1.1 This directive takes effect on October 1, 2009.
1.2 It replaces the following:
2.1 This directive applies to departments as defined in section 2 of the Financial Administration Act. It also applies to agent Crown corporations for subsection 6.1.11 related to the sharing of debtor information.
2.2 Those portions of sections of this directive that provide for the Comptroller General to monitor compliance with this policy within departments and/or request departments take corrective action, do not apply with respect to the Office of the Auditor General, the Office of the privacy Commissioner, the Office of the Information Commissioner, the Office of the Chief Electoral Officer, the Office of the Commissioner of Lobbying, the Office of the Commissioner of Official Languages and the Office of the Public Sector Integrity Commissioner. The deputy heads of these organizations are solely responsible for monitoring and ensuring compliance with this policy within their organizations, as well as for responding to cases of non-compliance in accordance with any Treasury Board instruments that address the management of compliance.
3.1 This directive supports the objectives of the Policy on Internal Control by outlining the responsibilities of the chief financial officer and any other senior official designated by the deputy head for the prudent management of departmental accounts receivable.
3.2 Receivables are an important asset of the government that require prudent management. Across government, receivables involve billions of dollars and a wide range of transactions. Given this extensive scope, the sound management of receivables is vital to the government's achieving its overall objective of responsible fiscal management.
3.3 Because the efficient and effective management of receivables is dependent upon cooperation among departments, the sharing of knowledge and information, collection facilities (e.g., call centres), information technology, and sharing of best practices and procedures is encouraged.
3.4 The types of debts managed by departments that may need to be recognized and administered in the department's receivables management system are identified in the Guideline on Collection of Receivables.
3.5 This directive is to be read in conjunction with the Receipt and Deposit of Public Money Regulations, the Security for Debts Due to Her Majesty Regulations, Debt Write-off Regulations, and the Interest and Administrative Charges Regulations which provide the regulatory framework for the directive's requirements. Departments are to read it in conjunction with the Policy on Internal Control.
3.6 This directive is issued pursuant to section 7 and subsection 9(3) of the Financial Administration Act.
Definitions to be used in the interpretation of this directive are in the Appendix.
That all government accounts receivables are managed fairly, efficiently and effectively, while minimizing the risk of loss.
The chief financial officer or senior official designated by the deputy head as the lead official for the management of accounts receivable is responsible for the following:
6.1.1 Minimizing receivables, to the extent possible, in program design and delivery by requiring payment in advance or at the time that goods and services are provided by the department.
6.1.2 Identifying in advance the types of goods and services, the uses of facilities, and the rights and privileges that may be provided on credit.
6.1.3 Establishing, through a departmental credit policy, items that include the following:
6.1.4 Issuing, recording and reporting all receivable transactions accurately and promptly in the departmental accounts and the accounts of Canada.
6.1.5 Applying authorized interest and administrative charges. Note that the Interest and Administrative Charges Regulations apply.
6.1.6 Taking appropriate, timely and cost-effective collection actions, including the use of a set-off. Note that subsection 155(1) of the Financial Administration Act applies.
6.1.7 Establishing procedures for responsibility centre managers to ensure fair treatment of debtors:
6.1.8 Recommending to the minister and deputy head the classes of payments (e.g., tax refunds, GST rebates) that should be made available to other departments for set-off.
6.1.10 Seeking security for debts due to the Crown when it is good business practice to do so (refer to the Guideline on Security for Debts). Note that section 156 of the Financial Administration Act applies.
6.1.11 Ensuring that upon request of departments and agent Crown corporations, debtor information held by other departments or agent Crown corporations is shared with them (unless departmental or program legislation specifically provides otherwise). This requires that:
The chief financial officer is responsible for ensuring the following:
6.2.1 Internal controls for the administration of accounts receivable are established, and are in place and include, at a minimum:
6.2.2 Appropriate forms of payment are accepted, as supported by the Receiver General, for the settlement of accounts receivable.
6.2.3 Estimates for the allowance for doubtful accounts are developed according to the Policy on Allowances for Valuation of Assets and Liabilities.
6.2.4 Procedures are established to ensure that once an account receivable has been recorded in the departmental accounts, it is not removed from these accounts until the department has received full payment or has properly authorized a remission or other forgiveness, a write-off or a cancellation. If it becomes known in the future - after an account has been written off but not legally extinguished - that the debtor's financial position has improved and the debtor is capable of paying the debt, the account is reinstated and collected.
6.3.1 Chief financial officers are responsible for supporting their deputy head by overseeing the implementation and monitoring of this directive in their departments, bringing to the deputy head's attention any significant difficulties, gaps in performance or compliance issues and developing proposals to address them, and reporting significant performance or compliance issues to the Office of the Comptroller General.
6.3.2 The Comptroller General is responsible for monitoring departments' compliance with the requirements of this directive and conducting a review within five to eight years.
7.1 In instances of non-compliance, deputy heads are responsible for taking corrective measures within their organization with those responsible for implementing the requirements of this directive.
7.2 In support of the responsibility of deputy heads to implement the Policy on Internal Control and related instruments, chief financial officers are to ensure corrective actions are taken to address instances of non-compliance with the requirements of this directive. Corrective actions can include requiring additional training, changes to procedures and systems, the suspension or removal of delegated authority, disciplinary action, and other measures as appropriate.
7.3 Individuals are reminded that sections 76 to 81 (Civil Liabilities and Offences) of the Financial Administration Act as well as sections 121 (Frauds against the Government), 122 (Breach of Trust), 322 (Theft) and 380 (Fraud) of the Criminal Code may apply.
This section identifies other significant departments with respect to this directive. In and of itself, it does not confer an authority.
The Treasury Board Secretariat, Office of the Comptroller General is responsible for development, oversight and maintenance of this directive and for providing interpretative advice.
Please direct enquiries about this directive to your departmental headquarters. For interpretation of this directive, departmental headquarters should contact:
Financial Management Policy Division
Financial Management and Analysis Sector
Office of the Comptroller General
Treasury Board Secretariat
Ottawa ON K1A 0R5
Are the cancellations or adjustments of accounts that occur when debts are recorded in error or when the legitimacy of the debt cannot be substantiated. The cancellation and adjustment are deemed administrative actions that do not require specific legislative or regulatory authority.
Is the deletion of a debt that extinguishes the debt, waives the right of Her Majesty to reinstate the debt, and permits both the Crown and the debtor to remove the debt from their accounts. Also refer to section 24.1 of the Financial Administration Act and Debt Write-off Regulations.
Is an interval of time determined to be reasonable by the chief financial officer based on risk and on the particular departmental circumstances e.g., volume of transactions, automation of systems, size and structure of organization.
Is similar to forgiveness and involves the cancellation of or release from an otherwise enforceable debt, tax, fee or penalty. It differs from forgiveness in that remission relates to budgetary expenditures while forgiveness relates to non-budgetary expenditures. Also refer to section 23 of the Financial Administration Act and Debt Write-off Regulations.
Is the reduction of a claim by deducting the amount of a valid countervailing claim. Set-off by the federal government may be enacted by a specific statute or regulation or under the authority of section 155 of the Financial Administration Act.
Is an accounting action that applies primarily to uncollectible debts. It does not forgive the debt or release the debtor from the obligation to pay; nor does it affect the right of the Crown to enforce collection in the future. Also refer to the Debt Write-off Regulations.