] In these situations, additional approvals are required, and it may be necessary to prepare a Treasury Board submission. A Treasury Board submission is "an official document submitted by a sponsoring minister on behalf of a federal organization seeking approval or authority from the Treasury Board for an initiative that the organization would not otherwise be able to undertake or that is outside its delegated authorities."[20] A Guide to Preparing Treasury Board Submissions provides guidance on when a submission is necessary and step-by-step instructions on how to prepare and submit the necessary documentation for approval.

As the appropriate expenditure initiation authority is being exercised, a sufficient unencumbered balance has to be available in an appropriation[21] (Verify Unencumbered Balance (Subprocess 3.1.3)). If a sufficient unencumbered balance is available, a commitment (Manage Commitments (Subprocess 3.1.4) ) is created in accordance with department-specific policy.

The Directive on Expenditure Initiation and Commitment Control does not specify what constitutes an appropriate level of documentation to support expenditure initiation and commitment control. However, the directive does state that the chief financial officer is responsible for supporting the deputy head in the implementation of the directive[22] and for establishing department-specific policy and procedures with the expected result of managing the spending authority in a manner that maintains effective commitment control.[23]

The Manage Requirements Subprocess Group ends when the following activities have been completed:

  • The requirement is defined and approved by the appropriate expenditure initiation authority;
  • The unencumbered balance is confirmed (Activity 3.1.3.1 - Determine Unencumbered Balance); and
  • The commitment is appropriately recorded (Activity 3.1.4.1 - Record/Update Commitment).[24]

Note: Both the Manage Requirements Subprocess Group and the Control Commitments Subprocess Group must be completed before an approved requisition (Activity 3.1.2.3 - Submit Requisition for Goods/Services) is submitted.

5.2.2.2 Roles and Responsibilities

For Activity 3.1.2.1 - Determine Required Expenditure Initiation Authority, there are typically two scenarios, depending on how the expenditure initiation authority has been delegated within the department. In the first scenario (S1), asset/materiel management services is responsible. In the second scenario (S2), the responsibility centre manager - acquisitions is responsible.

For Activity 3.1.2.2 - Exercise or Obtain Authority, the responsibility centre manager - financial management is accountable for obtaining the appropriate expenditure initiation authorization and may be assisted by asset/materiel management services in fulfilling this responsibility.

For Activity 3.1.2.3 - Submit Requisition for Goods/Services, the responsibility centre manager - acquisitions is accountable for submitting the approved requisition and may be assisted by asset/materiel management services.

Table 2 provides an overview of roles and responsibilities for this subprocess, using the Responsible, Accountable, Consulted, and Informed (RACI) approach. These roles and responsibilities are further described in Appendix D.

Table 2. Determine/Exercise Expenditure Initiation Authority (Subprocess 3.1.2) - RACI
Activity Related Data Responsible Accountable Consulted Informed Authoritative Source

Legend

AMS:
asset/materiel management services
CF:
corporate finance
CM:
corporate contracting and materiel
DFMS:
departmental financial and materiel management system
FIN:
financial services
PWGSC-AB:
Department of Public Works and Government Services - Acquisitions Branch
RCM-A:
responsibility centre manager - acquisitions
RCM-F:
responsibility centre manager - financial management
3.1.2.1 Determine Required Expenditure Initiation Authority
  • Delegation documents
  • Requisition (description, type of good/service, estimated cost, quantity, etc.)

S1: AMS

S2: RCM-A

S1: RCM-A

S2: RCM-A

S1: CF, FIN, PWGSC-AB

S2: AMS, CF, FIN, PWGSC-AB

 

S1: DFMS

S2: DFMS

3.1.2.2 Exercise or Obtain Authority
  • Delegation documents
AMS, RCM-F RCM-F CF, FIN CM, PWGSC-AB, RCM-A DFMS
3.1.2.3 Submit Requisition for Goods/Services
  • Date(s) required
  • Description and type of good/service
  • Estimated cost
  • Financial coding (authority, object, subactivity, responsibility centre, etc.)
  • Requisition identifier
  • Quantity
AMS, RCM-A RCM-A CM,  PWGSC-AB CM, PWGSC-AB DFMS

The Control Commitments subprocess group involves ensuring that sufficient unencumbered balances are available as well as creating and updating commitments prior to entering into or amending the contract. Control Commitments connects to three subprocess groups: Manage Requirements, to create the commitment; Manage Contracts, if there are amendments to the contract; and Manage Payables, to close the commitment on the payment of the last invoice for the contract.

5.3.1 Verify Unencumbered Balance (Subprocess 3.1.3)

Before submitting the requisition (Determine/Exercise Expenditure Initiation Authority - Subprocess 3.1.2), the manager needs to ensure that a sufficient unencumbered balance is available in an appropriation.[25] Figure 6 depicts the Level 3 process flow for Verify Unencumbered Balance.

Figure 6. Verify Unencumbered Balance (Subprocess 3.1.3) - Level 3 Process Flow

Figure 6. Verify Unencumbered Balance (Subprocess 3.1.3) - Level 3 Process Flow
Text version: Figure 6. Verify Unencumbered Balance (Subprocess 3.1.3) - Level 3 Process Flow

Note A: Once both Determine/Exercise Expenditure Initiation Authority (Subprocess 3.1.2) and Manage Commitments (Subprocess 3.1.4) are completed, authorization is provided pursuant to section 32 of the FAA.

The deputy head or other person charged with the administration of a program is responsible for establishing procedures to ensure that commitments are controlled and accounted for and that records pertaining to them are maintained.[26] In addition, departments should have the appropriate processes in place to verify the availability of unencumbered balances at the time of expenditure initiation and prior to entering into a contract.[27] Commitment authority is delegated in writing to departmental officials by the deputy head (delegation of authority).[28] The delegated official is then responsible for ensuring that there is a sufficient unencumbered balance available before entering into a contract or other arrangement.[29] The creation and the maintenance of the delegation documents are addressed in Manage Delegation of Financial Authorities (Business Process 7.4). Commitment control, which includes accounting for those commitments, is an ongoing activity throughout the Manage Procure to Payment business process.

5.3.1.1 Activities

The manager requesting the good or service ensures that there is a sufficient unencumbered balance available to proceed with the procurement (Activity 3.1.3.1 - Determine Unencumbered Balance) by reviewing budget information, including a detailed analysis of outstanding or the previous year's commitments as well as unpaid invoices. Ongoing, multi-year procurements require that continuing commitments are kept separate for the current fiscal year and for each future year within the most recently approved budget.[30]

When the unencumbered balances are insufficient, it will be necessary to:

  • Re-allocate budgets;
  • Revise the approved budget and procurement requirements; or
  • End the Manage Procure to Payment process.

If there are sufficient unencumbered balances, department-specific functions related to commitment authority are carried out. It is essential to ensure that there is appropriate evidence substantiating the authorization pursuant to section 32 of the FAA (Activity 3.1.3.2 - Provide Authorization), as stipulated by department-specific policy and procedures.[31]

5.3.1.2 Roles and Responsibilities

The responsibility centre manager - financial management is accountable for his or her commitments.

Table 3 provides an overview of roles and responsibilities for this subprocess, using the Responsible, Accountable, Consulted, and Informed (RACI) approach. These roles and responsibilities are further described in Appendix D.

Table 3. Verify Unencumbered Balance (Subprocess 3.1.3) - RACI
Activity Related Data Responsible Accountable Consulted Informed Authoritative Source

Legend

CF:
corporate finance
CM:
corporate contracting and materiel
DFMS:
departmental financial and materiel management system
FIN:
financial services
PWGSC-AB:
Department of Public Works and Government Services - Acquisitions Branch
RCM-A:
responsibility centre manager - acquisitions
RCM-F:
responsibility centre manager - financial management
3.1.3.1 Determine Unencumbered Balance
  • Financial coding
  • Financial data (budget, commitments, actuals to date)
  • Requisition amount
RCM-F RCM-F AMS, FIN FIN, RCM-A DFMS
3.1.3.2 Provide Authorization
  • Description and type of good/service
  • Estimated cost
  • Financial coding (Authority, object, subactivity, responsibility centre, etc.)
  • Specimen signature documents
RCM-F RCM-F CF CM, PWGSC-AB, RCM-A DFMS

5.3.2 Manage Commitments (Subprocess 3.1.4)

While the unencumbered balance is being confirmed, commitments are recorded and updated by the manager, by asset/materiel management services, by corporate contracting and materiel or by financial services, in accordance with department-specific policy. Once the unencumbered balance has been confirmed and there has been appropriate commitment control, section 32 of the FAA has been exercised. Figure 7 depicts the Level 3 process flow for Manage Commitments.

Figure 7. Manage Commitments (Subprocess 3.1.4) - Level 3 Process Flow

Figure 7. Manage Commitments (Subprocess 3.1.4) - Level 3 Process Flow
Text version: Figure 7. Manage Commitments (Subprocess 3.1.4) - Level 3 Process Flow

5.3.2.1 Activities

The manager is accountable for ensuring that the commitment, including a continuing commitment that impacts future fiscal years, is recorded in accordance with department-specific policy. The manager may record or update the commitment, or the activity can be performed by asset/materiel management services, contract management or financial services. Throughout the Manage Procure to Payment process, the commitment is monitored and updated as needed (e.g., when the contract value changes) (Activity 3.1.4.1 - Record/Update Commitment).

Following receipt of the final invoice, the commitment is updated and closed out (Activity 3.1.4.2 - Close Out Commitment). The end objective of Determine/Exercise Expenditure Initiation Authority (Subprocess 3.1.2) and the Control Commitments subprocess group is to ensure that all commitments are managed and that managers do not exceed their allocated budgets or appropriations.[32]

It may be impractical to formally record commitments individually, such as for transactions of low-dollar value. Departments can implement alternative accounting methods for these commitments, provided that their department-specific policy identifies when it is appropriate to do so and how these commitments are to be accounted for.[33] Commitments are recorded based on the department's approved budget and quantify the financial implications of the planned procurement requirements. For an ongoing, multi-year procurement, it is necessary to record the commitment annually.

5.3.2.2 Roles and Responsibilities

The responsibility centre manager - financial management is accountable for his or her commitments.

Table 4 provides an overview of roles and responsibilities for this subprocess, using the Responsible, Accountable, Consulted, and Informed (RACI) approach. These roles and responsibilities are further described in Appendix D.

Table 4. Manage Commitments (Subprocess 3.1.4) - RACI
Activity Related Data Responsible Accountable Consulted Informed Authoritative Source

Legend

AMS:
asset/materiel management services
CM:
corporate contracting and materiel
DFMS:
departmental financial and materiel management system
FIN:
financial services
PWGSC-AB:
Department of Public Works and Government Services - Acquisitions Branch
RCM-A:
responsibility centre manager - acquisitions
RCM-F:
responsibility centre manager - financial management
3.1.4.1 Record/ Update Commitment
  • Commitment authorization
  • Financial coding
  • Financial data (budget commitments, actuals to date)
  • Goods receipt data
  • Requisition amount
AMS, CM, FIN, RCM-F RCM-F CM, FIN PWGSC-AB, RCM-A DFMS
3.1.4.2 Close Out Commitment
  • Commitment data
  • Contract data
  • Financial data (budget, commitments, actuals to date)
  • Goods receipt data
AMS, FIN, RCM-F RCM-F AMS, CM, FIN RCM-A DFMS

This subprocess group involves creating and/or amending the contract as well as determining and exercising the appropriate transaction authority. Most activities are materiel management in nature rather than financial, but they provide important context and link the financial and contracting processes.

5.4.1 Manage Contracts (Subprocess 3.1.5)

Based on the approved requisition and in accordance with contracting policies, a vendor is selected. The manager must ensure that he or she has been delegated the appropriate transaction authority, and exercises the authority or obtains the approval of the individual with delegated transaction authority.[34] The contract is created as appropriate, and the final output is the approved contract. Figure 8 depicts the Level 3 process flow for Manage Contracts.

Figure 8. Manage Contracts (Subprocess 3.1.5) - Level 3 Process Flow

Figure 8. Manage Contracts (Subprocess 3.1.5) - Level 3 Process Flow
Text version: Figure 8. Manage Contracts (Subprocess 3.1.5) - Level 3 Process Flow

5.4.1.1 Activities

The approved requisition (including authorization pursuant to section 32 of the FAA) initiates this subprocess group. The manager provides adequate information in the requisition for goods and services, such as evaluation criteria and sufficient detail, to support the procurement based on the procurement needs. The department is responsible for ensuring that the established vendor selection criteria are appropriate and in accordance with materiel management business processes. The vendor is selected through the appropriate procurement vehicle (Activity 3.1.5.1 - Select Vendor Through Appropriate Procurement Vehicle).

The Treasury Board Contracting Policy is a major element of the procurement framework, providing guidance on how to select vendors through the bidding process and on contracting. The Policy Framework for the Management of Assets and Acquired Services and the Treasury Board Contracting Policy identify policies, regulations and processes applicable to government procurement.

Depending on the nature of the good or service and the dollar value of the purchase, the contract creation, issuance and approval can be the responsibility of the manager, asset/materiel management services, or the Department of Public Works and Government Services - Acquisitions Branch. For a simple purchase of low-dollar value, the manager is typically delegated the appropriate transaction authority. Although the use of an acquisition card is not mandatory, it is strongly encouraged when the purchase is within delegated transaction authority and it is efficient, economical and operationally feasible to do so.[35] An alternative flow is provided in Appendix E to illustrate the process when an acquisition card is used.

The finalization of the terms and conditions (Activity 3.1.5.2 - Finalize/Review Terms and Conditions) is sometimes an iterative process and may require revisions based on the agreement with the selected vendor. The terms and conditions of the contract must comply with the Policy on Decision Making in Limiting Contractor Liability in Crown Procurement Contracts. The process may also include consulting legal counsel, for example, to ensure that the terms and conditions are clear and indisputable in order to avoid any future misunderstanding or confusion.

If an amendment has been identified in Administer Contracts and Deliverables (Subprocess 3.1.6), the responsibility centre manager obtains the necessary details to review the terms and conditions and revises the contract. Once the amendment has been approved and signed by all parties to the contract, the Administer Contracts and Deliverables process flow can resume.

The data in the vendor master data file are validated and used in the contract. When a new vendor is selected or when the vendor information changes, a vendor master data file update should be requested or performed. The creation and maintenance of the vendor master data file is part of Manage Vendor Master Data File (Business Process 7.1).

When the value of the contract differs from the value listed in the original requisition, it will be necessary to revisit Verify Unencumbered Balance (Subprocess 3.1.3) in order to ensure that the commitment is still appropriate, prior to signing the contract. In the case of an increase in value, it should be determined:

  • Whether sufficient unencumbered balances are still available;
  • Whether the commitment authority is still appropriate; and
  • That the commitment is recorded at the value expected to be incurred.[36]

If unencumbered balances are available, the commitment is updated and the process continues. If no additional unencumbered balances are available, it will be necessary to obtain funding elsewhere or to amend the requirements.

The required transaction authority is then determined (Activity 3.1.5.3 - Determine Required Transaction Authority). Transaction authority is the authority to enter into contracts, including acquisition card purchases (Appendix E), or to sign off on legal entitlements.[37]

Subsection 41(1) of the FAA provides for the establishment of financial limits above which Governor-in-Council or Treasury Board approval is required. The authority for departmental contracts can be found in the legislation constituting the department, which confers certain powers on the minister. Appendix C of the Contracting Policy prescribes the dollar levels above which Treasury Board authority is to be obtained. Transaction authority is limited by the Appropriation Acts passed by Parliament each year, which provide funds to carry out the departmental mandate.

As part of defining the requirement, the requesting responsibility centre manager should ensure that he or she has been delegated the appropriate transaction authority, as determined by the approved delegation documents of the department.[38] When the manager does not possess the required transaction authority, the signatures of those with delegated authority must be obtained.[39] In some situations, the transaction authority may not be granted and the Manage Contracts subprocess ends.

To ensure adequate separation of duties, the following functions are kept separate when responsibility is assigned to individuals involved in the expenditures process[40]:

  • Authority to enter into a contract (transaction authority) (Activity 3.1.5.4 - Exercise or Obtain Transaction Authority) ;
  • Certification of the receipt of goods and the provision of services, pursuant to section 34 of the FAA (certification authority) (Activity 3.1.6.3 - Match Deliverables with Contract);
  • Determination of entitlement, verification of accounts, and preparation of requisitions for payment or settlement, pursuant to section 34 of the FAA (certification authority) (Manage Payables (Subprocess 3.1.7));
  • Certification of requisition for payment or settlement, pursuant to section 33 of the FAA (payment authority) (Activity 3.1.8.4 - Exercise FAA, Section 33 Certification, Including EAA Key); and
  • If the process or other circumstances do not allow such separations of duties as identified above, alternate control measures are implemented and documented.

Furthermore, par. 6.2.2 of the Directive on Delegation of Financial Authorities for Disbursements requires that "persons with delegated authority do not exercise the following:

  • Certification authority and payment authority on the same payment;
  • Spending, certification or payment authority for an expenditure from which they can directly or indirectly benefit (e.g., when the payee is the individual with financial signing authority or when the expenditure is incurred for the benefit of that individual)."[41]

As well as obtaining and exercising the transaction authority (Activity 3.1.5.4 - Exercise or Obtain Transaction Authority), the signed contract from the vendor is also obtained as required. When the responsibility centre manager exercising the transaction authority and the project authority are not the same individual, it is good practice for the project authority to provide concurrence with the statement of work. The contract, signed and approved by all parties, triggers the Administer Contracts and Deliverables subprocess group that involves the receipt of deliverables, which is an input to the account verification subprocess.

5.4.1.2 Roles and Responsibilities

The expenditure initiation authority and commitment are now in place, and the transaction authority has been obtained. The role accountable for the transaction authority will depend on whether the authority is delegated to the department or held by the Department of Public Works and Government Services - Acquisitions Branch. When the Department of Public Works and Government Services - Acquisitions Branch exercises transaction authority, the contract information and supporting evidence of financial options are kept in the departmental financial and materiel management system at the Department of Public Works and Government Services - Acquisitions Branch; this system would be the authoritative source. Although vendor selection and finalization of terms and conditions are materiel management in nature, they are included because of their financial implication (i.e., a signed contract).

Depending on the value of the contract and/or the delegated authority, there are several scenarios relating to accountability and responsibility for Manage Contract activities.

For Activity 3.1.5.1 - Select Vendor Through Appropriate Procurement Vehicle, there are two scenarios:

  • In scenario one (S1), asset/materiel management services or the manager is responsible; and
  • In scenario two (S2), the Department of Public Works and Government Services - Acquisitions Branch is responsible.

In both scenarios, the responsibility centre manager - acquisitions is accountable for this activity.

For Activity 3.1.5.2 - Finalize/Review Terms and Conditions, there are three scenarios, depending on the delegated authority.

  • In scenario one (S1), asset/materiel management services is both responsible and accountable;
  • In scenario two (S2), the Department of Public Works and Government Services - Acquisitions Branch is both responsible and accountable; and
  • In scenario three (S3), the responsibility centre manager - acquisitions is both responsible and accountable.

For Activity 3.1.5.3 - Determine Required Transaction Authority, corporate contracting and materiel is accountable, and the manager or corporate contracting and materiel is responsible.

For Activity 3.1.5.4 - Exercise or Obtain Transaction Authority, there are three scenarios, depending on the delegated authority.

  • In scenario two (S2), the Department of Public Works and Government Services - Acquisitions Branch is both responsible and accountable;
  • In scenario four (S4), corporate contracting and materiel is both responsible and accountable; and
  • In scenario five (S5), the responsibility centre manager - financial management is both responsible and accountable.

Table 5 provides an overview of roles and responsibilities for this subprocess, using the Responsible, Accountable, Consulted, and Informed (RACI) approach. These roles and responsibilities are further described in Appendix D.

Table 5: Manage Contracts (Subprocess 3.1.5) - RACI
Activity Related Data Responsible Accountable Consulted Informed Authoritative Source

Legend

AMS:
asset/materiel management services
CF:
corporate finance
CM:
corporate contracting and materiel
DFMS:
departmental financial and materiel management system
PWGSC-AB:
Department of Public Works and Government Services - Acquisitions Branch
RCM-A:
responsibility centre manager - acquisitions
RCM-F:
responsibility centre manager - financial management
3.1.5.1 Select Vendor Through Appropriate Procurement Vehicle
  • Date(s) required
  • Description and type of good/service
  • Estimated cost
  • Quantity
  • Supporting evidence of financial options (if applicable)

S1: AMS, RCM-A

S2: PWGSC-AB

S1: RCM-A

S2: RCM-A

S1: CM, PWGSC-AB

S2: CM, RCM-A

S1: CM, PWGSC-AB

S2: CM, RCM-A

S1: DFMS

S2: PWGSC-AB's DFMS

3.1.5.2 Finalize/ Review Terms And Conditions
  • Date(s) required
  • Description and type of good/service
  • Estimated cost
  • Quantity
  • Terms and conditions
  • Vendor data

S1: AMS

S2: PWGSC-AB

S3: RCM-A

S1: AMS

S2: PWGSC-AB

S3: RCM-A

S1: CM, PWGSC-AB

S2: CM

S3: CM, PWGSC-AB

S1: CM, PWGSC-AB

S2: CM

S3: CM, PWGSC-AB

S1: DFMS

S2: PWGSC-AB's DFMS

S3: DFMS

3.1.5.3 Determine Required Transaction Authority
  • Contract information
  • Cost
  • Delegation documents
  • Type of good/service
CM , RCM-A CM AMS, CF, PWGSC-AB CM, RCM-F DFMS
3.1.5.4 Exercise or Obtain Transaction Authority
  • Delegation documents

S2: PWGSC-AB

S4: CM

S5: RCM-F

S2: PWGSC-AB

S4: CM

S5: RCM-F

S2: CF, RCM-A

S4: CF, RCM-A

S5: CF, RCM-A

S2: RCM-A

S4: RCM-A

S5: RCM-A

S2: PWGSC-AB's DFMS

S4: DFMS

S5: DFMS

Administer Contracts and Deliverables is a point of integration with the business processes from the Materiel/Finance Interactions domain for the management of assets. This subprocess group involves monitoring the contract, receiving and accepting deliverables (part of account verification in support of section 34 of the FAA), monitoring financial performance, and resolving vendor issues. Most activities of this subprocess are materiel management in nature and are outside the financial management scope of this process, but they provide important context and link the financial and contracting processes. In some cases, it may be necessary to revisit Manage Contracts (Subprocess 3.1.5), for example, when the contract requires amendments.

5.5.1 Administer Contracts and Deliverables (Subprocess 3.1.6)

Subprocess 3.1.6 involves monitoring the contract, certifying the receipt and acceptance of deliverables (pursuant to section 34 of the FAA), reviewing financial performance, and managing vendor issues. The manager, supported by asset/materiel management services, is accountable for administering the contract. Receiving deliverables involves the physical receipt of deliverables and either accepting or rejecting deliverables based on damage, quantity, or other criteria, as defined by the contract. Figure 9 depicts the Level 3 process flow for Administer Contracts and Deliverables.

Figure 9. Administer Contracts and Deliverables (Subprocess 3.1.6) - Level 3 Process Flow

Figure 9. Administer Contracts and Deliverables (Subprocess 3.1.6) - Level 3 Process Flow
Text version: Figure 9. Administer Contracts and Deliverables (Subprocess 3.1.6) - Level 3 Process Flow

Note A: When the purchase is determined to be an asset, the cost of deliverables is an input to the following Materiel/Finance Interactions domain processes: Manage Other Capital Assets (Business Process 4.1), Manage Real Property (Business Process 4.2) and Manage Inventory (Business Process 4.3).

5.5.1.1 Activities

The contract should be regularly monitored (Activity 3.1.6.1 - Monitor Contract) to ensure that:

  • Milestones are achieved;
  • The vendor continues to be a going concern;
  • The vendor meets the terms and conditions of the contract;
  • The goods or services meet the requirements of the contract; and
  • The total value of the contract is sufficient.

At any time during the contract period, events may trigger the need for action to be taken relating to the contract, the vendor information or the vendor.

The Administer Contracts and Deliverables subprocess also involves the physical receipt of goods and performing an inspection, or confirming receipt of services. In some cases, there may be multiple locations or designated receiving areas within the department where the goods are delivered. For goods, the physical receipt process results in a receiving document; and for services, in a documented acknowledgement of services received. Data such as quantity and item description are matched with the receiving document (Activity 3.1.6.2 - Match Deliverables With Receiving Document). Evidence of the receipt is part of the account verification, in support of section 34 of the FAA (Manage Payables (Subprocess 3.1.7)).[42]

The deliverables are then compared to the terms and conditions of the contract (Activity 3.1.6.3 - Match Deliverables With Contract). Any discrepancies are noted and resolved with the vendor. If no discrepancies are noted or once they are resolved, the deliverables are officially accepted as part of the certification of the receipt of goods or the provision of services pursuant to section 34 of the FAA,[43] supported by documentation such as a bill of lading, a deliverable, a time sheet, or a notice of acceptance.

To ensure adequate separation of duties, the following functions are kept separate when responsibility is assigned to individuals involved in the expenditures process[44]:

  • Authority to enter into a contract (transaction authority) (Activity 3.1.5.4 - Exercise or Obtain Transaction Authority) ;
  • Certification of the receipt of goods and the provision of services, pursuant to section 34 of the FAA (certification authority) (Activity 3.1.6.3 - Match Deliverables with Contract);
  • Determination of entitlement, verification of accounts, and preparation of requisitions for payment or settlement, pursuant to section 34 of the FAA (certification authority) (Manage Payables (Subprocess 3.1.7));
  • Certification of requisition for payment or settlement, pursuant to section 33 of the FAA (payment authority) (Activity 3.1.8.4 - Exercise FAA, Section 33 Certification, Including EAA Key); and
  • If the process or other circumstances do not allow such separations of duties as identified above, alternate control measures are implemented and documented.

Furthermore, par. 6.2.2 of the Directive on Delegation of Financial Authorities for Disbursements requires that "persons with delegated authority do not exercise the following:

  • Certification authority and payment authority on the same payment;
  • Spending, certification or payment authority for an expenditure from which they can directly or indirectly benefit (e.g., when the payee is the individual with financial signing authority or when the expenditure is incurred for the benefit of that individual)."[45]

Goods and certain services may be recorded as an expense, an inventory item (Business Process 4.3 - Manage Inventory), or as a capital asset (Business Process 4.1 - Manage Other Capital Assets or Business Process 4.2 - Manage Real Property) along with the related liability. If not done previously, an analysis of the nature of the deliverables or goods may be required when it is not evident how the purchase should be recorded. This analysis is especially vital when the acquisition could be a component for an asset under construction, a betterment or a capital lease. An accrual entry may be recorded to reflect the receipt of the good or service, and the applicable updates are made to commitments.

In the event of the rejection of deliverables or a discrepancy in the receiving document, it is necessary to resolve these issues with the vendor (Activity 3.1.6.4 - Resolve Issues With Vendor). The vendor needs to be contacted to resolve the issue, which may result in returned goods, a modification to the deliverable, or a contract amendment.

Goods that are damaged or that are in excess of what was ordered are returned in accordance with the terms and conditions of the contract. The vendor is contacted and advised of the issue. Usually when goods are returned to the vendor, a Return Merchandise Authorization form is completed and sent with the returning merchandise. Goods to be returned can result in several outcomes:

  • The goods can be replaced or exchanged for an alternative when the original goods are not available;
  • The vendor can adjust or revise the invoice; or
  • The vendor can issue a refund or credit memo for the portion of goods returned.

There may be instances when the issue can be resolved without returning the goods or rejecting the deliverables, that is, where they are accepted as received. This resolution may impact the value of the contract, for example, if the deliverables are accepted at a discount of the original price.

If the contract needs to be amended, it will be necessary to revisit Manage Contracts (Subprocess 3.1.5) and to proceed with the review and finalization of the terms and conditions of the contract (Activity 3.1.5.2 - Finalize/Review Terms and Conditions) following the appropriate flow of activities. There may be circumstances when additional entities may be consulted, most notably legal counsel, to ensure that issues are resolved. The contract and corresponding commitments should be adjusted to reflect the final resolution agreed upon by all parties.

The vendor master data file may require changes, such as a change in location or payment data, over the course of the contract. It is important to record changes when they become known. Certain vendor master data file changes may also trigger a contract amendment, for example, when a vendor undergoes a legal name change. Manage Vendor Master Data File (Business Process 7.1) provides details on how to make changes to the vendor master data file.

When deliverables are paid for by acquisition card, rather than proceeding to Manage Payables (Subprocess 3.1.7), the process would proceed to the performance of certification of the credit card statement, pursuant to section 34 of the FAA. The alternative process flow for acquisition cards is described in Appendix E.

5.5.1.2 Roles and Responsibilities

The key financial management activities of this subprocess are ensuring that the receiving documents accurately describe the deliverables received and that the deliverables match what was requested. Responsibility for administering the contract is shared among several roles, while the manager is ultimately accountable for the outcome. The remaining activities are materiel management in nature.

There are various scenarios relating to responsibility and accountability.

For Activity 3.1.6.1 - Monitor Contract, corporate contracting and materiel, the Department of Public Works and Government Services - Acquisitions Branch or the responsibility centre manager - acquisitions is responsible for this activity. When the manager is responsible, the Department of Public Works and Government Services - Acquisitions Branch could be consulted for their expertise and the manager - acquisitions would be informed of issues when he or she was not responsible for monitoring the contract. The manager - acquisitions is always accountable.

For Activity 3.1.6.2 - Match Deliverables With Receiving Document and Activity 3.1.6.3 - Match Deliverables With Contract, when the responsibility centre manager - financial management and the responsibility centre manager - acquisitions are not the same individual, the manager - financial management is informed of the results of activities 3.1.6.2 and 3.1.6.3, which are part of the account verification process in Manage Payables (Subprocess 3.1.7).

For Activity 3.1.6.3 - Match Deliverables With Contract, the type of deliverables will determine which role is responsible, typically based on the technical expertise required to confirm compliance to the specifications of the contract. In scenario one (S1), asset/materiel management services is responsible. In scenario two (S2), the manager - acquisitions is responsible. In both cases, however, the manager remains accountable.

For Activity 3.1.6.4 - Resolve Issues With Vendor, the role responsible will depend on how the transaction authority was exercised. In scenario two (S2), the manager - acquisitions is responsible. In scenario three (S3), corporate contracting and materiel is responsible. In scenario four (S4), the Department of Public Works and Government Services - Acquisitions Branch is responsible. In all cases, the manager is accountable for this activity.

Table 6 provides an overview of roles and responsibilities for this subprocess, using the Responsible, Accountable, Consulted, and Informed (RACI) approach. These roles and responsibilities are further described in Appendix D.

Table 6. Administer Contracts and Deliverables (Subprocess 3.1.6) - RACI
Activity Related Data Responsible Accountable Consulted Informed Authoritative Source

Legend

AMS:
asset/materiel management services
CM:
corporate contracting and materiel
DFMS:
departmental financial and materiel management system
FIN:
financial services
PWGSC-AB:
Department of Public Works and Government Services - Acquisitions Branch
RCM-A:
responsibility centre manager - acquisitions
RCM-F:
responsibility centre manager - financial management
3.1.6.1 Monitor Contract
  • Contract data (vendor, quantity, type)
  • Item description
  • Receiving document (optional)
CM, PWGSC-AB, RCM-A RCM-A CM, PWGSC-AB RCM-A DFMS
3.1.6.2 Match Deliverables With Receiving Document
  • Contract data (vendor, quantity, type)
  • Date deliverables received
  • Item description
  • Quantity
  • Receiving document
AMS, RCM-A RCM-A CM, PWGSC-AB RCM-A, RCM-F DFMS
3.1.6.3 Match Deliverables With Contract
  • Contract data (vendor, quantity, type)
  • Contract ID
  • Item description
  • Receiving document

S1: AMS

S2: RCM-A

S1: RCM-A

S2: RCM-A

S1: CM

S2: CM,

PWGSC-AB

S1: FIN, RCM-F

S2: FIN, RCM-F

S1: DFMS

S2: DFMS

3.1.6.4 Resolve Issues With Vendor
  • Contract data (vendor, quantity, type)
  • Contract ID
  • Item description
  • Receiving document (optional)

S2: RCM-A

S3: CM

S4: PWGSC-AB

S2: RCM-A

S3: RCM-A

S4: RCM-A

S2: CM,  PWGSC-AB

S3: PWGSC-AB

S4: CM

S2: FIN

S3: FIN, RCM-A

S4: FIN

S2: DFMS

S3: DFMS

S4: DFMS

This subprocess group involves handling invoices, completing the account verification, and providing certification authority pursuant to section 34 of the FAA.

5.6.1 Manage Payables (Subprocess 3.1.7)

Upon receipt of the invoice, the following takes place:

  • Account verification process is performed;
  • Section 34 certification authority is exercised by the manager; and
  • A request for payment is prepared and sent to financial services

Figure 10 depicts the Level 3 process flow for Manage Payables.

Figure 10: Manage Payables (Subprocess 3.1.7) - Level 3 Process Flow

Figure 10: Manage Payables (Subprocess 3.1.7) - Level 3 Process Flow
Text version: Figure 10: Manage Payables (Subprocess 3.1.7) - Level 3 Process Flow

Manage Payables (Subprocess 3.1.7) involves receiving invoices, credit memos or other documents from vendors and verifying and validating invoice information. The approved contract and receiving document form part of the account verification.

Subprocess 3.1.7 begins when the vendor sends an invoice, which could be received by the program area, accounts payable or financial services, depending on the arrangements established in the contract. At this time, the date of receipt is recorded; the date of receipt is a key element in calculating interest, which is further described in Perform Payment Authority (Subprocess 3.1.8).

Account verification provides the necessary evidence to demonstrate that:

  • The work has been performed;
  • The goods were supplied or services were rendered;
  • The relevant contract or agreement terms and conditions have been met;
  • The transaction is accurate; and
  • All authorities have been complied with.[46]

Primary responsibility for verifying individual accounts rests with the responsibility centre manager - financial management, who has the authority to confirm and certify entitlement pursuant to section 34 of the FAA.[47] These steps rely on the goods/services receipt process described in Administer Contracts and Deliverables (Subprocess 3.1.6), the approved contract (output from Subprocess 3.1.5 - Manage Contracts) and the vendor invoice. All payments and settlements are to be certified pursuant to section 34 of the FAA. Credit memos are reviewed following the same process as for invoices received.

To ensure adequate separation of duties, the following functions are kept separate when responsibility is assigned to individuals involved in the expenditures process[48]:

  • Authority to enter into a contract (transaction authority) (Activity 3.1.5.4 - Exercise or Obtain Transaction Authority);
  • Certification of the receipt of goods and the provision of services pursuant to section 34 of the FAA (certification authority) (Activity 3.1.6.3 - Match Deliverables with Contract);
  • Determination of entitlement, verification of accounts, and preparation of requisitions for payment or settlement, pursuant to section 34 of the FAA (certification authority) (Manage Payables [Subprocess 3.1.7]);
  • If the process or other circumstances do not allow such separation of duties, alternative control measures are implemented and documented.
  • Certification of requisition for payment or settlement, pursuant to section 33 of the FAA (payment authority) (Activity 3.1.8.4 - Exercise FAA, Section 33 Certification, Including EAA Key).

Furthermore, par. 6.2.2 of the Directive on Delegation of Financial Authorities for Disbursements requires that "persons with delegated authority do not exercise the following:

  • Certification authority and payment authority on the same payment;
  • Spending, certification or payment authority for an expenditure from which they can directly or indirectly benefit (e.g., when the payee is the individual with financial signing authority or when the expenditure is incurred for the benefit of that individual)."[49]

Although account verification is normally performed prior to payment, completing account verification following payment is permitted in certain situations, such as acquisition card purchases, provided that the claim for payment is reasonable and meets the criteria outlined in the Directive on Account Verification.[50]

5.6.1.1 Activities

The Manage Payables subprocess involves the following activities[51] that support the verification and certification of invoices pursuant to section 34 of the FAA:

  • Verifying that supporting documentation is complete (i.e., the documentation provides an audit trail and demonstrates agreed price and other specifications as well as receipt of goods or services and authorization according to the delegation of financial signing authorities) (Activity 3.1.7.1 - Verify That Supporting Documentation Is Complete);
  • Confirming the following:
    • That contract or agreement terms and conditions have been met, including price, quantity and quality,
    • That work has been performed,
    • That the goods have been supplied or services have been rendered, and
    • If, as a result of exceptional circumstances, the price is not specified in the contract or agreement, confirmation that it is reasonable (Activity 3.1.7.2 - Confirm That Contract Terms Are Met);
  • Confirming that the payee is entitled to, or eligible for, the payment. This confirmation would include ensuring that the payee is appropriate, particularly in the case of an assignment of the supplier's debt (alternate payee) (Activity 3.1.7.3 - Confirm That Payee Is Entitled to Payment);
  • Validating three-way matching (i.e., the information in the invoice, the approved contract and the receiving document is in agreement (Activity 3.1.7.4 - Validate That Three-Way Matching Occurred);
  • Ensuring that the payee information is accurate and valid. The payee information should also be verified against the vendor master data file. If the payee information is not accurate and changes are required, the Manage Vendor Master Data File process (Business Process 7.1) explains how to make changes to the vendor master data file (Activity 3.1.7.5 - Ensure That Payee Information Is Accurate);
  • Ensuring that the financial coding is accurate and complete (Activity 3.1.7.6 - Ensure That Financial Coding Is Correct);
  • Verifying that all relevant statutes, regulations, Orders in Council, policies and directives, and other legal obligations have been complied with (Activity 3.1.7.7 - Verify That Relevant Regulations, Policies and Directives Were Followed);  and
  • Confirming that the transaction is accurate, including that the payment is not a duplicate, that discounts, credits or contract holdbacks have been deducted, that charges not payable have been removed, and that the invoice or claim total has been calculated correctly (Activity 3.1.7.8 - Verify Accuracy of Transaction).

In addition to the policies previously identified in this guideline (subsection 3.2, "References"), other policy instruments specific to the transaction should be consulted, such as the Directive on the Payment, Collection and Remittance of Provincial Taxes and Fees.

It should be emphasized that departments are required to ensure that suppliers are paid on the due date. Departments that fail to pay by the due date[52] must pay interest, without demand from the supplier, in accordance with the terms and conditions of the contract. The Directive on Payment Requisitioning and Cheque Control does not allow the department to elect a minimum threshold for payment of interest. For information on determining the due date, see the "Payment on due date" section of the Directive on Payment Requisitioning and Cheque Control. Typically, the payment term starts when the invoice is received at the invoicing address specified in the contract; this is the invoice receipt date for purposes of calculating the due date. The department has an obligation to record the invoice receipt date as follows:

  • Paper invoices should date stamped; or
  • Electronic invoices should have a date tag applied that cannot be changed electronically.

The "goods/services acceptance date" is the date of delivery to the department (Activity 3.1.6.2 - Match Deliverables With Receiving Document). The quality of the deliverables received is determined as part of the FAA section 34 certification process (Activity 3.1.6.3 - Match Deliverables With Contract).

Account verification also involves confirming that advance payments meet appropriate requirements[53] and comply with the Treasury Board Contracting Policy. Recurring periodic payments for ongoing contracts, such as utilities and facilities, are described in Manage Other Payments (Business Process 3.3).

If, at any point during the account verification process, a discrepancy is noted or if the information is incomplete, the manager is required to resolve the discrepancy by tracing the issue to its source (Activity 3.1.7.9 - Resolve Discrepancies). Once the issue is resolved, the account verification may resume or start over.

Once the invoice has been verified and no discrepancies or issues have been noted, the account verification is complete and certified pursuant to section 34 of the FAA (Activity 3.1.7.10 - Exercise or Obtain Authority), which is usually provided through a signature block on the invoice or a completed account verification checklist. The invoice is recorded and the need to adjust the commitment is determined, such as in the case of a final invoice. If the invoice is not certified, follow-up with the vendor or others involved in the Manage Procure to Payment business process may be required. The final output of the Manage Payables subprocess group is an approved invoice in the form of a payment request for the purpose of payment processing.

Account verification pursuant to section 34 of the FAA also involves ensuring that there is auditable evidence of verification (i.e., ensuring that the process identifies the individuals who performed the account verification and ensuring that there is an audit trail).

5.6.1.2 Roles and Responsibilities

The responsibility centre manager - financial management is responsible and accountable for the completion of the account verification and the certification of invoices pursuant to section 34 of the FAA.

Table 7 provides an overview of roles and responsibilities for this subprocess, using the Responsible, Accountable, Consulted, and Informed (RACI) approach. These roles and responsibilities are further described in Appendix D.

Table 7: Manage Payables (Subprocess 3.1.7) - RACI
Activity Related Data Responsible Accountable Consulted Informed Authoritative Source

Legend

AMS:
asset/materiel management services
CF:
corporate finance
CM:
corporate contracting and materiel
DFMS:
departmental financial and materiel management system
FIN:
financial services
PWGSC-AB:
Department of Public Works and Government Services - Acquisitions Branch
RCM-A:
responsibility centre manager - acquisitions
RCM-F:
responsibility centre manager - financial management
3.1.7.1 Verify That Supporting Documentation Is Complete
  • Contract data
  • Deliverables receipt data
  • Invoice/credit memo data
RCM-F RCM-F AMS, CM, FIN AMS, CM, FIN DFMS
3.1.7.2 Confirm That Contract Terms Are Met
  • Acceptance of deliverables data
  • Contract data
  • Invoice data
RCM-F RCM-F CM, FIN, PWGSC-AB, RCM-A RCM-A DFMS
3.1.7.3 Confirm That Payee Is Entitled to Payment
  • Acceptance of deliverables data
  • Contract data
  • Invoice/credit memo data
  • Vendor data
RCM-F RCM-F CF, FIN, RCM-A RCM-A DFMS
3.1.7.4 Validate That Three-Way Matching Occurred
  • Acceptance of deliverables data
  • Contract data
  • Invoice/credit memo data
RCM-F RCM-F

AMS, CM,

FIN, PWGSC-AB, RCM-A

RCM-A DFMS
3.1.7.5 Ensure That Payee Information Is Accurate
  • Contract data
  • Invoice/credit memo data
  • Vendor data
RCM-F RCM-F

CF, FIN,

RCM-A

RCM-A DFMS
3.1.7.6 Ensure That Financial Coding Is Correct
  • Acceptance of deliverables data
  • Chart of Accounts
  • Contract data
  • Financial coding
  • Invoice/credit memo data
RCM-F RCM-F

CF, FIN,

RCM-A

RCM-A DFMS
3.1.7.7 Verify That Relevant Regulations, Policies and Directives Were Followed
  • Acceptance of deliverables data
  • Contract data
  • Financial coding
  • Invoice/credit memo data
  • Policy instruments Note A
RCM-F RCM-F

AMS, CF,

FIN, RCM-A

RCM-A DFMS
3.1.7.8 Verify Accuracy of Transaction
  • Acceptance of deliverables data
  • Contract data
  • Financial coding
  • Invoice/credit memo data
RCM-F RCM-F AMS, CF, CM, FIN RCM-A DFMS
3.1.7.9 Resolve Discrepancies
  • Contract data
  • Deliverables receipt data
  • Invoice/credit memo data
  • Vendor data
RCM-F RCM-F AMS, CM, FIN, PWGSC-AB, RCM-A RCM-A, FIN DFMS
3.1.7.10 Exercise or Obtain Authority
  • Certification authority
  • Delegation documents
  • Expenditure initiation authority
  • Transaction authority
RCM-F RCM-F CF, CM RCM-A DFMS

Note A: The authoritative source for most policy instruments is outside of the DFMS.

The Manage Payments subprocess group completes the Manage Procure to Payment business process and involves the performance of quality assurance activities where applicable, exercising payment authorization pursuant to section 33 of the FAA, completing and submitting payment requisitions, and finalizing payments.

5.7.1 Perform Payment Authority (subprocess 3.1.8)

Perform Payment Authority starts with the receipt of a request for payment. Quality assurance is performed by financial services as part of payment authorization pursuant to section 33 of the FAA. Figure 11 depicts the Level 3 process flow for Perform Payment Authority.

Figure 11: Perform Payment Authority (Subprocess 3.1.8) - Level 3 Process Flow

Figure 11: Perform Payment Authority (Subprocess 3.1.8) - Level 3 Process Flow
Text version: Figure 11: Perform Payment Authority (Subprocess 3.1.8) - Level 3 Process Flow

5.7.1.1 Activities

The request for payment is received by financial services (Activity 3.1.8.1 - Receive Request for Payment) for payment issuance. The request for payment includes the invoice data, payment details (date invoice received, deliverables acceptance date, due date, and amount of invoice), vendor data, payment type (regular or priority payment), and financial coding block.

As part of this subprocess, the financial officer delegated section 33 of the FAA authority performs quality assurance (Activity 3.1.8.2 - Perform Quality Assurance). The financial officer exercises payment authority and is responsible for certifying and ensuring that[54]:

  • There is auditable evidence demonstrating that account verification has taken place and has been certified by an individual with delegated financial signing authority, pursuant to section 34 of the FAA;
  • No payment is made when the payment:
    • Is not a lawful charge against the appropriation,
    • Will result in an expenditure exceeding the appropriation, or
    • Will result in an insufficient balance in the appropriation to meet the commitments charged against it;
  • When exercising payment authority:
    • All high-risk transactions are subject to a full review; and
    • A sample of medium- and low-risk transactions is selected, based on a sample selection methodology, and the most important aspects of each transaction are reviewed; and
  • Certification of payments pursuant to section 33 of the FAA is provided to the Receiver General (Standard Payment System).

If a discrepancy is found during this process, such as a duplicate payment, the payment requisition is returned to the responsibility centre manager - financial management for resolution.

The department is responsible for defining high, medium and low risks on the basis of its risk tolerance. Manage Post-Payment Verification (Business Process 8.1) describes the quality assurance requirements of section 33 of the FAA for sampling of medium- and low-risk transactions. Furthermore, the financial officer is responsible for requesting corrective action when a critical error is identified during the quality assurance process for payment authority.[55]

The next activity is to determine whether interest is due on the invoice and to calculate interest as appropriate, in accordance with the Directive on Payment Requisitioning and Cheque Control, using the Bank of Canada interest rate in effect for the previous month plus 3 per cent[56] (Activity 3.1.8.3 - Calculate Interest).

When calculating interest on late payment of an invoice, the date to be used is the latest of the following:

  1. The original invoice receipt date;
  2. The supplier's invoice date (to be used as default if (a) is not captured);
  3. The deliverables acceptance date; or
  4. The shipment date (to be used as default if (c) is not captured).

Under the Directive on Payment Requisitioning and Cheque Control, if parts of an invoice are in dispute, the parts that are not in dispute are to be paid within the due date period. Departmental invoice business processes should have the capacity to split supplier invoices into disputed items and non-disputed items, and to have adequate duplicate payment controls that can identify true duplicate payments versus multiple payments on the same supplier invoice.[57]

To ensure adequate separation of duties, the following functions are kept separate when responsibility is assigned to individuals involved in the expenditures process[58]:

  • Authority to enter into a contract (transaction authority) (Activity 3.1.5.4 - Exercise or Obtain Transaction Authority);
  • Certification of the receipt of goods and the provision of services pursuant to section 34 of the FAA (certification authority) (Activity 3.1.6.3 - Match Deliverables with Contract);
  • Determination of entitlement, verification of accounts, and preparation of requisitions for payment or settlement, pursuant to section 34 of the FAA (certification authority) (Manage Payables (Subprocess 3.1.7));
  • Certification of requisition for payment or settlement, pursuant to section 33 of the FAA (payment authority) (Activity 3.1.8.4 - Exercise FAA, Section 33 Certification, Including EAA Key); and
  • If the process or other circumstances do not allow such separation of duties, alternative control measures are implemented and documented.

Furthermore, par. 6.2.2 of the Directive on Delegation of Financial Authorities for Disbursements requires that "persons with delegated authority do not exercise the following:

  • Certification authority and payment authority on the same payment;
  • Spending, certification or payment authority for an expenditure from which they can directly or indirectly benefit (e.g., when the payee is the individual with financial signing authority or when the expenditure is incurred for the benefit of that individual)."[59]

Once the financial officer is satisfied that all requirements have been met, the payment requisition is certified pursuant to section 33 of the FAA and electronic authorization and authentication is performed (Activity 3.1.8.4 - Exercise FAA, Section 33 Certification [Including EAA Key]).

The payment requisition is then prepared and submitted to the Receiver General (Activity 3.1.8.5 - Submit Payment Requisition to Receiver General) in accordance with the:

The requisitions within the payment file contain full payment details: name, date, amount, delivery address, financial institution routing information, stub detail (if required) and the type of payment. Departments assign a unique requisition number to each batch of payments.[60]

The Receiver General Control Framework and the Receiver General Manual provide additional details and steps for ensuring that the payment requisition is properly submitted to the Receiver General. Authorized requisitions can be paid using several types of payment. When selecting the type of payment, there are many characteristics to consider.[61] Table 8 provides the relevant references as well as key characteristics of the most common types of payment.

Table 8. Common Types of Payment
Type of Payment Receiver General Control Framework [62] Characteristics
Regular payment Section 7.2
  • Payment file should contain full payment details
Priority payment Section 7.8
  • Priority payment indicator
  • Time-sensitive deadline
  • Pre-registration of payee information
  • Advance notice of payment due date
  • Adequate internal controls surrounding cheques
Direct deposit Section 7.2
  • Payment coding
  • Correct banking information
  • Recognized vendor
Large Value Transaction System Section 7.7
  • Pre-registration of payee information
  • Advance notice of payment 48 hours before due date
  • Due diligence for every payment

The following types of payment are not common, but may be used by departments in special situations:

Departmental bank accounts (DBAs): DBAs are limited to locations where normal facilities for the issuance of Receiver General cheques are not immediately available.[63]

Electronic data interchange (EDI): The payee's bank account should be EDI-compliant.[64]

5.7.1.2 Roles and Responsibilities

Financial services are responsible and accountable for managing payment requisitions and certifying payments (section 33 of the FAA).

Table 9 provides an overview of roles and responsibilities for this subprocess, using the Responsible, Accountable, Consulted, and Informed (RACI) approach. These roles and responsibilities are further described in Appendix D.

Table 9. Perform Payment Authority (Subprocess 3.1.8) - RACI
Activity Related Data Responsible Accountable Consulted Informed Authoritative Source

Legend

RG-BCM:
Receiver General - Banking and Cash Management Sector
CF:
corporate finance
CM:
corporate contracting and materiel
DFMS:
departmental financial and materiel management system
FIN:
financial services
RCM-A:
responsibility centre manager - acquisitions
RCM-F:
responsibility centre manager - financial management
3.1.8.1 Receive Request for Payment
  • Invoice data
  • Payment details
  • Vendor data
FIN FIN RCM-A, RCM-F RCM-A,  RCM-F DFMS
3.1.8.2 Perform Quality Assurance
  • Contract data
  • Delegation documents
  • Invoice data
  • Payment details
  • Receiving documents
  • Section 34 verification and certification
  • Specimen signature card
  • Vendor data
FIN FIN RCM-A,  RCM-F RCM-A,  RCM-F DFMS
3.1.8.3 Calculate Interest
  • Bank of Canada interest rate
  • Date deliverables received
  • Invoice data
FIN FIN CF RCM-F DFMS
3.1.8.4 Exercise FAA, Section 33 Certification (Including EAA Key)
  • Appropriation balance
  • Approved payment requisition
  • Delegation documents
  • Quality assurance results
  • Section 33 certification (signature)
FIN FIN CF   DFMS
3.1.8.5 Submit Payment Requisition to Receiver General
  • Electronic authorization and authentication section 33 details
  • Invoice data
  • Payment details
  • Vendor data
FIN FIN   RG-BCM DFMS

5.7.2 Issue Payment (Subprocess 3.1.9)

After payment authorization pursuant to section 33 of the FAA is exercised, the payment requisition is sent to the Receiver General for payment issuance. The payment requisition files are edited and validated, and payments are released by the Receiver General. The Receiver General produces a generic return file containing unique payment references for control purposes. At this time, the payment records should be updated[65] in the departmental financial and materiel management system. Manage Procure to Payment (Business Process 3.1) ends, and Manage Post-Payment Verification (Business Process 8.1) or Manage Financial Close (Business Process 8.2) begins.

In the unlikely event that an overpayment or a duplicate payment is issued and cashed by the vendor, two options should be considered: obtaining a credit memo to be applied to future invoices within the current fiscal year (section 29.1 of the FAA[66]) or receiving a refund from the vendor (Activity 3.1.6.4 - Resolve Issues with Vendor). The credit memo should be processed as described in Manage Payables (Subprocess 3.1.7). The refund should be processed as a receipt as described in Manage Revenue, Receivables and Receipts (Business Process 2.1).

Figure 12 depicts the Level 3 process flow for Issue Payment.

Figure 12: Issue Payment (Subprocess 3.1.9) - Level 3 Process Flow

Figure 12: Issue Payment (Subprocess 3.1.9) - Level 3 Process Flow
Text version: Figure 12: Issue Payment (Subprocess 3.1.9) - Level 3 Process Flow

5.7.2.1 Activities

The Department of Public Works and Government Services uses the Standard Payment System (SPS) to issue Receiver General payments in Canadian and foreign currencies (Activity 3.1.9.1 - Issue Payment) and to process interdepartmental settlements (IS); the latter is addressed in Manage Interdepartmental Settlements (Business Process 2.2). All program, accounts payable and compensation payments are issued by the Receiver General on behalf of federal departments and are drawn from the Consolidated Revenue Fund. [67] The SPS is an integrated system, with various components and menus that incorporate the entire payment/document process.[68]

The following summarizes the SPS payment processing steps.[69]

Edit and Verification: On receipt of the requisition and payment details, the SPS confirms the authenticity of the electronic signature on the requisition and then edits the input to ensure that the requisition and payment details match and show no signs of tampering.

Assignment of Payment Reference Numbers: Each edited payment is assigned a 12-digit payment reference number (PRN) prior to loading into the SPS database. Each PRN is linked to the SPS requisition number assigned by the department.

Notification to Departments: Departments receive notification by return file that their payments have been edited and loaded into the SPS. Departments record the payment details (PRN, payment date, etc.) in their own departmental financial management system for control and future reference purposes.

Online Enquiry and Updates: Returned payments are recorded in the SPS. Departments are responsible for handling returned payments and may request the cancellation or the issuance of duplicate payments through the SPS. The SPS allows enquiries at all points of the payment life cycle.

Post-payment processing, including cheque replacement and exceptions, is part of Manage Financial Close (Business Process 8.2).

Departments receive notification by return file that their payments have been released by the SPS. Departments process the return payment file (Activity 3.1.9.2 - Process Return Payment File) and subsequently finalize and record the payment details (PRN, payment date, etc.) in their departmental financial management system (Activity 3.1.9.3 - Finalize Payment).

Departments are required to regularly reconcile the payment requisitions submitted to the SPS with the payment return/notification file sent by the SPS. Departments are also required to regularly reconcile the control account balances in the departmental financial and materiel management system with the control account totals received daily from the Receiver General - General Ledger (RG-GL) based on control data received from the SPS. Control account balance reconciliation is part of Manage Financial Close (Business Process 8.2).

5.7.2.2 Roles and Responsibilities

The Banking and Cash Management Sector is responsible for issuing payments, and financial services is responsible for recording completed payments.

Table 10 provides an overview of roles and responsibilities for this subprocess, using the Responsible, Accountable, Consulted, and Informed (RACI) approach. These roles and responsibilities are further described in Appendix D.

Table 10. Issue Payment (Subprocess 3.1.9) - RACI
Activity Related Data Responsible Accountable Consulted Informed Authoritative Source

Legend

RG-BCM:
Receiver General - Banking and Cash Management Sector
FIN:
financial services
RCM-A:
responsibility centre manager - acquisitions
RCM-F:
responsibility centre manager - financial management
RG-SPS:
Receiver General and Standard Payment System
3.1.9.1 Issue Payment
  • Payment details
  • Payment return file
BCM RG-BCM FIN FIN RG-SPS
3.1.9.2 Process Return Payment File
  • Payment return file
  • Payment reference number
  • Requisition number
FIN FIN BCM   RG-SPS
3.1.9.3 Finalize Payment
  • Payment details
  • Payment return file
  • Payment reference number
  • Requisition number
FIN FIN BCM RCM-A,  RCM-F RG-SPS

Appendix A. Definitions

The following definitions apply to this guideline and reflect common definitions used in Treasury Board policies, standards, directives, guides and tools.

Account verification and certification:

Account verification provides a means to ensure the following:

  • That the work has been performed;
  • That goods have been supplied or services have been rendered;
  • That relevant contract or agreement terms and conditions have been met;
  • That the transaction is accurate; and
  • That all authorities have been complied with.

As required by the Financial Administration Act, all payments and settlements are to be certified pursuant to sections 33 and 34. Financial signing authorities are to be exercised according to the requirements of the Financial Administration Act, the Directive on Delegation of Financial Authorities for Disbursements, and departmental delegation documents.[70]

For further description of these requirements, consult the Treasury Board Directive on Account Verification.

Accountable - RACI:

Within the context of the RACI tables, the role that can attest to the truth of the information or decision and is ultimately accountable for the completion of the activity. There must be exactly one resource accountable for each activity.

Activity:

An elaboration on a subprocess appearing in a Level 3 business process flow. See also Process, Subprocess.

Authoritative source - RACI:

Within the context of the RACI tables, the system (or container) that holds the official version of the information or decision. The authoritative source can be automated or manual.

Certification authority:

The authority, pursuant to section 34 of the Financial Administration Act, to certify, before payment, contract performance and price, entitlement or eligibility for the payment.[71]

Cluster group:

A collective of departments working together to promote and implement business-driven and standardized solutions for interoperable financial and materiel management in the Government of Canada.[72]

Commitment accounting:

The recording of obligations to make future payments at the time they are planned and before the time services are rendered and billings are received. Such obligations may represent contractual liabilities, as is the case when purchase orders or contracts for goods or services are issued. Commitments are recorded individually. When it is impractical to formally record commitments individually (e.g., low-value transactions), the organization's procedures will be designated to identify these instances and describe how they will be accounted for.[73]

Commitment authority:

The authority that carries out one or more specific functions related to the control of financial commitments as required by the Directive on Expenditure Initiation and Commitment Control.[74] Commitment authority is delegated in writing to departmental officials by the deputy head (or equivalent) for ensuring that there is a sufficient unencumbered balance available before entering into a contract or other arrangement. Note that subsection 32(2) of the Financial Administration Act applies.

Commitment control:

Consists of established procedures that prevent an organization from entering into a contract or any other arrangement that provides for a payment unless there is enough money available in that year's appropriation to discharge the debt that is incurred during that fiscal year.[75]

Consulted - RACI:

Within the context of the RACI tables, the role that is required to provide accurate information or a decision for an action to be completed. There is typically a two-way communication between those consulted and the responsible party.

Departmental financial and materiel management system (DFMS):

A system whose primary objectives are to:

  • Demonstrate compliance by the government with the financial authorities granted by Parliament;
  • Comply with the government's accounting policies;
  • Inform the public through departmental financial statements;
  • Provide financial and materiel information for management and control;
  • Provide information for economic analysis and policy formulation;
  • Meet central agency reporting requirements; and
  • Provide a basis for audit.[76]
Expenditure initiation authority:

The authority to incur an expenditure or to make an obligation to obtain goods or services that will result in the eventual expenditure of funds. This authority includes the decision to hire staff, to order supplies or services, to authorize travel, relocation or hospitality, or to enter into some other arrangement for program purposes.[77]

Financial Administration Act (FAA):

Sets out a series of fundamental principles on the manner in which government spending may be approved, expenditures can be made, revenues can be obtained, and funds can be borrowed.[78]

Financial authorities:

Consist of certification authority and payment authority.[79]

Financial management system (FMS):

Any combination of business processes (end-to-end, automated and manual), procedures, controls, data and software applications, all of which are categorized as either departmental financial and materiel management systems, or program systems and central systems that produce financial information and related non-financial information.[80]

Financial management systems are used for:

  • Collecting, processing, maintaining, transmitting and reporting data about financial events and maintaining accountability for the related assets, liabilities and equity;
  • Supporting financial management, planning, budgeting and decision-making activities;
  • Accumulating and reporting cost information; or
  • Supporting the preparation of internal and external reports, such as departmental financial statements and input to the Public Accounts of Canada.[81]
Informed - RACI:

Within the context of the RACI tables, the role that is notified of the information or decision after the decision is made or the activity is completed. There is typically a one-way communication from the responsible (or accountable) party to those informed.

Level 1:

A graphical business process representation of Government of Canada financial management that applies to all functional domains and cross-functional areas.

Level 2:

A one-page aggregated business process flow that is relevant to the whole or part of a functional domain. This process description is aimed at the executive level.

Level 3:

A business process flow that provides more detail to a Level 2 subprocess through identification of activities, while remaining common to all departments and system-independent.

Process:

A function that is fully described by a Level 2 business process flow. It is elaborated at Level 2 through definition of subprocesses. See also Activity, Subprocess.

Project authority:

An individual with authority to make decisions on matters concerning the technical content of the work under the contract. In some departments the project authority is also known as the technical authority.

RACI analysis:

An analysis that describes the roles and responsibilities of various teams or individuals in delivering or contributing to a process activity. The RACI approach divides tasks into four participatory responsibility types (Responsible, Accountable, Consulted, and Informed), which are then assigned to different roles in the process.

Record of commitments:

The deputy head or other person charged with the administration of a program for which there is an appropriation by Parliament or an item included in Estimates then before the House of Commons shall, as the Treasury Board may prescribe, establish procedures and maintain records respecting the control of financial commitments chargeable to each appropriation or item.[82]

Related data - RACI:

Within the context of the RACI tables, the data sets that are typically created or reviewed as part of the activity.

Responsibility centre manager - acquisitions (RCM-A):

In this role, the individual defines requirements for goods and services, participates in the selection of a vendor, and monitors contract performance in accordance with departmental delegation. Due consideration must be given to adequate separation of duties in the whole process.[83]

Responsibility centre manager - financial management (RCM-F):

In this role, the individual:

  • Exercises delegated authorities to initiate expenditures;
  • Is accountable for commitment control;
  • Exercises transaction authority to enter into contracts;
  • Exercises section 34 of the FAA certification authority; or
  • Is accountable for the account verification.

Due consideration must be given to adequate separation of duties in the whole process.[84]

Responsible - RACI:

Within the context of the RACI tables, the role that records the information or decision or does the work to complete the activity, relying on the information from those consulted or accountable. There can be multiple roles responsible.

Section 32 of the Financial Administration Act [85] :

Includes the requirements for commitment control and record of commitments.

Section 33 of the Financial Administration Act [86] :

Requires that financial officers with delegated section 33 payment authority confirm, before releasing payment, that the expense is a lawful charge against the appropriation (including assurance that value has been received) and that the payment would not result in an expenditure in excess of the appropriation or reduce the balance available in the appropriation to an insufficient level to meet the commitments charged against it. Section 33 authority can be delegated to a position other than the chief financial officer of the department. In such cases, the chief financial officer, who is responsible for the overall quality of financial management, remains entirely responsible for the effectiveness and efficiency of the individual exercising that authority.

Section 34 of the Financial Administration Act [87] :

Contains the requirements for account verification and certification. Before a payment is made for goods or services received, the responsible departmental official must certify that the performance of the work, the supply of the goods, or the rendering of services complies with the terms and conditions of the contract, and that the price charged is in accordance with the contract or, in the absence of a contract, is reasonable. See also Account verification, Certification.

"Should be" model:

The Government of Canada process that reflects current legislation and policy frameworks.

Spending authority:

Consists of three elements: expenditure initiation authority, commitment authority and transaction authority.

Subprocess:

An elaboration on a process appearing in a Level 2 business process flow. A subprocess is further elaborated at Level 3 through definition of activities. See also Activity, Process.

Subprocess group:

A logical grouping of subprocesses that assists in the explanation of the overall process.

Transaction authority:

The authority to enter into contracts including acquisition card purchases[88] (may be referred to as contracting authority in department delegation documents).

Appendix B. Abbreviations

AMS
departmental asset/materiel management services
CF
departmental corporate finance
CM
departmental corporate contracting and materiel
DBA
departmental bank account
DFMS
departmental financial and materiel management system
EAA
electronic authorization and authentication
EDI
Electronic Data Interchange
FAA
Financial Administration Act
FIN
departmental financial services
FMS
financial management system
IS
interdepartmental settlement
IT
information technology
PODD
payment on due date
PRN
payment reference number
PWGSC-AB
Department of Public Works and Government Services - Acquisitions Branch
RCM-A
responsibility centre manager - acquisitions
RCM-F
responsibility centre manage - financial management
RG-BCM
Receiver General - Banking and Cash Management Sector
RG-GL
Receiver General - General Ledger
RG-SPS
Receiver General - Standard Payment System
SCP
departmental strategic and corporate planning
SPS
Standard Payment System

Appendix C. Methods of Analysis Used in This Guideline

Departments that have already documented business processes and key controls/control frameworks for their financial business processes can validate their work by comparing their processes against the appropriate guidelines.

Departments that have not yet documented business processes or key controls/control frameworks for their financial business processes can accelerate and validate their work by using the guidelines and common business process model documents as a starting point for the development of control-focused documentation that is both department and system-specific.

The objective of this guideline is to provide information to the business user (as opposed to the more common objective of supporting a systems development exercise). Through its analysis, this guideline recognizes five levels of detail for any financial management business process.

Process Model Levels

As illustrated in Figure 13, the Level 1 model represents the highest level and least detailed view of the financial management business process. It provides a graphical business process representation of financial management in the Government of Canada that applies to all functional domains and cross-functional areas.

Figure 13. Level 1 Model of Financial Management

Figure 13. Level 1 Model of Financial Management
Text version: Figure 13. Level 1 Model of Financial Management

This Level 1 model provides an over-arching context for all financial management in the Government of Canada and can be applied to the following domains:

  • Planning, Budgeting, Forecasting;
  • Revenue and Accounts Receivable;
  • Expenditures and Accounts Payable;
  • Materiel/Finance Interactions;
  • Human Resources/Finance Interactions;
  • Transfer Payments;
  • Common Data;
  • Integration; and
  • Results and Performance Reporting.

The Manage Procure to Payment business process falls within the Expenditures and Accounts Payable functional domain.

The scope of a Level 2 process is a one-page business process flow diagram that describes all or part of a functional domain. This process description is aimed at the executive level. It is elaborated at Level 2 through definition of subprocesses. Some subprocesses on Level 2 diagrams will be used for more than one business process, to reflect integration points between business processes.

A Level 3 business process flow is aimed at the process specialist level and provides more detail to a Level 2 subprocess through identification of activities, while remaining common to all departments and system-independent.

Once defined, departments, agencies and cluster groups can tailor the Level 3 descriptions to address organizational needs and system-specific or system-dependant concerns. These very detailed business processes (i.e., Level 4 and Level 5) are considered unique to departments and systems and are outside the scope of this guideline.

Process Diagrams

Process diagrams are used to describe processes (Level 2) and subprocesses (Level 3). The symbols used are as follows:

Start and End

Symbol found on Figures: Start of financial management business process.Start of financial management business process.

Symbol found on Figures: End of financial management business process.End of financial management business process.

Processes and Activities

Symbol found on Figures: A subprocess group (Level 2 grouping of subprocesses).A subprocess group (Level 2 grouping of subprocesses).

Symbol found on Figures: A subprocess (Level 2) or activity (Level 3). A subprocess (Level 2) or activity (Level 3).

Symbol found on Figures: A process or activity that is outside the
scope of the financial management business processes. A process or activity that is outside the scope of the financial management business processes.

Gateways
Parallel: All subprocesses or activities must be completed.

Symbol found on Figures: Parallel: All subprocesses or activities must be completed.

Symbol found on Figures: Inclusive or: One or more subprocesses or activities must be selected and completed.Inclusive "or": One or more subprocesses or activities must be selected and completed.

Symbol found on Figures: Exclusive or: Only one of the
subprocesses or activities must be selected and completed.Exclusive "or": Only one of the subprocesses or activities must be selected and completed.

Connectors

Symbol found on Figures: Connection to a subprocess or activity on
the same page. Connection to a subprocess or activity on the same page.

Symbol found on Figures: Connection to a subprocess or activity defined in financial management business processes. Connection to a subprocess or activity defined in financial management business processes.

Symbol found on Figures: Connection to a subprocess that is outside the scope of financial management business processes. Connection to a subprocess that is outside the scope of financial management business processes.

Decisions

Symbol found on FiguresDecision.

Inputs and Outputs

Symbol found on Figures Key input to, or output from, the subprocess or activity.

Other Symbols Used

Symbol found on Figures Annotation.

RACI Tables

This guideline uses a Responsible, Accountable, Consulted, and Informed (RACI) approach to describe how the roles and responsibilities apply to given subprocesses.

This approach, depicted in the table below, identifies related data, the role assignment, and the applicable authoritative source.

Sample RACI Analysis Table
ActivityRelated DataResponsibleAccountableConsultedInformedAuthoritative Source
       
  • Activity: This refers to the number and the title of the activity within the subprocess.
  • Related data: Data that are typically created or reviewed as part of the activity, and listed in alphabetical order.
  • Roles and Responsibilities: For the purpose of this guideline, a role is an individual or a group of individuals responsible, accountable, consulted or informed for an activity. Because of differences among the various departments and agencies, the role may not correspond to a specific position, title or organizational unit. A detailed description of roles and responsibilities is provided in Appendix D.
    • Responsible: A role that records the information or decision or does the work to complete the activity, relying on the information from those consulted or accountable. There can be multiple roles responsible.
    • Accountable: A role that can attest to the truth of the information or decision and that is accountable for the completion of the activity. There must be exactly one role accountable for each activity.
    • Consulted: A role that is required to provide accurate information or a decision for an activity to be completed. There may or may not be a consulted role, and consultation may or may not be mandatory. When consultation does occur, there is typically a two-way communication between those consulted and the responsible party.
    • Informed: A role that is notified of the information or decision after the decision is made or the activity is completed. There may or may not be an informed role, and informing the role may or may not be mandatory. There is typically a one-way communication from the responsible or accountable party to those informed.
    • Authoritative Source: The system (or container) that holds the official version of the information or decision resulting from the activity. The authoritative source can be automated or manual. Explanations of the authoritative source abbreviations are provided in Appendix B.

Note 1: Occasionally, roles and responsibilities can change, depending on the scenario involved. In such cases, 'S(x)' notation is used to show the differences in roles for each scenario.

Note 2: The abbreviations used in RACI tables are listed in Appendix B.

Appendix D. Detailed Description of Roles and Responsibilities

This appendix describes in detail the organizational roles and responsibilities identified for Business Process 3.1- Manage Procure to Payment. For the purpose of this guideline, a role is an individual or a group of individuals responsible, accountable, consulted or informed (RACI) for an activity. Because of differences among the various departments and agencies, the role may not correspond to a specific position, title or organizational unit. The organizational roles are grouped by stakeholder category as shown in Figure 14.

Figure 14. Roles Involved in Manage Procure to Payment

Figure 14. Roles Involved in Manage Procure to Payment
Text version: Figure 14. Roles Involved in Manage Procure to Payment

The following organizational roles act in support of legislation, such as the Financial Administration Act (FAA) and the Federal Accountability Act, and define policy and/or process that must be followed.

Office of the Comptroller General - Financial Management Sector

The Financial Management Sector supports the Comptroller General of Canada in bringing rigorous standards to financial management, oversight, and reporting across the government. The sector plays a lead role in enhancing, integrating, and standardizing business systems, policies, processes, and data to make quality information available for decision making and analysis. Key roles include:

  • Financial management;
  • Financial oversight; and
  • Financial reporting.

Led by the Assistant Comptroller General, the Financial Management Sector works to bring excellence and innovation to the government's financial management policy suite. It also helps improve the quality of information available for enterprise-wide decision making and analysis. These activities are accomplished through ongoing efforts to enhance integration and standardization of business systems, policies, processes, and data.[89] Key activities of the sector are described on the website of the Office of the Comptroller General, Corporate Structure and Activities.

Office of the Comptroller General - Acquired Services and Assets Sector

The Acquired Services and Assets Sector supports the Comptroller General of Canada in strengthening the management of real property and materiel, investment planning, project management and procurement across the government. The sector promotes excellence in resource stewardship, governance, and public sector accountability by providing policy advice and support to the Treasury Board in the following areas:

  • Procurement;
  • Investment planning and project management;
  • Real property and materiel; and
  • Development of concerned communities of public servants.

Led by the Assistant Comptroller General, the Acquired Services and Assets Sector provides leadership, expertise and innovation to the government's procurement, investment planning, project management, real property, and materiel policy suites. It also helps improve the quality of information available for enterprise-wide decision making and analysis. These activities are accomplished through ongoing efforts to enhance the integration and standardization of policies, processes, training and data.

The sector works closely with the Procurement, Materiel Management and Real Property communities and stakeholders to develop and implement management strategies, enabling infrastructures, programs and tools that support the communities in fulfilling their roles related to the delivery of programs and services.[90] Key activities of the sector are described on the website of the Office of the Comptroller General, Corporate Structure and Activities.

Deputy Head

The deputy head is responsible for[91]:

  • Providing leadership by demonstrating financial responsibility, transparency, accountability, and ethical conduct in financial and resources management;
  • Managing the department and departmental programs, in compliance with legislation, regulations, Treasury Board policies, and financial authorities;
  • Assuming overall stewardship responsibilities for the integrity of the department's financial management capabilities, and the department's capacity to meet the needs of the department and the government;
  • Ensuring that the strategic planning process gives due consideration to financial risks, financial sustainability, governance, resource allocation and performance monitoring; and
  • Establishing a sound financial management governance structure that fosters prudent stewardship of public resources in the delivery of the mandate of the organization, consistent with the Policy on Management, Resources, and Results Structures and the Management Accountability Framework.

The deputy head is also responsible for[92]:

  • Establishing procedures and maintaining records respecting the control of financial commitments, pursuant to section 32 of the FAA.
  • Ensuring the establishment, maintenance, monitoring and review of the departmental system of internal control to mitigate risks in the following broad categories[93]:
    • Effectiveness and efficiency of programs, operations and resource management, including safeguarding of assets,
    • Reliability of financial reporting, and
    • Compliance with legislation, regulations, policies and delegated authorities.

The deputy head is accountable to his or her respective minister and to the Treasury Board for the management of assets and acquired services in departments.[94]

In relation to required training and of relevance to this guideline, the deputy head is responsible for ensuring that[95]:

  • First-time managers at all levels successfully complete the required training so that they meet the Standards on Knowledge for Required Training prior to delegating authorities;
  • Existing managers and executives validate their knowledge of their legal responsibilities in order to maintain their delegated authorities; and
  • Functional specialists successfully complete training and/or validate their knowledge of their professional and legal responsibilities.

Department of Public Works and Government Services - Acquisitions Branch

Section 9 of the Department of Public Works and Government Services Act gives the Minister of Public Works and Government Services exclusive responsibility for the procurement of all goods as described in the Act. Other departments and agencies may procure goods only when their own legislation specifically permits or when an appropriate delegation of authority has been made by the Minister of Public Works and Government Services.

Under the Common Services Policy, departments and agencies must obtain goods and certain services from common service organizations unless procurement authority has been delegated to the department or agency through other Treasury Board policies, by specific Treasury Board exemption, by specific departmental legislation, or in the provisions of the Common Services Policy.

The branch develops, implements and maintains policies, tool kits and standards to assist departments and agencies and in support of its role as the procurement authority for the federal government.

Receiver General - Accounting, Banking and Compensation Branch

The Receiver General for Canada is a central government service, supporting both the Treasury and the Accountant functions of the federal government. The mandate of the Receiver General is to safeguard the integrity of the Consolidated Revenue Fund and the Accounts of Canada. The Department of Public Works and Government Services Act designates the Minister of Public Works and Government Services as the Receiver General for Canada and the Deputy Minister as the Deputy Receiver General for Canada.[96]

The authorities carried out by the Receiver General are identified in various sections of the FAA and entail the following responsibilities:

  • Ensuring that all monies owing to the government are deposited into bank accounts managed by the Receiver General;
  • Controlling the issue and redemption of all payments out of the Consolidated Revenue Fund;
  • Maintaining the Accounts of Canada;
  • Publishing the Monthly Statement of Financial Operations; and
  • Preparing annual consolidated audited Public Accounts.

In addition, the Receiver General manages the Receiver General treasury, accounting and reporting systems, which are accessed by federal departments and agencies in fulfilling their accountabilities to the public and Parliament, whether through payment issuance, revenue collection or accounting and reporting. Directives and guidance related to accounting, payment and deposit issues are provided to federal departments and agencies through Receiver General Directives, the Receiver General Manual, and Receiver General Information Notices. These functions are performed by the Banking and Cash Management Sector and the Central Accounting and Reporting Sector of the Accounting Banking and Compensation Branch of the Department of Public Works and Government Services.

The following organizational roles act in response to financial management (Office of the Comptroller General - Financial Management Sector and deputy head) policy and process requirements.

Corporate Finance

The chief financial officer, with the support of the corporate finance role, provides stewardship with respect to legislation, regulations, policies, directives, and standards related to financial management.

Corporate finance responsibilities of relevance to the scope of the Manage Procure to Payment business process involve:

  • Developing, communicating and maintaining the departmental financial management framework and providing leadership and oversight on the proper application and monitoring of financial management across the department[97];
  • Ensuring that robust risk-based account verification procedures are in place, in compliance with the FAA[98];
  • Establishing and communicating clear responsibilities for holders of positions with delegated financial authorities, and monitoring adherence to these responsibilities[99];
  • Providing a challenge function on financial management matters and use of public resources across the department[100]; and
  • Providing functional guidance, direction and advice to managers across the department on matters of financial management.[101]

Strategic and Corporate Planning

The strategic and corporate planning role is responsible for coordinating input into the departmental strategic, integrated, and operational planning processes defined by the department, and for supporting central agency requirements, such as those under the Management, Resources, and Results Structure and the Management Accountability Framework, and required parliamentary reports, such as the Report on Plans and Priorities and the Departmental Performance Report. It is recognized that the functional ownership will vary, and strategic and corporate planning may be part of either the finance or policy organization in a department or agency.

The deputy head is responsible for "ensuring the strategic planning process gives due consideration to financial risks, financial sustainability, governance, resource allocation and performance monitoring."[102] The chief financial officer is responsible for leading the financial component of the departmental planning process on behalf of the deputy head (unless otherwise delegated).[103] The applicable senior department managers (i.e., managers reporting directly to a deputy head) are collectively responsible for overall input into the strategic and integrated planning processes.

Financial Services

The financial services role ensures the day-to-day application and practical implementation of financial controls. This role fulfills financial management responsibilities for departmental transactions (revenues, expenses, assets and liabilities), vendor and client transactions. Within financial services, the finance officer delegated the authority under section 33 of the FAA is responsible for providing assurance on the adequacy of account verification and certification processes pursuant to section 34 of the FAA and related financial controls, and for ensuring adherence to the requirements of the Payments and Settlements Requisitioning Regulations,1997, to ensure accurate and timely payment of transactions.

Responsibility Centre Manager - Financial Management

For the purpose of this guideline, a responsibility centre manager role can represent either an individual responsibility centre or a group of responsibility centres, as would be the case for senior managers.

The manager also has an acquisition role, as described below in "Contracting and Materiel Management." Due consideration should be given to adequate separation of duties between individuals in the Manage Procure to Payment process.[104]

The role of responsibility centre manager - financial management (the manager) has been delegated the authority to initiate expenditures and to enter into some contracts (transaction authority). The manager is responsible and accountable for recording and managing commitments in accordance with department-specific policy so that the department does not exceed the appropriation.[105]

In completing the certification and verification requirements of section 34 of the FAA, the manager must ensure the timely performance of account verification and verify the correctness of the payment requested.[106] Additional details on the manager's responsibilities for account verification are described in Manage Payables (Subprocess 3.1.7).

In fulfilling training and learning responsibility and in order to have the necessary knowledge of legal responsibilities to effectively exercise their delegated authorities, managers at all levels should successfully complete the required training so that they meet the Standards on Knowledge for Required Training.[107] Managers and executives with existing delegated authorities must validate-at least every five years[108]-their knowledge of their legal responsibilities in order to maintain their delegated authorities.

The following organizational roles act in response to policy and process requirements relating to the management of real property and materiel, investment planning, project management and procurement across the government. These roles are not financial in nature, but are described in order to provide context and to link the financial processes.

Corporate Contracting and Materiel

The corporate contracting and materiel management role supports the deputy head by[109]:

  • Providing a materiel management framework that:
    • Sets out clear accountability and decision-making regimes consistent with organizational resources and capacity, and
    • Supports timely, informed materiel management decisions and the strategic outcomes of departmental programs in the monitoring and reporting on the efficient management of public assets and acquired services in their departments;
  • Ensuring that:
    • A control and oversight strategy is in place to monitor adherence to materiel management and contracting policies and associated directives of the Treasury Board Secretariat,
    • Performance relative to the obligations under Treasury Board policies and associated directives is measured and documented,
    • The management framework for materiel is reviewed as an ongoing component of departmental risk-based audit planning, and
    • Departmental records, plans, policy instruments or any other required information is provided to the Treasury Board Secretariat upon request, in support of the Secretariat's monitoring responsibilities;
  • Meeting government-wide reporting requirements including:
    • An annual report on all contracting activities (see Appendix K of the Treasury Board Contracting Policy for details),
    • Obligations under the North American Free Trade Agreement, the World Trade Organization - Agreement on Government Procurement, and the Agreement on Internal Trade to report contracting statistics. These statistics are collected from the contract coding information provided by contracting officers for each procurement, accurate coding of the applicable agreements, goods, services or construction code, tendering method, limited tendering reasons and contract award details is essential to demonstrate the federal government's compliance with the agreements to the other countries or provinces that are parties to the agreements,
    • Quarterly public disclosure, within one month after the close of each quarter, of contracts entered into or amendments valued at over $10,000, and
    • Quarterly public disclosure, within 45 days after the close of each quarter, of contracts issued in areas covered by Comprehensive Land Claims Agreements;
  • Providing overall direction, advice and services, in collaboration with financial management and program areas of the department, related to procurement and contracting, including requirements, under the:

Asset/Materiel Management Services

The Asset/materiel management services role provides contracting and materiel services for a department. The Government of Canada's definition of asset/materiel management services[110] identifies three categories of services in departments and agencies. These services normally occur as a result of a financial transaction (purchases, inventory, asset accounting) and may be directly associated with an employee or position. Administrative officers and staff provide the following:

  • Real property services to ensure that real property is managed in a sustainable and financially responsible manner throughout its life cycle, to support the cost-effective and efficient delivery of government programs. Real property is defined as any right, interest or benefit in land, which includes mines, minerals and improvements on, above or below the surface of the land.
  • Materiel services to ensure that materiel can be managed by departments in a sustainable and financially responsible manner to support the cost-effective and efficient delivery of government programs. Materiel is defined as all movable assets, excluding money and records, acquired by Her Majesty in right of Canada. Materiel management entails all activities necessary to acquire, hold, use and dispose of materiel, including the notion of achieving the greatest possible efficiency throughout the life cycle of materiel assets; and
  • Acquisition services (formerly Procurement Services) to acquire a good or service to fulfill a properly completed request (including a complete and accurate definition of requirements and certification that funds are available) until entering into or amending a contract.

Under the Manage Procure to Payment business process, asset/materiel management services is responsible for:

  • Facilitating program delivery and the fulfillment of departmental mandates through either advice or direct accountability for providing procurement services in an organization, as well as development and implementation of the procurement systems, processes, and procedures;
  • Providing advice to program managers and deputy heads on potential improvements to the procurement systems and processes;
  • Conducting procurement in accordance with departmental priorities; applicable statutes, regulations and policies; and departmental management controls; and
  • Exercising control commitments (on behalf of the manager), if delegated.

Responsibility Centre Manager - Acquisitions

For the purpose of this guideline, a responsibility centre manager role can represent either an individual responsibility centre or a group of responsibility centres, as would be the case for senior managers.

The manager also has a financial management role, as described earlier in "Financial Management." Due consideration should be given to adequate separation of duties between individuals in the Manage Procure to Payment process.[111]

In some cases, the responsibility centre manager - acquisitions (the manager) is responsible for:

  • Defining requirements for goods and services;
  • Supporting contracting activities for goods and services;
  • Respecting government statutes, regulations, and policies, as well as the departmental management control framework and associated accountability based on the manager's specific delegated contracting authorities; and
  • Monitoring the operation and effectiveness of the procurement and contracting process on an ongoing basis, with particular attention to effective planning, and ensuring that essential requirements to be delivered through contracts are well defined and that FAA obligations pursuant to sections 32 and 34 of the FAA are met.

The following organizational roles provide a central service to most federal government departments.

Department of Public Works and Government Services - Acquisitions Branch

The Acquisitions Branch[112] provides procurement and contracting services to all government departments and agencies covered by the Common Services Policy.

The Acquisitions Branch provides a number of services to departments and agencies, assisting at each stage of the supply cycle, and offers tools that simplify and accelerate the acquisition of goods and services. Responsibilities in the context of this guideline are as follows:

  • Ensuring that the government exercises due diligence and maintains the integrity of the procurement process;
  • Providing departments with comprehensive services for acquiring complex and commercial goods and services. Purchases range from office supplies to military ships to security systems;
  • Providing access to all of the procurement services and tools available through the Department of Public Works and Government Services, including Standing Offers and Supply Arrangements for goods and services, and all procurement publications and documents;
  • Helping to identify requirements and carrying out all steps in the procurement process quickly and easily. These activities can include:
    • Identifying the goods or services to be purchased,
    • Selecting the most effective procurement approach,
    • Developing appropriate evaluation criteria,
    • Calling for, receiving and evaluating bids,
    • Negotiating contracts,
    • Debriefing unsuccessful bidders, and
    • Administering contracts;
  • Providing operational advice and developing innovative electronic approaches; and
  • Providing a broad range of training, seeking out innovative services and alternative forms of service delivery, and managing quality assurance, performance review and performance indicators.

Receiver General - Banking and Cash Management Sector

The Receiver General supports the government-wide treasury function through the receipt, transfer, holding and disbursement of public money, and the redemption and settlement of all payments. These responsibilities are carried out through some of the main activities listed below[113]:

  • Issuing Receiver General payments, redemption and validation of payment instruments, and employment insurance warrants;
  • Negotiating or tendering all government banking services and arranging for the required facilities related to the receipt of monies to the Consolidated Revenue Fund;
  • Processing, monitoring and controlling public money on behalf of the Government of Canada;
  • Managing the Government Banking System and the Standard Payment System;
  • Publishing the bank rate established by the Bank of Canada;
  • Calculating the payment on due date interest rate; and
  • Providing advice and direction on vendor payment and deposit-related issues as well as on accounting and reporting issues.

Appendix E. Alternative Process Flow for Acquisition Cards

The Directive on Acquisition Cards defines acquisition cards as:

Charge cards that provide a convenient and practical method of procuring and paying for goods and services while maintaining financial control. They simplify the process of procuring and paying for goods and services thereby generating savings in procurement and expenditure processing. Procurements using an acquisition card are subject to the requirements of contracting policies and various Acts, Regulations, trade agreements and Comprehensive Land Claim Agreements, as applicable.[114]

Furthermore, subsection 3.3 of the Directive states:

The use of acquisition cards is recommended for purchases of day to day expense items for standard maintenance, repair and operational goods and services, excluding large dollar purchases, complex transactions, fleet-related operating expenses, travel and capital assets. Although the use of an acquisition card is not mandatory, it is strongly encouraged when the purchase is within delegated transaction authority and it is efficient, economical and operationally feasible to do so.[115]

Acquisition cards are not to be used for most operating and maintenance expenses of fleet vehicles, for travel expenses, to obtain cash advances, or for interdepartmental transactions, with the exception of transactions with CORCAN.[116] In addition, there may be some restrictions set out by individual department-specific policies.

All operation and maintenance expenses on government vehicles are to be paid for using fleet credit cards, which are normally assigned to a single government vehicle.[117] This requirement ensures that all vehicle-related expenditures are captured and available to support negotiations of provincial tax discounts or exemptions and other negotiated fleet-related discounts.[118] The alternative process presented in this appendix is to be followed for purchases related to operation and maintenance expenses made using fleet credit cards linked to the vehicle in question.

The distribution and maintenance of the acquisition card accounts is excluded from the scope of this alternative process and is addressed in Manage Distribution and Maintenance of Acquisition Cards (Business Process 3.5).

Within the context of the Manage Procure to Payment business process, the use of acquisition cards still requires the completion of the various Manage Procure to Payment subprocesses, including:

The use of an acquisition card as a payment method should be identified in the terms and conditions of the contract. Table 11 provides a summary of how the various subprocesses apply to acquisition cards.

Table 11. Alternative Process Analysis for Acquisition Cards
Subprocess Applicable to Acquisition Cards?
3.1.1 Determine Requirements Yes
3.1.2 Determine/Exercise Expenditure Initiation Authority Yes
3.1.3 Verify Unencumbered Balance (Financial Administration Act (FAA), section 32) Yes-according to department-specific commitment policy
3.1.4 Manage Commitments (FAA, section 32) Yes-according to department-specific commitment policy
3.1.5 Manage Contracts Yes
3.1.6 Administer Contracts and Deliverables (part of section 34 of the FAA) Yes-includes paying the invoice with the acquisition card
3.1.7 Manage Payables (FAA, section 34) Yes - account verification and FAA section 34 certification are performed post-payment
3.1.8 Perform Payment Authority (FAA, section 33) Yes-for credit card company payment
3.1.9 Issue Payment
  • The vendor is paid using an acquisition card.
  • Credit card company payment is made using the Standard Payment System.

The alternative process for acquisition cards is a variation of the Manage Procure to Payment business process. The procurement process proceeds at a greater speed than the standard Manage Procure to Payment Process because several of the subprocesses are performed simultaneously. The most significant variation from the standard procurement process is the post-payment verification of section 34 of the FAA, which occurs after the payment of the acquisition card invoice/statement.[119] An overview of the alternative process is depicted in Figure 15.

Figure 15. Manage Procure to Payment - Alternative Level 2 Process Flow for Acquisition Cards

Figure 15. Manage Procure to Payment - Alternative Level 2 Process Flow for Acquisition Cards
Text version: Figure 15. Manage Procure to Payment - Alternative Level 2 Process Flow for Acquisition Cards

Note A: This symbol means that all three subprocesses should be completed before proceeding to the Manage Contracts subprocess group.

Note B: When the purchase is determined to be an asset, the cost of deliverables is an input to the following Materiel/Finance Interactions domain processes: Manage Other Capital Assets (Business Process 4.1), Manage Real Property (Business Process 4.2) and Manage Inventory (Business Process 4.3).

The subprocesses are further described below.

  • Determine Requirements (Subprocess 3.1.1): Based on the approved budget and approved plan, or an ad hoc requirement, the need for a good or service is identified.
  • Determine/Exercise Expenditure Initiation Authority (Subprocess 3.1.2): The manager requesting the requirement must ensure that he or she has been delegated the appropriate expenditure initiation authority, and exercise or obtain that authority.[120] Typically, this subprocess is performed concurrently with Verify Unencumbered Balance (Subprocess 3.1.3) and Manage Commitments (Subprocess 3.1.4).
  • Verify Unencumbered Balance (Subprocess 3.1.3): Before proceeding with the purchase, the manager needs to ensure that a sufficient unencumbered balance is available in an appropriation, prior to the organization entering into a contract or other arrangement.[121]
  • Manage Commitments (Subprocess 3.1.4): When sufficient unencumbered balances are available, a commitment is recorded and updated in accordance with department-specific policy. When it is impractical to formally record commitments individually (e.g., low-value transactions), the organization's procedures will be designated to identify these instances and describe how they will be accounted for.[122]
  • Manage Contracts (Subprocess 3.1.5): When making a purchase with an acquisition card, a cardholder enters into a contractual obligation with the vendor.[123] The cardholder must ensure that he or she has been delegated the appropriate transaction authority, and exercises the authority or obtains the approval of the individual with delegated transaction authority.[124]
  • Administer Contracts and Deliverables (Subprocess 3.1.6): The cardholder is responsible for the receipt and acceptance of deliverables (part of certification pursuant to section 34 of the FAA) and managing issues with the supplier. The supplier's invoice is paid using the acquisition card.
  • Perform Payment Authority (Subprocess 3.1.8): Payment authority pursuant to section 33 of the FAA is provided for the statement from the credit card company, on a department-wide basis.[125]
  • Issue Payment (Subprocess 3.1.9): The payment requisition for the statement from the credit card company is sent to the Receiver General for payment issuance. The payment requisition files are edited and validated, and payments are released by the Receiver General. The Receiver General produces a generic return file containing unique payment references for control purposes. The payment records should be updated in the departmental financial and materiel management system.
  • Manage Payables (Subprocess 3.1.7): The manager provides certification pursuant to section 34 of the FAA of the credit card statement for his or her acquisition card purchases, and attaches the supporting receipts. The process proceeds to Manage Post-Payment Verification (Business Process 8.1) and then to Manage Financial Close (Business Process 8.2).

The processes for the management and distribution of acquisition cards and fleet cards are described in Management and Distribution of Acquisition Cards (Business Process 3.4).

The roles and responsibilities for each subprocess are similar to those for the Manage Procure to Payment business process and are described in section 4 and Appendix D. Typically, corporate contracting and materiel, the Department of Public Works and Government Services - Acquisition Branch, and asset/materiel management would have limited to no involvement in the process when acquisition cards are used as a procurement method. However, these roles could be involved when acquisition cards are used as payment method.

There are also specific responsibilities for the deputy head, the responsibility centre manager - financial management, and the cardholder in relation to the management and use of acquisition cards as follows.

Deputy heads are responsible for establishing risk-based management practices and controls to ensure economical, efficient and secure use of acquisition cards.[126]

The responsibility centre manager - financial management is responsible for[127]:

  • Ensuring that there is a sufficient unencumbered balance available before entering into acquisition card transactions, pursuant to section 32 of the FAA;
  • Ensuring account verification is performed in accordance with the Directive on Account Verification; and
  • Certifying the cardholders' statements, at least monthly, pursuant to section 34 of the FAA.

The cardholder is responsible for[128]:

  • Obtaining sufficient and appropriate authorization, before making purchases, from the individual who has expenditure initiation and transaction authority, when the cardholder does not have formal delegated expenditure initiation or transaction authority;
  • Ensuring that he or she never exercises financial signing authority for the settlement of his or her own acquisition card statements; and
  • Providing evidence of approval of transactions and documentation to support all items in the monthly acquisition card statement.
Date Modified: