Policy on Financial Management Governance
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1. Effective date
1.1 This policy takes effect on April 1, 2009 and was last amended June 1, 2010.
1.2 The Policy on Financial Management Governance supersedes both the Policy on Responsibilities and Organization for Comptrollership, dated February 22, 1996, and the guidance on Financial Management Accountability in Departments and Agencies; updated March 8, 1991.
1.3 Any references to Senior Financial Officer are considered to be replaced with Chief Financial Officer (CFO).
2.1 This policy applies to all departments and organizations defined as departments within the meaning of section 2 of the Financial Administration Act (FAA). Throughout this policy, the terms "government-wide" and "across government" refer to these organizations.
2.2 Section 7.2, and those portions of sections 6.2 and 7.3 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 policy sets responsibilities with respect to financial management governance and capabilities. This policy is designed to ensure strong financial management of public resources, reinforce the principles of probity and prudence, and contribute to better decision-making. This is done through the development and maintenance of human resources capabilities and the capacity for financial management. These responsibilities are in support of legal requirements, set out in various Acts of Parliament including the Financial Administration Act and the accounting officer accountabilities as set out in section 16.4 of the FAA.
3.2 At the departmental level, this policy provides deputy heads with a clear outline of what they can expect of their Chief Financial Officer (CFO) and senior departmental managers.
3.3 This policy is to be read in conjunction with the Values and Ethics Code for the Public Service, or that of your respective organization or both, the Framework for the Management of Compliance, the Policy on Internal Audit and other financial management policies. Further contextual information is included in the Foundation Framework for Treasury Board Policies.
3.4 This policy is issued pursuant to section 7 of the Financial Administration Act.
4. Policy statement
The objective of this policy is to strengthen public sector financial management and its leadership thereby contributing to appropriate stewardship of public resources, effective decision-making, and efficient policy and program delivery. This is achieved by clarifying the roles and responsibilities for financial management governance that must be exercised for the stewardship, management and oversight of public resources by deputy heads, the Comptroller General of Canada, Chief Financial Officers (CFOs), and senior departmental managers.
4.2 Expected results
4.2.1 An awareness and clear understanding by all stakeholders of their roles, responsibilities, and accountabilities for both financial management and stewardship of public resources.
4.2.2 Sound and transparent, and effective financial management is in place including:
- Compliance and financial management policies, directives and standards
- Establishment of an appropriate CFO model in all departments; and
- Consideration of the guidelines for CFO qualifications.
4.2.3 Well-informed decision-making, clear accountability for public resources, and efficient and effective policy and program delivery.
5. Policy requirements
5.1 Deputy head – The deputy head is responsible for:
5.1.1 Providing leadership by demonstrating financial responsibility, transparency, accountability, and ethical conduct in financial and resources management;
5.1.2 Managing the department and departmental programs in compliance with legislation, regulations, Treasury Board policies, and financial authorities;
5.1.3 Assuming overall stewardship responsibilities for the integrity of the department's financial management capabilities, and the department's capacity to meet the needs of the department and the government;
5.1.4 Ensuring the strategic planning process gives due consideration to financial risks, financial sustainability, governance, resource allocation and performance monitoring;
5.1.5 Establishing a sound financial management governance structure that fosters prudent stewardship of public resources in the delivery of the mandate of the organization, consistent with the Management, Resources, and Results Structure (MRRS) and the Management Accountability Framework (MAF);
5.1.6 Approving and signing off on all key external financial management representations and financial management disclosures including those in:
- Memoranda to Cabinet; and
- Treasury Board submissions.
5.1.7 Approving and signing off on Departmental financial statements including the Statement of Management Responsibility Including Internal Control Over Financial Reporting.
5.1.8 Appointing, in writing, the CFO of his or her department and ensuring that the:
- Comptroller General, or his or her representative, is a member of the selection committee;
- Comptroller General is consulted on the intention to remove a CFO for reasons relating to the CFO's professional performance;
- Comptroller General is advised of the appointment, transfer or departure of the CFO;
- CFO reports directly to the deputy head;
- CFO leads and directs the financial management function; and
- Guideline on Chief Financial Officers Qualifications is considered with respect to the qualifications of CFOs.
5.1.9 Seeking advice in writing from the Comptroller General when deciding on a course of action the CFO has advised against (see 5.4.12) on the basis that:
- Undue financial risk or control exposure for the department exists; or
- The course of action will not comply with the financial requirements of any legislation, regulation or policy.
The matter will be referred to the Secretary of the Treasury Board when the deputy head and the Comptroller General cannot agree on a course of action.
5.1.10 Consulting with the Comptroller General on the proposed position description of the CFO;
5.1.11 In consultation with the Comptroller General:
- Establishing clear responsibilities and performance expectations for the CFO;
- Ensuring that the CFO is not assigned program responsibilities;
- Ensuring that if the CFO is assigned additional non-financial roles and responsibilities, that these roles and responsibilities do not compromise the integrity, independence and financial management responsibilities of the CFO or the CFO's ability to have the focus necessary to fulfill his or her responsibilities; and
- Undertaking the periodic performance evaluation of the CFO.
5.2 Departmental Audit Committee – The Chair of the Departmental Audit Committee is responsible for ensuring that the Committee:
5.2.1 Acts as an independent and objective advisor to the deputy head; and
5.2.2 Provides guidance to the deputy head on the adequacy of the department's systems of internal control, financial reporting and financial disclosures.
5.3 Comptroller General of Canada – The Comptroller General is responsible for:
5.3.1 Providing government-wide functional direction and assurance for financial management and stewardship over public resources, as assigned by the Treasury Board, in collaboration with other central agencies and the Receiver General for Canada;
5.3.2 Promoting strong government-wide financial management and internal control; providing oversight of government-wide financial information systems and quarterly financial reporting; and providing, in collaboration with the Receiver General for Canada; direction for the preparation of departmental and government-wide financial statements and Public Accounts;
5.3.3 Providing interpretation of financial management policies, directives and standards for the Government of Canada and providing ongoing support and functional direction on financial management to CFOs;
5.3.4 Overseeing and communicating a financial management policy framework in support of effective government-wide and departmental financial management and stewardship;
5.3.5 Providing guidance on the financial management framework applicable to departments and for the periodic assessment of departmental financial management performance;
5.3.6 Providing functional guidance in setting knowledge and certification standards for departmental CFOs and for financial management across departments;
5.3.7 Developing and implementing, in collaboration with the Canada School of Public Service, a government-wide core learning strategy on financial management for all employees of the public service involved with the management of financial resources; and
5.3.8 Providing functional leadership and supporting the development of sustainable capacity of the financial management community across government.
5.4 Chief Financial Officer - The CFO is responsible for:
5.4.1 Supporting the deputy head in the achievement of his or her mandate, through the following key roles as:
- An objective strategic advisor for business and financial management;
- The key steward with respect to relevant legislation, regulations, policies, directives and standards related to financial management;
- A senior departmental executive providing the deputy head with independent and objective recommendations on all funding initiatives and resource allocations requiring the deputy head's approval; and
- The lead departmental executive for all aspects of financial management, program financing, financial reporting and disclosure, and for dealing with central agencies and other stakeholders.
5.4.2 Supporting the deputy head for overall stewardship responsibilities and for the integrity of the department's overall financial management performance, culture and capabilities;
5.4.3 Developing, communicating and maintaining the departmental financial management framework, and providing leadership and oversight on the proper application and monitoring of financial management across the department;
5.4.4 Ensuring that robust risk-based account verification procedures are in place, in compliance with the Financial Administration Act;
5.4.5 Leading the financial component of the departmental planning process on behalf of the deputy head, unless the deputy head specifically designates another employee to do so;
5.4.6 Assessing, in collaboration with the Executive Management Team, principal business risks and financial resource implications of options and policy alternatives, and their impact on the department's financial position unless the deputy head specifically designates another employee to do so;
5.4.7 Signing financial management representations and disclosures such as the Departmental financial statements, including the Statement of Management Responsibility Including Internal Control Over Financial Reporting.
5.4.8 Providing the deputy head with reasonable assurance that appropriate measures are taken to maintain an effective system of internal controls and that processes are in place to ensure the effectiveness of departmental financial management;
5.4.9 Establishing and communicating clear responsibilities for holders of positions with delegated financial authorities, and monitoring adherence to these responsibilities;
5.4.10 Providing a challenge function on financial management matters and use of public resources across the department;
5.4.11 Signing off on all financial and related reports, submissions and disclosures of the department requiring approval of the deputy head;
5.4.12 Advising the deputy head, if a proposed course of action will result in undue financial risk or control exposure for the department or when the proposed course of action would not comply with the financial requirements of any legislation, regulation or policy:
- In the event the deputy head does not accept the advice, the CFO must seek the advice of the Comptroller General of Canada on an appropriate course of action; and
- In the event that the deputy head does not accept the subsequent advice that is offered after the CFO consultation with the Comptroller General, the CFO must request that the deputy head seek the advice of the Comptroller General, as outlined in section 5.1.9 of this policy.
5.4.13 Providing functional guidance, direction and advice to managers across the department on matters of financial management;
5.4.14 Maintaining financial management services that meet the needs of the department and managers at every level; and maintaining financial management service standards;
5.4.15 Providing functional leadership and direction to the financial management community of the department;
5.4.16 Seeking clarification, as required and for accountability purposes, on the scope of the management and accounting entity or entities under his or her purview; and
5.4.17 Being the primary contact point with the Office of the Comptroller General of Canada and Treasury Board Secretariat on all departmental financial resource management matters, including all departmental financial information preparation, reporting and disclosure matters.
5.5 Senior departmental managers – For the purpose of this policy, senior departmental managers are defined as managers reporting directly to a deputy head. Senior departmental managers are responsible for:
5.5.1 Exercising his or her financial management authorities, responsibilities, and accountabilities, managing financial resources entrusted to him or her in a prudent manner, complying with legislation, regulations, Treasury Board policies, directives and standards;
5.5.2 Ensuring that delegated financial and other authorities are respected in his or her organization;
5.5.3 Ensuring that his or her staff understand the departmental financial management framework applicable to them, exercise their financial management authorities and responsibilities, are properly trained in effective financial management, and take appropriate action to correct undesirable performance;
5.5.4 Seeking the advice and support of the CFO on the development and maintenance of an effective financial management, risk and control framework over programs, and on the integration of financial and related non-financial information; and
5.5.5 Seeking the advice and support of the CFO to carry out the duties of his or her position in financial management, control, and financial reporting and disclosure.
6. Monitoring and reporting
6.1 Deputy heads – Deputy heads are responsible for:
6.1.1 Monitoring compliance with this policy and its supporting directives and standards through periodic audits and other assessments to ensure their effective implementation. Deputy heads are to take corrective action when needed.
6.1.2 Providing any reports or information as requested by the Comptroller General or Treasury Board Secretariat.
6.2 Comptroller General – The Comptroller General is responsible for:
6.2.1 Monitoring compliance with this policy in a variety of ways including but not limited to assessments under the Management Accountability Framework, and examinations of Treasury Board submissions, results of audits and evaluations, and reports and special studies by Parliament or its agents;
6.2.2 Monitoring government-wide compliance with Treasury Board policies for effective financial management;
6.2.3 Recommending that corrective action be taken when a department has not complied with the requirements of this policy;
6.2.4 Monitoring the qualifications and competence of the financial management community across government for all aspects of financial management;
6.2.5 Reporting periodically to Treasury Board on the state of financial management across government; and
6.2.6 Establishing a framework for the review of this policy and its supporting directives, and ensuring that a review is initiated within five years of the effective date of this policy.
7.1 The deputy head is responsible for investigating and acting when significant issues arise regarding policy compliance. The deputy head is also responsible for ensuring that appropriate remedial actions are taken to address these issues within the deputy's department.
7.2 If the Comptroller General determines that a department may not have complied with any requirements of this policy or supporting directives and standards, the Comptroller General may request that the deputy head:
7.2.1 Conduct an audit or a review to assess whether requirements of this policy or its supporting directives/standards have been met. The cost of such an audit or review will be paid from the department's reference level; and
7.2.2 Take corrective actions and report back on the results achieved.
7.3 Consequences of non-compliance with this policy and supporting directives and standards, or of failure to take corrective actions requested by the Comptroller General, may include recommending to Treasury Board:
7.3.1 Limits on the spending authority of the department;
7.3.2 Imposition of any other measures determined appropriate in the circumstances; and
7.3.3 Imposition of any measure allowed by the FAA.
8.1 Other relevant legislation
8.2 Other relevant documents
Please direct enquiries about this policy to your department's headquarters. For interpretation of this policy, departmental headquarters should contact:
Assistant Comptroller General
Financial Management and Analysis Sector
Office of the Comptroller General
Treasury Board Secretariat
Ottawa ON K1A 0R5