ARCHIVED - Guidelines for Ministers' Offices (2004-07) - Archived

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Part 4  Financial Management

4.1  Source of funds

Ministerial budgets are funds that are available for portfolio and other official government business. These budgets are in addition to and separate from entitlements that a Minister and Minister of State have as members of the House of Commons. This document deals only with the budgets of Ministers and Ministers of State.

The entitlements related to being a member of the House of Commons are explained in detail in the Member's Manual of Allowances and Services published by the House of Commons and questions related to these entitlements should be referred to the Office of the Comptroller, House of Commons.

A Minister's or a Minister's of State budget is an integral part of a department's budget and is subject to the same provision of theFinancial Administration Act (FAA) that apply to all departmental funds. The Financial Administration Act is intended to assure parliamentary control over public money by prescribing a financial control framework over all financial transactions. Many of the financial management provisions in the FAAare put in force through Treasury Board approved policies. Therefore, unless specifically exempted, Ministers' and Ministers' of State budgets are also subject to Treasury Board policies and regulations.

Ministers' and Ministers' of State budgets are subdivided into four parts and must be controlled separately. These budgets are funded from within the existing respective departmental reference levels. See Appendix C for more specific details on dollar values of the budgets and any limitations:

• Minister's salary and motorcar allowance (Budgets for the allowance for the Ministers of State reside with the Privy Council program and not with respective departments)
• Ministers' and Ministers' of State exempt staff salary budget;
• Ministers' and Ministers' of State operating budget; and
• Departmental staff salaries budget.

4.2  Transferring funds

Ministers and Ministers of State can transfer funds from their operating budget to their exempt staff salary budget and vice versa. The annual transfer limit is $100,000 for Ministers and $50,000 for Ministers of State. When funds are transferred to the exempt staff salary budget from the operating budget, the department must set aside an additional amount equal to 20 per cent of the funds to cover employee benefit costs. Alternatively if funds are transferred from exempt staff salaries to the Minister's or Minister's of State operating budget the amount includes 20 per cent of the funds in lieu of employee benefit costs. This 20 per cent transaction takes place outside the Ministers' office budgets. Only specified direct costs can be charged to the exempt staff salary budget. No transfers to or from the departmental salary budget are permitted.

Ministers' and Ministers' of State may carry forward a maximum of 5% of their unexpended exempt staff and operating staff budgets from one fiscal year to the next. This authority does not extend to the Ministers and Ministers of State departmental staff budget.

4.3  Accountability

Expenditures against a Minister's or Minister's of State operating budget, or against the exempt staff budget for the portfolio or for other official government business, are charged against a "program" or "operating" expenditure vote in the appropriate department. The public money in these budgets should only be spent with the usual high standards of prudence and probity. The Treasury Board Secretariat periodically compiles data on how much each Minister's or Minister's of State office spends on such items as salaries for exempt staff and departmental staff, and operating costs.

Ministers and Ministers of State are individually responsible and accountable for dealing with all public inquiries about the expenditures made for their offices - whether by them directly, by their staff or on their behalf including publicly justifying them if the need to do so arises.

4.4  Accounting for expenditures charged to Ministers' and Ministers' of State Budgets

Expenditures against a Minister's or a Minister's of State exempt staff budget and operating budget 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 the parameters (scope, purpose and limits) of the budget.

There are specific types of expenditures that should be charged to specific budgets in the Ministers' or Ministers' of State budgets as outlined below. There are some expenditures that may be reimbursed from the TB Vote 5 or charged to the departmental operating budget; these are also outlined below.

4.4.1  Ministers' and Ministers' of State Salary and Car Allowance

A Minister's and Minister's of State salary and motor vehicle allowance are statutory expenditures. This means that these resources are conferred on a continuing basis and are not voted upon annually by Parliament. However, as noted in section 6.2, the Ministers of the Treasury Board have established a policy covering motor vehicles.

4.4.2  Exempt staff salary budget

Ministers and Ministers of State, except the Prime Minister, receive a prescribed exempt staff salary budget to manage their Minister's or Minister's of State offices. This budget is over and above any budget to which the Minister or the Minister of State 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 and Minister's of State exempt staff salary budget. The President of the Treasury Board notifies each Minister and Minister of State of the annual amount in writing. The exempt staff budget is to be allocated from within existing departmental reference levels.

Budgets cannot be exceeded. Ministers who wish to have their budgets increased must seek the approval of the Treasury Board. The Minister and the President of the Treasury Board should discuss all such requests first.

When a Minister or Minister of State changes portfolios during the course of the year, the budget for the remainder of the year in the new portfolio is to be equal to the free balance remaining in the previously held portfolio as at the date of the change (after outstanding commitments have been paid). When a new portfolio is created, or when a Minister or Minister of State is appointed to a portfolio after a change in government, the new Minister or Minister of State is allowed a pro-rated amount representing the budget for the balance of the fiscal year in progress, as set by the Treasury Board.

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

• salaries (including pay while on leave);
• vacation pay for unused vacation leave 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 are entitled when a Minister or Minister of State ceases to be a Minister or Minister of State (see section 3.7.5).

4.4.3  Operating budget

A Minister's or Minister's of State operating budget covers all operating expenditures incurred by exempt staff or by departmental staff in the Minister's or Minister's of State office, provided that the costs are related to the conduct of portfolio or other official government departmental business.

The following costs will be charged to a Minister's or Minister's of State operating budget:

• official gifts, travel, hospitality and other services in relation to the department;
• charges for Ministers' Regional Offices common costs;
• conference and training costs for exempt staff;
• relocation of exempt staff to the Minister's or Minister's of State departmental office (on appointment only);
• office furniture and furnishings for Ministers, Ministers of State 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 or Minister's of State departmental office; and
• all other expenses related to the operation of a Minister's or a Minister's of State departmental office.

4.4.4  Other costs related to exempt staff personnel

Other exempt staff related costs, as described below are to be funded as indicated:

Departments may request funding centrally, through TB Vote 5, as for other public servants:

• maternity/parental benefits (Supplemental Employment Benefit);
• vacation pay for unused vacation leave on termination of employment when at termination of employment employee is eligible for severance pay;
• severance pay.

Departmental Operating budgets:

• separation pay.

4.4.5  Departmental staff salary budget

Costs related to departmental personnel assigned to a Minister's office must be charged to the departmental salary budget. These costs must be accounted for separately as part of the Minister's office expenditures. Costs such as equalisation payments, bilingual bonuses and overtime are to be included in the Minister's departmental staff salary budgets. Other personnel-related costs will be funded in accordance with existing departmental practices for Public Service employees.

4.5  Financial Authorities

Treasury Board policies related to financial management are generally found in the Comptrollership policies, which can be found at internet address: http://www.tbs-sct.gc.ca/pubs_pol/dcgpubs/TBM_142/siglist-eng.asp . These policies provide directives and guidelines governing the accounting and control of expenditures and outlines the framework for exercising financial authorities to satisfy the requirements of the Financial Administration Act (FAA). Essentially, there are two types of authority related to expenditures spending authority and payment authority.

Two major requirements related to financial authorities are: (1) No person can exercise both spending or payment authority for a payment, and (2) no person can exercise spending authority over a payment from which he or she can benefit personally, neither should a person be involved in any of the processing steps with respect to his or her own pay and benefits. Reference: Treasury Board Policy on Delegation of Authorities, which can be found at internet address: http://www.tbs-sct.gc.ca/Pubs_pol/dcgpubs/TBM_142/2-1-eng.asp.

4.5.1  Spending Authority

Spending authority consists of four elements expenditure initiation, commitment control, contracting and confirmation of contract performance and price.

The Minister or Minister of State is responsible for and has spending authority over the exempt staff and Minister's or Minister's of State operating budgets. Often, the Minister will delegate some of this authority to the Chief of Staff or other senior exempt staff. In the case of Ministers of State, some of this authority may be delegated to the Chief of Staff. However, this delegation does not apply in instances where a Minister or Minister of State wishes to hire, dismiss or set salaries for exempt staff.

4.5.1.1  Expenditure Initiation

This authority is delegated to Ministers and Ministers of State to initiate expenditures against their budgets, to requisition goods and services, to 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.

4.5.1.2  Commitment Authority

Under section 32 of the FAA, Ministers or Ministers of State, 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 exempt staff nor the Ministerial operating budgets are overspent.

Reference: Treasury Board Policy on Control of Commitments, which can be found at internet address: http://www.tbs-sct.gc.ca/pol/doc-eng.aspx?id=12192 .

4.5.1.3  Authority to Contract

The authority to acquire material and goods is delegated to the Minister or Minister of State from the Minister of Public Works and Government Services Canada. The Minister or Minister of State is ultimately responsible to Parliament for all contracting activity. Within the Minister's or Minister's of State office, the authority to contract may be delegated to the Minister's Chief of Staff or other senior exempt staff or to the Minister's of State 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 the spirit of the Financial Administration Act, the Government Contracts Regulations and the Treasury Board's contracting directives and policy. Please see part 7 for further details on contracting.

4.5.1.4  Certification and Verification, Payment for Work, Goods or Services

Expenditures incurred by Ministers, Ministers of State and their exempt staff are subject to the account verification process and must be certified under section 34 of the FAAprior to payment.

Under section 34 of the FAA Ministers and Ministers of State 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 FAA section 33 are responsible for the quality of the account verification process performed pursuant to FAA section 34.

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 Policy on Account Verification, which can be found at internet address: http://www.tbs-sct.gc.ca/pubs_pol/dcgpubs/TBM_142/Accver-eng.asp .

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, requisitions for payments may only be made 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 or Minister's of State 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 and Ministers of State 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 or Ministers of State. In the absence of supporting documentation, there is normally a requirement for an official certification or attestation by the Minister or Minister of State, and an original signature (not that of a delegate) is required.

Reference: Treasury Board Policy on Payment Requisitioning and Payment on Due Date, which can be found at internet address: http://www.tbs-sct.gc.ca/Pubs_pol/dcgpubs/TBM_142/2-6-eng.asp

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, the Minister of State, or their Minister's or Minister's of State offices fall within the scope of the internal audit function.

 

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