Directive on Financial Management of Pay Administration

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1. Effective date

1.1 This directive takes effect on October 1, 2009.

1.2 It replaces the Comptrollership Policy on Pay Administration (dated April 1, 1997).

2. Application

2.1 This directive applies to departments as defined in section 2 of the Financial Administration Act.

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.Context

3.1 This directive supports the Policy on Internal Control by establishing a pay administration process within departments that ensures the accuracy and integrity of payroll expenditures, and accounting control over pay financial transactions.

3.2 The chief financial officer and human resources senior management share the responsibility for pay administration in departments. The chief financial officer is responsible for the effectiveness of the financial controls related to pay administration and payroll accounting, as well as payment requisitions. The heads of human resources are responsible for the compensation policies and function. They also have joint responsibilities for garnishments that respect the Garnishment, Attachment and Pension Diversion Act and all appropriate provincial and territorial laws. Timely and accurate processing is essential for all pay administration functions including garnishments.

3.3 This directive is to be read in conjunction with the following:

3.4 This directive is issued pursuant to section 7 of the Financial Administration Act.

3.5 This directive is to be read in conjunction with the Guideline on Financial Management of Pay Administration and the Policy on Internal Control.

4. Definitions

Definitions to be used in the interpretation of this directive are in Appendix.

5. Directive statement

To establish adequate financial controls over pay administration in a manner that ensures its accuracy, integrity and timeliness.

  • Financial resources are used appropriately, based on the right authority, and losses due to waste, abuse, mismanagement, errors, frauds, omissions and other irregularities are minimized.
  • All charges requisitioned against the Consolidated Revenue Fund for the compensation of employees and persons on an interchange assignment are properly authorized, legal, timely, and requisitioned in accordance with sections 32, 33, and 34 of the Financial Administration Act.
  • The accuracy, timeliness, and integrity of payroll expenditures, and accounting control over pay financial transactions.
  • Timely and effective processing of garnishment payments through the establishment and maintenance of appropriate internal controls.

6. Requirements

The chief financial officer is responsible for establishing management practices and controls to ensure effective internal control over the financial management of pay administration, including the following:

6.1.1 Developing, in conjunction with senior human resources management, efficient and effective departmental accounting and controls;

6.1.2 Ensuring that the verification of pay input data by financial management personnel does not duplicate the work performed by human resources personnel;

6.1.3 Verifying that all persons with delegated signing authorities for pay transactions have successfully completed required training and understand the responsibilities associated with the delegated authority;

6.1.4 Providing functional direction to persons who are responsible for cheque and direct deposit payment statement distribution;

6.1.5 Ensuring that the controls relating to all pay administration are identified, understood and applied;

6.1.6 Ensuring the proper administration of sections 33 and 34 of the Financial Administration Act for all pay administration disbursements;

6.1.7 Ensuring effective controls (e.g. accuracy, completeness, timeliness, authorization) are in place for all processes and systems that support pay administration, and;

6.1.8 Ensuring that adequate segregation of duties, such as ensuring the custody and distribution of cheques and direct deposit payment statements, is performed by a person who does not have signing authority in the areas of staffing, classification, or pay input transactions.

6.2.1 Establishing and maintaining internal procedures and adequate documentation to administer agreements that may provide for salary expenses, including allowances and employer-paid benefits to be reimbursed in a timely manner by the host organization for employees on secondment or for persons on an interchange assignment to or from an outside organization; and

6.2.2 Establishing, in collaboration with Human Resources, a departure procedure to ensure that all money or any other material issued by the host organization to a person on secondment or on an interchange agreement is recovered or accounted for when the person returns to the home organization;

Chief Financial Officers and Heads of Human Resources are jointly responsible for:

6.3.1 Establishing and maintaining the departmental process for timely and accurate garnishment from salaries payable to employees and fees owing to personal services contractors and remittance to the Courts and the provincial and territorial maintenance enforcement programs in compliance with the Garnishment, Attachment and Pension Diversion Act, the associated regulations and relevant provincial or territorial laws; and

Chief Financial Officers are responsible for:

6.3.2 Ensuring that financial officers who administer payment requisitions are aware of their responsibilities for processing garnishments in a timely and accurate manner consistent with the Garnishment, Attachment and Pension Diversion Act, and its regulations and relevant provincial or territorial laws as well as the Receiver General Guidelines on Garnishment, Garnishment of public servant's salaries and monies owing to individuals employed under contracts for services; and

Heads of Human Resources are responsible for:

6.3.3 Ensuring that human resources personnel in the garnishment process, including individuals delegated as contacts with the Department of Justice, are aware of their responsibilities and process garnishments in a timely and accurate manner consistent with the Garnishment, Attachment and Pension Diversion Act, the associated regulations and relevant provincial or territorial laws as well as the Office of Chief Human Resources Officer Guidelines for the Processing of Garnishments.

6.4.1 Establishing and maintaining adequate record-keeping to meet the requirements of the Income Tax Act and provincial or territorial income tax acts for filing information returns with respect to allowances and other taxable benefits paid in addition to basic pay;

6.5.1 Ensuring the recovery of any salary replacement from other sources, such as the workers' compensation board, when an employee has been injured and in rare instances due to administrative error the employee was also receiving full salary during the predetermined period as established by the employer;

6.5.2 Ensuring that recovery is not made when the salary replacement stems from a personal disability policy for which the employee or the employee's agent has paid the premium; and

6.5.3 In consultation with PWGSC Compensation Sector, ensuring the appropriate provincial or territorial legislation is applied to determine whether employment-injury benefits received from the workers' compensation board are taxable and consulting the Injury-on-Duty Leave policy and Workers' Compensation policy for additional guidance concerning workers' compensation and injury-on-duty leave;

6.6.1 Establishing, in collaboration with Human Resources, a departure report and checklist process to sign off and certify that all money owing to the Crown, or any other material, is accounted for before an employee leaves the department, which:

  • Ensures the return of outstanding accountable advances on loan such as travel advances, standing advances, emergency salary advances, petty cash funds, and change floats; acquisition cards; travel cards; identity cards; overdrawn leave; and equipment, tools, and manuals. This list is not exhaustive and may include other items;
  • Includes sign off by such areas as human resources, security, materiel management, administration, library, and financial services. This list is not exhaustive and may include other areas within organizations; and
  • Ensures that financial management personnel or, if applicable, the organization to which payment authority under section 33 of the Financial Administration Act is delegated is the last to sign off; and

6.6.2 Ensuring that when a departing employee owes money or has not accounted for other materials a process is put in place to inform Compensation in order that a deduction can be made from any amounts due to the employee or, if necessary, that an account receivable is established and recovery action taken.

6.7.1 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.

6.7.2 Chief Financial Officers in conjunction with Heads of Human Resources will monitor compliance with the Garnishment, Attachment and Pension Diversion Act, the associated regulations and relevant provincial or territorial laws and ensure that any undue delays are remedied in a manner to prevent their recurrence.

6.7.3 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. Consequences

7.1 In instances of non-compliance, deputy heads are responsible for taking corrective measures within their organizations 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 section 76 to 81 (Civil Liability 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.

8. Roles and responsibilities of government organizations

This section identifies other significant departments with respect to this directive. In and of itself, it does not confer an authority.

(Compensation Sector) is responsible for the operation of the following:

  • The Regional Pay System that is used to calculate employee pay and deductions and to send requests for payment issue to the Standard Payment System;
  • The Payroll Systems General Ledger (PS-GL) that is used to provide payroll control and payroll control account balances reports; and
  • A separate pay system for members of the Royal Canadian Mounted Police.
  • The Office of the Comptroller General is responsible for development, oversight and maintenance of this directive and for providing interpretative advice; and
  • Labour Relations and Compensation Operations Sector is responsible for pay administration policies and supporting policy instruments related to employee compensation.

9. References

10. Enquiries

10.1 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

Email: fin-www@tbs-sct.gc.ca
Telephone: 613-957-7233
Fax: 613-952-9613

10.2 For enquiries concerning compensation operational issues, departmental headquarters should contact:

Labour Relations and Compensation Operation
Treasury Board of Canada Secretariat
Ottawa ON K1A 0R5

10.3 For enquiries regarding Public Works and Government Services Canada (Compensation Sector), departmental headquarters should contact:

Compensation Sector
Public Works and Government Services Canada
Ottawa ON K1A 0S5

Email: ncr.rgenquire@pwgsc.gc.ca


Appendix-Definitions

Management practices and controls (pratiques et contrôles de gestion)
Policies, processes, procedures, and systems that enable a department to operate its programs and activities, use its resources effectively, exercise sound stewardship, fulfill its obligations, and achieve its objectives.
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