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Policies for Ministers' Offices - January 2011

Part 4 — Financial Management

4.1 Establishing the ministers' office budgets

The budgets for ministers' offices are funded from existing departmental reference levels. The budgets for ministers' offices are intended to cover the costs of conducting portfolio and other official government business. These budgets are in addition to and separate from entitlements that a minister has as a member of Parliament. These Policies do not extend to the entitlements of a minister related to being a member of Parliament; such entitlements are explained in detail in the Members' Allowances and Services Manual published by the House of Commons. Questions related to these entitlements should be referred to the Office of the Comptroller, House of Commons.

Ministers' office budgets are subject to the same provisions of the Financial Administration Act (FAA) that apply to expenditures of other departmental funds. The FAA is intended to assure parliamentary control over public money by prescribing a financial control framework for all financial transactions. Many of the financial management provisions in the FAA are put into force through Treasury Board-approved policies. Therefore, unless specifically exempted, ministers' budgets are also subject to Treasury Board policies and regulations.

Ministers' office budgets are subdivided into components that must be controlled separately as listed in the following sections.

Components of ministers' office budgets include:

  • ministers' exempt staff personnel costs budgets ("exempt staff budget");
  • ministers' other operating costs (i.e. non-personnel) budgets ("other operating budgets"); and
  • ministers' departmental staff personnel costs budget ("departmental staff budget").

4.2 Budget transfers and the carry forward of unspent funds

4.2.1 Budget transfers

Within the overall limit communicated by the Treasury Board regarding ministers' office budgets, funds can be transferred among the exempt staff budgets, the departmental staff budget and other operating budgets. When funds are transferred to an exempt staff budget or to the departmental staff budget from other operating budgets, the department must set aside, from its own funds, an additional amount of other operating funds equal to 20% of the funds transferred. Conversely, when funds are transferred from either a minister's exempt staff or the departmental staff budget to the other operating budget, that budget will only be increased by the amount of the reduction in the personnel costs budget. In this way, the ministers' office budgets will not be impacted by the 20% transfer cost that applies to transfers between personnel and other operating budgets, thereby respecting the spirit of allocating specific budget levels to ministers' offices for personnel and other operating costs. The transfer cost will be managed by the department.

4.2.2 Operating budget carry forward

Ministers may access the departmental operating budget carry forward from one fiscal year to the next for an amount equal to their unspent exempt staff and other operating budgets, up to a maximum of five percent of their most recently approved annual budgets effective on April 1 of the fiscal year. Any increases after the approval of the annual budgets are to be excluded from the calculation of the 5% ceiling.

Where a minister is named to a different portfolio or where a new minister is appointed to an existing portfolio, the budget for the purpose of calculating the 5 % maximum carry forward will be the annualized amount that is determined for the office of the new minister on the basis of section 4.4.6.

4.3 Accountability

Expenditures for the portfolio or for other official government business that are charged against a minister's other operating budgets, or against exempt staff budgets, are expenditures against a "program expenditure vote" or an "operating expenditure vote" in the appropriate department. The expenditure of public funds in these budgets must be made only with the usual high standards of prudence and probity.

Ministers are individually responsible and accountable for dealing with all public inquiries about the expenditures made from their office budgets—whether by them directly, by their staff or on their behalf—including publicly justifying them if the need arises.

4.4 Accounting for expenditures charged to ministers' budgets

Subject to 4.2, the overall budget for a minister's office cannot be exceeded. A minister who wishes to have his or her budget increased must seek approval from the Treasury Board, after discussing the request with the Office of the Prime Minister and obtaining a written approval.

Expenditures against a minister's exempt staff budgets and other operating budgets must be limited to the types of expenditures that can be legally charged against each budget—in other words, the expenditures must clearly fall within budget parameters (scope, purpose, and limits).

There are types of expenditures that should be charged to specific budget components in a minister's office budget. Other types of expenditures will be charged to the department's budget (examples are outlined in Appendix E).

4.4.1 Ministers' exempt staff personnel costs budget ("exempt staff budget")

Ministers, except the Prime Minister, receive a prescribed exempt staff budget to manage their offices. This budget is over and above any budget to which the minister is entitled as a member of the House of Commons. The budget provided by the House of Commons is used to pay for staff in the House of Commons office and in the constituency office.

The Treasury Board periodically sets the size of a minister's exempt staff budget. The President of the Treasury Board notifies each minister of the annual amount in writing, according to the previous written communication. The exempt staff budget is to be funded from within existing departmental reference levels.

Only direct personnel costs can be charged to the exempt staff budget, including the following:

  • salaries (including pay while on leave);
  • pay for unused vacation leave, at the request of the exempt staff with the approval of the minister, on termination of employment, or paid out at the end of each fiscal year; and
  • salary for the 30 days' employment to which exempt staff is entitled when a minister ceases to be a minister (see section 3.7.5).

The following exempt staff‑related costs are to be funded from the personnel budgets of the department:

  • maternity or parental benefits (supplemental employment benefit);
  • vacation pay for unused vacation leave on termination of employment when at termination of employment the employee is eligible for severance pay;
  • severance pay; and
  • separation pay

For Public Service employees, the department will be reimbursed for expenditures in the first three categories through an allocation from a Treasury Board Central Vote. The department must absorb costs related to separation pay.

4.4.2 Ministers' other operating costs budgets ("other operating budget")

The other operating budgets of a minister covers all operating expenditures incurred by parliamentary secretaries, by exempt staff or by departmental staff in a minister's office. Only direct operating expenditures that are related to the conduct of portfolio or other official government departmental business are to be charged to a minister's other operating budgets.

The following costs will be charged to a minister's other operating budgets:

  • official gifts, travel, hospitality, and other services in relation to the department (exceptions for international travel may apply; see section 6.5);
  • conference and training costs for exempt staff;
  • relocation of exempt staff to the minister's departmental office (on appointment only);
  • office furniture and furnishings for ministers and their private secretaries that are over and above normal departmental standards;
  • fees for professional outplacement services;
  • the cost of professional and temporary help services for the minister's departmental office; and
  • all other expenditures directly attributable to the operation of a minister's departmental office. These expenditures could include, but are not restricted to, items such as the use of cell phones, the acquisition of office equipment that is over and above departmental standards, the use of taxi and courier services, and postage. It is expected that all indirect departmental costs such as corporate services costs (e.g. Finance and HR) and other costs for internal service providers will not be charged against the minister's budgets following the funding model used in the department.

Appendix E provides a non-exhaustive list of examples of items that should be charged to a minister's other operating budget and those that should be charged to a budget of the department or agency.

4.4.3 Ministers' departmental staff personnel costs budget ("departmental staff budget")

Costs related to departmental personnel assigned to a minister's office must be charged to the minister's departmental staff budget, with the exception of costs related to the Departmental Assistant, which are funded directly from the existing departmental or agency reference levels. These costs must be accounted for separately as part of the minister's office expenditures. Costs such as bilingualism bonuses and overtime are to be included in the minister's departmental staff budget. Other personnel-related costs, such as training and development, will be funded by the department in accordance with existing departmental practices for Public Service employees.

4.4.4 Budget for parliamentary secretary's assistant

The parliamentary secretary's assistant is a minister's exempt staff member dedicated to supporting a parliamentary secretary. A minister is authorized to hire one parliamentary secretary's assistant for each parliamentary secretary appointed. Only one minister is authorized to hire a parliamentary secretary's assistant when the parliamentary secretary has multiple responsibilities under the jurisdiction of more than one minister. When a parliamentary secretary(ies) is (are) appointed to assist a minister, departments are authorized to provide a parliamentary secretary's assistant (exempt staff) budget and an other operating costs budget for the assistant for each parliamentary secretary appointed subject to Treasury Board approval. The source of funds for these budgets is existing departmental reference levels.

4.4.5 Budgetary increases and exceptions

Ministers' budgets are to be allocated from within existing departmental reference levels. Subject to section 4.2, budgets cannot be exceeded. A minister who wishes to have his or her budget increased or modified, or an exception granted, must first obtain the written agreement of the Prime Minister's Office and the President of the Treasury Board. The Treasury Board must approve the proposal. Budgetary increases and exceptions are to be funded from the existing departmental reference levels.

4.4.6 Budgets as a result of a change in portfolio

When a minister changes portfolio or when a new minister is appointed to an existing portfolio during the course of a fiscal year, the office budgets for the remainder of the year in the new portfolio are to be equal to the outstanding free balance representing the budgets for that portfolio (after outstanding commitments have been paid), as set by the Treasury Board, for the balance of the fiscal year. This will include budget increases and modifications already approved by the Treasury Board for that portfolio. The Treasury Board may rescind, modify, or revise any budget at the time of the portfolio change. If so the appropriate minister(s) will be informed by written communication.

When regional responsibilities are transferred among ministers during the course of the fiscal year, budgets for the remainder of the year are to be equal to the outstanding free balance representing the budget for that responsibility (after outstanding commitments have been paid), as set by the Treasury Board, for the balance of the fiscal year.

When a minister with regional responsibilities changes portfolios during the course of the fiscal year, the budgets for the regional responsibilities, as set by the Treasury Board, are to be equal to the outstanding free balance remaining in those budgets (after outstanding commitments have been paid) as at the date of the change.

Regional representation budgets are to be funded from existing departmental reference levels.

4.4.7 Expenditures of ministers' offices report

On December 12th, 2006 the Federal Accountability Act amended the Access to Information Act with the following provision:

72.1 The head of a department or a ministry of state for the Government of Canada shall publish an annual report of all expenses incurred by his or her office and paid out of the Consolidated Revenue Fund.

This report is published in Volume III, Section 10 of the Public Accounts of Canada. Expenditures presented in this report are those charged to ministers' budgets and do not include statutory expenditures, such as the minister's salary and motor vehicle allowance, or employer contributions to superannuation and benefit plans, nor do they include civilian termination benefits.

For further information, please refer to Chapter 15 of the Receiver General Manual, which provides the instructions and guidance to prepare the information required for this report.

All enquiries with respect to this annual report are to be directed to the Financial Management Policy Division, Office of the Comptroller General of Canada by emailing: fin-www@tbs-sct.gc.ca or calling 613-957-7233.

4.5 Financial authorities

Treasury Board policies related to financial management are generally found in the comptrollership policies.

These policies provide directives governing the accounting and control of expenditures and outline the framework for exercising financial authorities to satisfy the requirements of the FAA. Essentially, there are three types of authority related to expenditures—spending authority, certification authority and payment authority.

Two major requirements related to financial authorities are 1) no person can exercise both spending and payment authority for a payment; and 2) no person can exercise spending authority for a payment from which he or she can benefit personally, nor should a person be involved in any of the processing steps with respect to his or her own pay and benefits.

Reference: Directive on Delegation of Financial Authorities for Disbursements.

Deputy heads are responsible for implementing the appropriate delegation instruments to ensure that authorities may be exercised on behalf of "appropriate ministers" as defined in the Financial Administration Act (FAA). These delegation instruments should provide authority to ministers and ministers of state within the portfolio of the appropriate minister, for responsibilities related to their exempt staff and the expenditures related to their exempt staff budgets, their other operating budgets, and other financial obligations identified in this document where the expenditures are charged to the appropriations of their departments.

Appropriate ministers may delegate, pursuant to the Financial Administration Act, financial authorities for these expenditures to their chief of staff or other exempt staff but the persons authorized under the delegation cannot subdelegate these authorities. Likewise, appropriate ministers may delegate, pursuant to the Financial Administration Act, financial authorities for these expenditures to their portfolio ministers or to their exempt staff or to the portfolio minister of state or to the chief of staff to the minister of state, but the persons authorized under the delegation cannot subdelegate these authorities. Nevertheless, a minister may not subdelegate the hiring, determination of salaries and salary increases, or termination of his or her own exempt staff. The appropriate minister may delegate the authority for such decisions concerning the exempt staff of a portfolio minister or minister of state, only to that portfolio minister or minister of state.

4.5.1 Spending authority

Spending authority consists of three elements—expenditure initiation authority, commitment authority, and transaction or contracting authority.

The minister is responsible for, and has spending authority over, the exempt staff and other operating budgets. Often, the minister will delegate some of this authority to the chief of staff or other senior exempt staff. However, this delegation does not apply in instances where a minister wishes to hire, dismiss, or set salaries for exempt staff. Expenditure initiation

This authority is delegated to ministers to initiate expenditures against their budgets, requisition goods and services, hire staff, extend hospitality, and the like. However, before the expenditure is actually made, the contract entered into, or the arrangement made, there must be a confirmation that funds are available—the commitment authority. Commitment authority

Under section 32 of the FAA, ministers, or financial officers acting on their behalf, must control commitments and ensure that funds are available within existing appropriations to discharge the financial commitment that would result from the contract or other arrangement.

Controls over commitments and expenditures must be maintained to ensure that neither the minister's exempt staff nor the minister's other operating budgets are overspent.

Reference: Treasury Board Directive on Expenditure Initiation and Commitment Control. Transaction or contract authority

The authority to acquire material and goods is delegated to the minister from the Minister of Public Works and Government Services. The minister is ultimately responsible to Parliament for all contracting activity. Within a minister's office, the authority to contract may be delegated to the minister's chief of staff.

Officials delegated such authority are to exercise it with prudence and probity so that the responsible minister is acting and is seen to be acting within the letter and spirit of the FAA, the Government Contracts Regulations, and the Treasury Board's contracting directives and policy. Please see Part 7 for further details on contracting.

In March 2004, the Government of Canada announced a new policy on the mandatory publication of contracts over $10,000. Please see Part 7 for further details. Certification authority

Expenditures incurred by ministers and their exempt staff are subject to the account verification process and must be certified under section 34 of the FAA prior to payment.

Under section 34 of the FAA, ministers are obligated to confirm that goods have been received or the work performed satisfactorily and that the price charged is correct. This account verification process includes checking that the relevant contract terms and conditions, including price, quantity, and quality have been met and, if an advance payment is being made, that it is required by the contract and that all relevant statutes, regulations, orders in council, and Treasury Board policies have been complied with. Financial officers with payment authority under section 33 of the FAA are responsible for the quality of the account verification process performed pursuant to section 34 of the FAA.

The account verification process must provide for auditable evidence of verification, including the identification of the various individuals who performed the verification.

Reference: Treasury Board Directive on Account Verification.

4.5.2 Payment authority

Payment authority is the authority to requisition payments. Pursuant to section 33 of the FAA and the Payments and Settlements Requisitioning Regulations, 1997, requisitions for payments may be made only if the payment has been verified under section 34, if there are sufficient funds available in the appropriation to make the payment, and if the payment has not been made previously.

Payment authority is usually delegated to departmental financial officers.

The departmental financial staff verifies the minister's certification (or that of a delegate) under section 34 and any required supporting documentation before requisitioning payment under section 33.

While, for reasons of confidentiality, some payment requests by ministers do not have to be supported by receipts and other documents that provide evidence of goods and/or services received, these supporting documents should nevertheless be retained in the offices of the ministers. In the absence of supporting documentation, there is normally a requirement for an official certification or attestation by the minister, and an original signature (not that of a delegate) is required.

4.6 Internal audit

It is government policy that departments:

  • have an effective, independent, and objective internal audit function that is properly resourced to provide sufficient and timely assurance services on all important aspects of its risk management strategy and practices, management control frameworks and practices, and information used for decision making and reporting;
  • incorporate internal audit results into their priority setting, planning, and decision‑making processes; and
  • issue completed reports in a timely manner and make them accessible to the public with minimal formality in both official languages.

Any charges against the departmental appropriation, including those incurred by the minister or his or her office, fall within the scope of the internal audit function.

4.7 Minister's salary and motor vehicle allowance

A minister's salary and motor vehicle allowance are authorized by separate enabling legislation that does not require annual approval by Parliament. The salary of each Cabinet minister as well as of both Government House Leaders is provided for in section 4 of the Salaries Act and the minister's motor vehicle allowance is provided for in paragraph 63(2) of the Parliament of Canada Act.

The motor vehicle allowance for a minister of state is also statutory. However, salaries for ministers of state are not statutory and are included in the funds approved by Parliament in annual appropriation acts. As noted in section 6.2, the ministers of the Treasury Board have established a directive covering motor vehicles.

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