Directive on Losses of Money or Property
This directive replaces:
1. Effective date
1.1 This directive takes effect on October 1, 2009.
1.2 It replaces specific sections of the Policy on Losses of Money and Offences and Other Illegal Acts Against the Crown (dated April 1, 1995).
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 objectives of the Policy on Internal Control by outlining processes and responsibilities of the chief financial officer for the preventing, detecting, recording, recovering and reporting of losses of public money or property.
3.2 The security and proper use of public money or property are essential to the effective management of a department. The departmental security officer (DSO) is responsible for the implementation and coordination of all security-related activities, including security measures to protect assets (e.g., money and property).
3.3 Money or property may be lost through negligence, lack of controls or criminal acts. Whatever the cause, departments are required to effectively manage such losses and have an established process for acting quickly to identify, record, report and, when possible, recover losses. In turn, this process supports timely investigations and ensures appropriate actions are taken to minimize potential future losses.
3.4 This directive is issued pursuant to section 7 of the Financial Administration Act.
Definitions used in the interpretation of this directive are in the Appendix.
5. Directive statement
To ensure losses of public money or property are prevented, detected and properly recorded, recovered and reported.
5.2 Expected results
- 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;
- The incidence and value of losses of money and property are minimized and the recovery rate for losses is maximized.
6.1 The chief financial officer is responsible for establishing of risk-based management practices and controls to ensure losses of public money and property are effectively managed. Those practices and controls involve the following:
6.1.1 Designing, implementing and maintaining systems of internal control, including those related to account verification, to prevent the loss of public money and property or to detect any losses in a timely manner.
6.1.2 Ensuring that the following is carried out when advised of an incident resulting in a loss of public money or property:
- The cost of the loss is calculated as soon as possible and, when the loss is recoverable, a claim against those responsible is prepared;
- All applicable transactions are recorded in the departmental financial management system; and
- The loss is reported for inclusion in the Public Accounts of Canada. Note that the Receiver General (RG) Manual – "Public Accounts Instructions" applies.
6.1.3 Calculating the value of the loss as follows:
- For public money, it is the actual amount missing; and
- For public property, it can be either of the following:
- If the property is not replaced, it is the net book value for the capitalized item or the fair market value for a non-capital item; or
- If the property is replaced, it is the replacement acquisition cost; or
- If the property is damaged, it is the cost of repair.
6.1.4 Ensuring that, in addition to the value of the loss of public money or property calculated as indicated in 6.1.3, claims include the following, when applicable:
- The goods and services tax/harmonized sales tax (GST/HST) and Provincial Sales Tax (PST);
- The financing costs of a loss of public money involving a fraudulent payment or an unauthorized expenditure;
- Additional costs incurred or revenue lost as a result of public materiel or property not being available for its intended purpose; and
- The cost of recovery proceedings or enforce recovery.
6.1.5 Preparing and processing claims against those responsible for losses due to negligence or offences (note that the Directive on Receivables Management applies), except in the following situations:
- When losses are to accountable advances and the conditions of section 6.1.6 are met;
- When legal proceedings (including proceedings before an administrative tribunal) are required to recover the loss and the Department of Justice recommends that proceedings be discontinued; and
- When Treasury Board has specifically authorized the department to waive recovery due to unusual circumstances.
6.1.6 Acting to recover any losses or shortages from the holder of an advance (note that section 3 of the Accountable Advance Regulations apply), including petty cash shortages, unless all of the following conditions have been met:
- The prescribed procedures were followed and the petty cash was properly secured;
- There was physical evidence of theft, such as forced entry; and
- No act or omission on the part of the custodian contributed to the loss.
6.1.7 Acting to recover any losses or shortages from either or both the holder of the advance and his or her manager when one or more of the conditions in 6.1.6 has not been satisfied and if the manager assumes full or partial responsibility for the loss by acknowledging in writing that he or she:
- Did not ensure that adequate facilities and procedures were in place;
- Did not provide adequate direction, instruction or supervision; or
- Allowed improper or inappropriate practices to occur.
In such a case, the chief financial officer is responsible for apportioning recovery of the loss between the manager and the employee concerned on the basis of their respective culpability.
6.1.8 Ensuring losses of public money requiring a disbursement to replenish a fund, like petty cash, and cashier shortages resulting from losses of revenue, are charged to the appropriation for the related program, after approval by the minister or such other member of the departmental senior executive committee as may be designated in writing by the minister.
6.1.9 Ensuring, in the case of cashier shortages resulting from losses of revenue, the applicable revenues are credited with the amount of the shortage when the appropriation is charged (as noted in 6.1.8).
6.1.10 Carrying out one or more of the following actions when there is an ongoing problem with cashier shortages,:
- Recovering shortages from the cashier when negligence is involved;
- Ensuring additional training is provided;
- Reassigning the cashier to other duties; and
- Conducting appropriate disciplinary action as required.
6.1.11 Ensuring that when a lapsing appropriation has been charged to replace the loss of public money or property, any recovery received in the same fiscal year is recorded and credited to the appropriation.
6.1.12 Ensuring that all losses of public money or property are reported for inclusion in the Public Accounts of Canada including losses involving negligence, offences and all acts of fraud, defalcation, misappropriation, malfeasance, misfeasance, nonfeasance, theft and robbery. The information reported consists of a brief description of the nature of the loss and, when applicable, the following:
- The amount of the loss, whether money or property (losses of similar incidents are grouped and only their total amount and number are reported, though the department retains details of the individual losses);
- The amount recovered in the current year;
- The amount not expected to be recovered; and
- The amount expected to be recovered in subsequent years.
6.1.13 Ensuring the amounts that are expected to be recovered in subsequent years continue to be reported for inclusion in the Public Accounts of Canada until fully paid or the outstanding claim amount is written off. Note that the RG Manual, Chapter 15 applies.
6.2 Monitoring and reporting requirements
6.2.1 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.
6.2.2 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.
8. Roles and responsibilities of other government organizations
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) is responsible for issuing instructions for reporting of losses of public money or property to be included in the Public Accounts of Canada.
8.2 The Treasury Board Secretariat, Office of the Comptroller General is responsible for development, oversight and maintenance of this directive and for providing interpretation advice.
9.1 Other relevant legislation and regulations
9.2 Related policy instruments and publications
- Values and Ethics Code for the Public Service
- Policy on Government Security
- Policy on Legal Assistance and Indemnification
- Policy on Management of Materiel
- Policy on Financial Management Governance
- Policy on Internal Control
- Directive on Accountable Advances
- Directive on Receipt, Deposit and Recording of Money
- Directive on Receivables Management
- Government-wide Chart of Accounts of Canada
- Receiver General Manual – Chapter 15 – "Public Accounts Instructions"
- National Joint Council Travel Directive
- NJC Relocation Directive
- Foreign Service Directives
- Isolated Posts and Government Housing Directive
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 of Canada Secretariat
Ottawa ON K1A 0R5
Telephone: (613) 957-7233
Fax: (613) 952-9613
Appendix — Definitions
- Defalcation (abus de confiance)
- Is a misappropriation of public funds, trust funds or money held in a fiduciary capacity.
- Fair market value (juste valeur marchande)
- Is an estimate of the property's value, immediately before its loss, that would have been received if it was sold in a competitive situation, taking into consideration the conditions of the market and the attributes of the property (e.g., age, condition, etc.).
- Fraud (fraude)
- Is a criminal deception involving the use of false representation with the specific intent of gaining an unfair or dishonest advantage. Fraud ordinarily involves either wilful misrepresentation or deliberate concealment of material facts for the purpose of inducing another person to either part with cash or something else of value or to surrender a legal right.
- Holder (détenteur)
- Means the person to whom an accountable advance has been issued or who is responsible for the advance.
- Malfeasance (délit d'action ou de commission)
- Is the commission of an unlawful act whereby the perpetrator has no right to perform that act or is prohibited by contract, statute or regulation from performing that act.
- Management practices and controls (pratiques et contrôles de gestion)
- Are policies, processes, procedures and systems that enable a department to operate its programs and activities, use its resources efficiently and effectively, exercise sound stewardship, fulfil its obligations and achieve its objectives.
- Misappropriation (détournement)
- Is the act of diverting money or property to a wrongful purpose. It is often used in the context of, but is not limited to, the diversion of public funds for one's own use or the use of others; however, any use not authorized by Parliament is a form of misappropriation.
- Misfeasance (faute d'exécution)
- Is the improper performance of a lawful act.
- Negligence (négligence)
- Is causing loss of money or damage to property as a result of doing something or failing to provide a proper or reasonable level of care.
- Nonfeasance (omission délictueuse)
- Is the omission of or failure to perform some specific act, duty or undertaking that one is obliged to do.
- Offences (infractions)
Involve any offence under the Criminal Code or a federal statute or regulation where the Crown is a victim. Examples include the following:
- Breach of trust by a public officer;
- Offences under sections 80 or 81 of the Financial Administration Act;
- Theft or misappropriation of public funds or funds belonging to others that have been entrusted to a public officer;
- False or fraudulent claims for a social benefit, a grant, a contribution, or any other program payment, including refunds and rebates;
- Forgery or fraudulent endorsement of Government payment instruments;
- Diversion of public money or public property for personal use;
- Theft of public property or of property belonging to others that has been entrusted to or seized by the Crown;
- Wilful damage to or destruction of public property;
- Breaking and entering or attempted breaking and entering;
- Computer-related offences, such as unauthorized or illegal access, theft of software or data, or alteration or destruction of data;
- Collusion or some other arrangement with a contractor to bill personal goods or services to the Crown and any fraudulent, illegal or improper interference in the contracting process, such as kickbacks and bribery, bid rigging and price fixing, or goods being deliberately short-shipped or replaced with defective goods or those of inferior quality.
- Public money (fonds publics)
Is all money belonging to Canada received and collected by the Receiver General or any other public officer in his or her official capacity or any person authorized to receive or collect such money. Public money includes the following:
- Duties and revenues of Canada;
- Money borrowed by Canada or received through the issue or sale of securities;
- Money received or collected for or on behalf of Canada; and
- All money that is paid to or received or collected by a public officer under or pursuant to any act, trust, treaty, undertaking or contract, and is to be disbursed for a purpose specified in or pursuant to that act, trust, treaty, undertaking or contract.
- Public property (biens publics)
- Is all property (including data), other than public money, belonging to Her Majesty in Right of Canada.
- Robbery (vol qualifié)
- Is the taking of money, property, or any other article of value against a person's will through violence or threat of violence.
- Theft (vol)
- Is the taking of money or property without the owner's consent and with the intent of depriving the owner, temporarily or permanently, of its possession, use or benefit. Although fraud and theft both result in depriving someone of property, a key distinguishing feature is that with fraud, the victim is induced through deceit or trickery to voluntarily give up the property, whereas with theft, the owner does not surrender the property voluntarily and, in some cases, may not initially even be aware that it has been taken.