1.1 This directive takes effect on October 1, 2009.
1.2 It replaces the Policy on Petty Cash (dated October 1, 1994).
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.
3.1 This directive supports the Policy on Internal Control by outlining the responsibilities of the chief financial officer and custodians of petty cash funds in the administration of accountable advances. The directive establishes a consistent approach that ensures effective financial controls for accountable advances within departments.
3.2 Accountable advances are provided on a standing basis when it is necessary to make payments or disbursements on an ongoing basis (for example, in the case of petty cash or for a change fund in a cashier function). Temporary accountable advances, such as travel or relocation advances, are provided when necessary, according to the relevant policy instrument.
3.3 Good cash management practices require that accountable advances be kept to a minimum to avoid unnecessary cash outflows while taking advantage of alternative methods of payment.
3.4 Accountable advances are issued under the authority of the following:
3.5 Interest charges, debt write-off, accounting, and other specific subject matter pertaining to accountable advances are referenced in the Guideline on Accountable Advances;
3.6 This directive is to be read in conjunction with the Policy on Internal Control and the Accountable Advances Regulations;
3.7 This directive is issued pursuant to section 7 of the Financial Administration Act.
Definitions to be used in the interpretation of this directive are in the Appendix.
To ensure the effective and efficient use of accountable advances while maintaining the required level of control to ensure prudent management of financial resources.
The chief financial officer is responsible for establishing risk-based management practices and controls to ensure the following:
6.1.1 Accountable advances are established only when required, used solely for the purpose for which they were issued, properly safeguarded, accounted for and accurately reported on a timely basis. Prior to issuing an accountable advance, other alternatives, such as travel cards, are examined. Such management practices and controls are to be documented and communicated to those responsible for the functions mentioned in this directive.
6.1.2 The amount of any accountable advance, including petty cash or change fund, is calculated based on operational needs with allowance made for peak periods and reimbursement time and without exceeding amounts required to meet estimated expenses. Options such as the establishment of several small funds to separate custodians or reduction of reimbursement cycles, in the case of petty cash funds, are to be considered.
6.1.3 Transactions that exceed the individual expense amount are not split into two or more transactions to avoid the limits prescribed by the Accountable Advances Regulations for petty cash transactions.
6.1.4 Petty cash funds are used to make low-value payments only when it is more cost-effective than other payment methods, with the use of an acquisition card being the preferred alternative unless none is available or its usage is not suitable.
6.1.5 Petty cash advances are not used to make change. Petty cash or change funds are not used to give salary advances, to cash cheques, or to make loans.
6.1.6 Accountable advances are charged to an appropriation and for standing advances, confirmation of authority is received from Public Works and Government Services Canada (PWGSC). Note: The Department of Foreign Affairs and International Trade and the Department of National Defence have separate authorities.
6.2.1 The custody of a petty cash or change fund is limited to an employee of the Government of Canada. Change of custodian is to be documented through an accounting and acknowledgement of responsibilities for the fund. One of the following methods is to be used to change the custodian of a fund:
6.3.1 The custodian reconciles according to 6.7 and reports are provided to the supervisor and appropriate corrective measures are taken.
6.3.2 Cash shortages are reported, investigated and accounted for following the reconciliation of a petty cash or change fund. Note that the Directive on Losses of Money or Property applies. When it is determined that a cash shortage is the responsibility of the fund custodian because of malfeasance or negligence or because the fund has not been duly accounted for, the shortage is to be recovered from the fund custodian. Note that subsection 76(4) or section 78 of the Financial Administration Act applies.
6.3.3 A disbursement is charged to the departmental appropriation whenit is determined that the cash shortage is not the responsibility of the fund custodian. Note that the Directive on Losses of Money or Property applies.
6.3.4 Cash overages are deposited and recorded in a Miscellaneous Other Revenue account if the source of the overage cannot be identified. If the source of the overage can be identified, it is to be refunded to its rightful owner. Note that the Directive on Receipt, Deposit and Recording of Money applies.
6.3.5 Accountable advance records are reconciled to control accounts monthly.
6.4.1 An adequate separation of duties of employees who deal with petty cash and change funds and other advances is maintained.
6.4.2 A complete separation of duties related to maintaining accounts receivable records, verifying accounts for payment, exercising financial signing authority and requisitioning payments is implemented whenever possible.
6.4.3 When a complete separation of duties cannot be implemented because of organizational structure, availability of staff, or materiality, duties are to be judiciously combined to ensure maximum separation of the functions.
6.4.4 The beneficiary of any accountable advance or a petty cash fund custodian is not to exercise financial signing authority pursuant to section 33 or 34 of the Financial Administration Act under any circumstances in this area.
6.4.5 Persons do not remain custodians over an extended period of time unless alternate controls, such as independent periodic verification, are implemented.
6.5.1 Financial systems allow the identification of all accountable advances to support reporting and follow-up on the collection of outstanding advances.
6.5.2 Accountable advances, including standing advances, are to be accounted for in a timely manner as provided for in the Accountable Advances Regulations.
6.6.1 Standing advances are replenished to their original value unless their use justifies a decrease, increase, or complete recovery. Other accountable advances (or portions) are to be settled and fully refunded in a single payment. Accompanying vouchers are to be voided in a manner that will prevent their reuse. Note: Accountable Advances Regulations apply.
6.8.1 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.
6.8.2 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.
8.1 Public Works and Government Services Canada (PWGSC)
PWGSC is responsible for the following:
8.2 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
Definitions for accountable advances, standing advances, petty cash funds and other terms used in this directive are found in the Accountable Advances Regulations.