Rescinded [2009-10-01] - Drawdown Policy for Crown Corporation Funding - TB Circular 1986-11

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Circular

Circular No: 1986-11

T.B. No: 801389

Our File No: 4295-09, 4295-14

Date : March 25, 1986

To: Deputy Heads of Departments and Heads of Agencies and Crown Corporations

Subject: Drawdown Policy for Crown corporation Funding

Purpose of Circular

1. The purpose of this circular is to inform departments, agencies, and Crown corporations of a new Treasury Board policy on the funding of Crown corporations.

Application

2. This policy applies to all Crown corporations receiving budgetary appropriations, whether lapsing or non-lapsing, except where corporations use Receiver General cheque issue services to pay all their accounts. The policy does not pertain to funds held in trust, or to funds belonging to a program for which there is no budgetary appropriation. The policy will apply from April 1, 1986.

Authority

3. Section 5(1) of the Financial Administration Act (FAA).

Background

4. Over the last few years, concerns have been expressed about the fact that some Crown corporations are drawing upon appropriated funds in advance of need.

5. After taking into account the views of Crown corporations and departmental officials respecting the viability of alternative mechanisms to address these concerns, the Treasury Board has concluded that a drawdown policy should be implemented. A drawdown mechanism ensures that, while Crown corporations continue to receive adequate funding to carry out their mandated activities, this funding is received only when consistent with immediate cash requirements.

Definition

6. In this circular, "Crown corporation" has the same meaning as in subsection 95(1) of the FAA.

Policy

7. Crown corporations shall draw on appropriated funds (including any amounts owed to them in accordance with Section 9.13 of the Treasury Board Guide on Financial Administration (TB Guide)), according to their short-term need for funds to carry out the businesses and activities outlined in annual corporate plans. Accordingly, draws will be closely tied to the net disbursements (excess of payments over receipts) that have to be made in the period encompassed by the drawdown. These individual draws shall be for as short a period as operationally feasible (for example, twice monthly, or, in some instances, monthly). Departments and agencies exercising payment authority over appropriations relating to Crown corporations shall implement an acceptable drawdown process with each Crown corporation on a case-by-case basis to give full effect to this policy.

8. Unless specifically authorized by Parliament in respect of designated appropriations, Crown corporations shall not draw upon appropriated funds in advance of need. However, in the interests of good cash management, Crown corporations may earn interest on any temporary cash surpluses that may take place from time to time through the course of the year.

9. Pursuant to section 30 of the FAA, appropriations (other than those with non-lapsing authority) lapse at the end of the government's fiscal year. Crown corporations shall not make drawdowns in excess of need at year-end for the purpose of preventing appropriated funds from lapsing.

10. Where section 26 (FAA) authority has been delegated to officials of Crown corporations, they are reminded that they shall observe the provisions of Chapter 9 of the TB Guide concerning payment authority.

11. Crown corporations shall apply good cash management practices with respect to their payables and receivables.

Guidelines

12. Government contracts with ongoing recurring payments contributing significantly to the funding of individual Crown corporations (e.g., payments by Transport Canada for marine and rail services) should include clauses consistent with this policy. Where contracts are already in place as at April 1, 1986 and cannot readily be adjusted, existing terms and conditions should be observed until these contracts expire.

Implementation

13. A corporation may be exempted from this policy, in whole or in part, through a submission to the Treasury Board.

Enquiries

14. Enquiries concerning this circular should be directed to the:

Director,
Cash Management Directorate,
Policy Development Branch,
Office of the Comptroller General,
Ottawa, Ontario.
K1A 1E4
Tel. (613) 957-9679

J.A. Macdonald,
Deputy Comptroller General,
Policy Development Branch
Date Modified: