Archived - Delegation of Financial Authorities

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Information Bulletin

DATE: October 23, 1996

TO: Senior Financial Officers and Senior Full-time Financial Officers

SUBJECT: Delegation of Financial Authorities


Alternate delivery of programs and services was one of the main themes in this year's federal Budget. Departments are encouraged to explore new types of arrangements, particularly with the private sector and other levels of government.

One key aspect of these new arrangements concerns the division of responsibilities, the delegation of authorities and the sharing and exercising of accountability.

As many departments have inquired about whether financial authorities under the Financial Administration Act could be delegated to outside organizations, it was deemed appropriate to provide overall guidance and direction to all departments.

Where authority is expressly delegated by statute and the statute authorizes the minister to further delegate that authority, such as sections 33 and 34 of the Financial Administration Act, and if the statute does not limit the delegation to federal public servants, then the minister may choose to delegate the authority to people outside the federal public service.

When a department considers concluding an alternate delivery arrangement, it should carefully examine the authorities that it intends to delegate to people outside the federal public service and to determine based on the above whether such delegation is acceptable.

In some cases, financial authorities will be required to support the delegation of authorities in other areas. For example, the Budget Implementation Act 1996 provided for the sub-delegation of personnel authorities under the FAA and the Public Employment Act to individuals outside the federal public service. The personnel authorities must be used with the corresponding financial authorities.

In any case, appropriate controls have to be implemented to ensure that these authorities are exercised appropriately. For your information, I have attached a short description of such controls as applicable to sections 33 and 34 of the FAA.

We intend to amend Chapter 2-1 of the Comptrollership Volume of the Treasury Board Manual to incorporate the attached information. Should you have comments or suggestions to complement the information presented, please forward them to my attention. Questions and comments could also be addressed to Gilles Vézina, the project manager responsible for this project, at (613) 957-9660. (signed)

R.J. Neville

A/Deputy Comptroller General

Delegation of Financial Authorities for Alternative Delivery of Programs

ELEMENTS OF A CONTROL FRAMEWORK

DELEGATION - GENERAL

  1. The wording of Sections 34 and 33 of the Financial Administration Act (FAA) allows the delegation of these authorities to persons outside the public service. As long as the Minister designates the person in writing, that person can exercise these authorities on the Minister's behalf.
  2. Ministers and deputy heads must delegate and communicate financial authorities in a manner and form that provide controls on the disbursement of public money by adequately enforcing an appropriate division of responsibilities.
  3. Departments must establish policies and procedures to ensure an adequate level of control over delegated authorities exists and that persons with delegated authorities understand their responsibilities.
  4. Only persons to whom these authorities have been formally delegated may exercise such authorities.
  5. The process must ensure that delegated authorities are authenticated before the transaction is processed further.
  6. Authorities must be delegated to the incumbents of positions identified by title, and not to individuals identified by name.
  7. No person may exercise the authorities delegated to a position unless an officer to whom the incumbent of the position reports has properly designated the person to act.
  8. Officers with delegated authority cannot redelegate that authority.

MAJOR PRINCIPLES AND POLICY ELEMENTS – SECTION 34 OF THE FAA

  1. All transactions affecting the Consolidated Revenue Fund (i.e., payment transactions) must be verified and certified under Section 34 of the FAA.
  2. Primary responsibility for verifying individual accounts rests with officers who have the authority to confirm and certify entitlement under Section 34 of the FAA. Persons with this authority are responsible for the correctness of the payment and of the account verification procedures. Under Section 34 of the FAA, the person certifies that:
    the payee is entitled to or eligible for the payment;
    the payment conforms with relevant contract or agreement terms and conditions;
    the transaction is accurate and the financial coding has been provided; and
    the transaction complies with all relevant statutes, regulations, orders in council, and Treasury Board policies, such as travel policies.
  3. The process for verifying accounts must leave auditable evidence of verification, including the identification of the various individuals involved.

RESPONSIBILITIES – SECTION 34 OF THE FAA

  1. Persons who have been delegated authority under Section 34 of the FAA must receive a set of instructions or procedures to ensure that they respect all departmental, legal, and regulatory requirements.
  2. Those officers who are delegated payment authority under Section 33 of the FAA are responsible for issuing these instructions and for the system for verifying accounts and related financial controls.

RESPONSIBILITIES – SECTION 33 OF THE FAA

  1. Financial officers with payment authority under Section 33 of the FAA must ensure that an adequate process is in place to verify accounts under Section 34 of the FAA, and that the process is being properly and conscientiously followed.
  2. Section 33 of the FAA authority can be delegated to a person outside the public service. Nevertheless, the senior financial officer (SFO) of the federal department, having responsibility for the overall quality of financial management, remains entirely responsible for the effectiveness and efficiency of the person exercising the delegated authority in accordance with departmental standards and control objectives.
  3. Therefore, the SFO should establish procedures and, probably, an audit program to ensure that authority under Section 33 of the FAA is exercised in accordance with departmental standards and control objectives. As well, the SFO must ensure that proper mechanisms are in place to allow the person with authority under Section 33 of the FAA to verify the legality of the payment and the availability of funds.

OTHER

  1. Two other principles must be observed:
    • no person shall exercise signing authority under both Sections 33 and 34 of the FAA with respect to a particular payment; and
    • no person shall exercise spending authority (Section 34 of the FAA) with respect to a payment from which he or she personally can benefit, directly or indirectly.
  2. Also, procedures must be in place to ensure adequate processing of assignments of Crown debts or powers of attorney recognized in force by the Receiver General.