This document contains the entire text of the policy as revised on July 1, 2002. This policy replaces the version dated October 31, 1995.
Receivables are an important asset of the government that need prudent management. Across government these receivables involve billions of dollars and a wide range of transactions that affect Canadians daily. Given this extensive scope, the sound management of receivables is significant to the government achieving its overall objective of responsible fiscal management.
This policy sets forth the management framework for the effective administration of this asset. Integrated within the policy are key roles and responsibilities, which are summarized as follows:
Treasury Board – the Financial Administration Act sets forth the statutory authority for Treasury Board to act on matters relating to 'receivables from any source whatever'. The authorities are identified in Section 10 of the policy. In support of the Treasury Board's responsibilities, the Secretariat is accountable for monitoring the effectiveness of this policy. Section 9 of this policy describes these responsibilities.
Ministers – overall, effective receivables management is a key component of Ministerial accountability for the sound financial management of their departments and agencies. Specifically, with respect to the collection of receivables, the Financial Administration Act provides an important role for Ministers through their authority to consent to requests for set-off for the purposes of recovery of debts due to the Crown. Appendix B.2.4 fully describes these responsibilities.
Deputy Heads (and their delegated officials) – in support of the ministerial accountability referred to above, Section 6 of the policy describes the mandatory requirements that are the responsibility of departments. Section 6.2 addresses further requirements that must be addressed by departments and agent Crown corporations. Deputy heads are expected to adhere to the procedural requirements addressed in Section 7. If other procedures are used, they must justify and document the reasons for doing so.
For many programs, receivables are an inherent aspect of program delivery. As long as government levies taxes, provides products, services and programs of financial assistance, there will be a receivables portfolio to manage.
The government's strategy for managing receivables is to pursue the horizontal management of knowledge and information in order to achieve the best results. This strategy addresses receivables management by treating the government as a single entity, where departments must assume a corporate responsibility for the global management of these assets in addition to their specific responsibilities for receivables under their control.
The adoption of the horizontal management approach provides the opportunity for the effective use of information and resources among departments and agencies. To this end, all departments and agencies will be encouraged to share information technology, collection facilities, practices and procedures with a view to improving the management of the global receivables portfolio, as well as the effectiveness and efficiency of their respective collection operations.
To ensure that all government accounts receivable are managed fairly, efficiently and effectively to recover such receivables and minimize the risk of loss.
It is government policy:
This policy applies to all organizations considered to be departments under section 2 of the Financial Administration Act. For the purposes of sections 6.2 and 7.2 of this document, this policy also applies to agent Crown corporations.
To limit unnecessary disclosure of the three information elements identified above, only the information that is necessary to comply with the purpose of the request is to be provided. Therefore, for requests concerning attempts to locate a person, only the first and second elements of information are to be provided. When a request concerns use of set-off authority, all three of the above elements of information may be necessary, and to the extent possible, are to be provided to the requestor.
Federal institutions that are subject to the Privacy Act or the Personal Information Protection and Electronic
Documents Act must also comply with their obligations under these Acts. Please refer to Appendix B.7 for the procedural
requirements concerning the sharing of personal information.
Departments are to:
The Treasury Board of Canada Secretariat will monitor the effectiveness of this policy by noting departmental internal audit and program evaluation reports and conducting reviews where warranted. The policy will be reviewed in five years time.
This policy is issued pursuant to sections 7(1)(c) and 9(3) of the Financial Administration Act.
Note:
This reference section is an integral component of this policy. In addition to the requirements addressed in this policy, the references identify other Acts, Regulations, policies and publications that shall be followed in the management of receivables.
Personal Information Protection and Electronic Documents Act
Receipt and Deposit of Public Money Regulations, 1997 – issued pursuant to section 17 of the Financial Administration Act
Interest and Administrative Charges Regulations, 1996 – issued pursuant to section 155.1(6) of the Financial Administration Act
Debt Write-off Regulations, 1994 – issued pursuant to section 25(1) of the Financial Administration Act
Security for Debts Due to Her Majesty Regulations, 1987 – issued pursuant to section 156 of the Financial Administration Act
Interdepartmental Settlements Policy
Policy on Allowances for the Valuation of Assets and Liabilities
Policy on Charging Interest on Overdue Accounts
Policy on Classification and Coding of Financial Transactions
Policy on Deletion of Debts Due to the Crown (under revision)
Policy on Deposits
Policy on Evaluation
Policy on Financial Systems and Controls
Policy on Internal Audit
Policy on Loans
Policy on Recording Receipts of Money
Policy on Recovery of Amounts Due to the Crown (from employees)
Policy on Statutory Financial Reporting
Policy on Privacy and Data Protection (which includes the Policy on the Use of the Social Insurance Number and the Policy on Data Matching)
Government Security Policy
Chart of Accounts
Accounting Manual
TB Circular No. 1989-2, "Policy Related to the Regulations Governing Security for Debts Due to Her Majesty"
TB Circular No. 1987-18, "Policy on Accepting Credit Cards as Means of Payment for Goods and Services Provided by the Government"
Public Works and Government Services Canada Public Accounts Instruction Manual
Receiver General Directives and other Bulletins
Practitioner's Guide to Management of Receivables in the Federal Government
Please direct enquiries about this policy to your departmental headquarters. For interpretation of this policy, departmental headquarters should contact:
Financial Management Policy Division
Comptrollership Branch
Treasury Board of Canada Secretariat
Ottawa, Ontario
K1A 0R5
Telephone: (613) 957-7233
Facsimile: (613) 952-9613
This Appendix identifies types of debts managed by departments that may need to be recognized and administered in the department's receivables management system. Not all of these debts will appear in the government's consolidated financial statements, although they may be reported in departmental reports. Examples of accounts that may not appear in the government's financial statements include debts between federal government departments and some disbursements made under repayable contribution agreements. For repayable contributions, the disbursed amount may not result in a receivable if the condition that triggers repayment is not met.
These debts include, but are not limited to, the following:
Departments will use whatever collection method is appropriate and cost-effective in each circumstance. Collection actions will usually be based on the methods and information outlined below.
Departments may act on a debtor's voluntary authorization to deduct the amount of a debt from payments the Crown owes the debtor. For voluntary transactions, it is not required to seek ministerial approvals that are required before processing a set-off. Voluntary assignments to the Crown of payments due to the debtor by a third party should be sent to departmental legal advisors for review.
Departments may collect an account by accepting payment that represents the present value of an established repayment schedule or an amount due at a future date as payment-in-full. In calculating the amount of a present-value payment, departments must determine and apply an appropriate discount rate. This discount rate should approximate the cost of borrowing to the federal government and the risk factors associated with the account. The Debt Write-off Regulations provide the authority to write-off the balance that remains after payment has been accepted as full settlement of the debt.
The policy related to the Security for Debts Due to Her Majesty Regulations is intended to encourage departments to require security to protect the payment of amounts owing to the Crown. Neither the Regulations nor the policy oblige a debtor to provide security. Departments must decide on a program basis, when requiring an amount to be paid to the Crown, whether security could be required in order to facilitate the collection of debt.
Departments should assess when it is appropriate in their collection process to realize the securities provided to the Crown.
Section 155(1) of the Financial Administration Act provides the general authority for the set-off of payments for debt collection when specific program legislation does not override this general authority.
Before initiating a set-off, every possible attempt should be made to advise the debtor that set-off action is being contemplated. If departments decide to pursue set-off against debtors that have already made satisfactory repayment arrangements, then debtors should be advised of this process when establishing the repayment arrangements with the department.
Departments must obtain the consent of the paying department's Minister (or his or her delegate) to the set-off except in cases of set-offs to recover overpayments of salaries, wages, outstanding travel advances and employment-related allowances of federal public service employees. Both the department responsible for collecting the debt and the department responsible for making the payment should agree to the collection rate. Set-offs against contractual payments are normally for the full amount.
Departments should make every effort to avoid creating undue hardship when initiating set-offs against government payments.
The following are the procedural requirements for using private-sector collection agencies and paying for their fees:
A compromise settlement involves accepting partial payment as fully satisfying a debt and releasing the debtor from any obligation to pay the balance. The authority to accept a compromise settlement is held by the Minister of Justice, who normally acts on the advice and recommendation of the appropriate Minister.
Compromise settlements are normally considered in a process that is incidental to litigation. The necessary condition for accepting a compromise settlement is the determination that the cost of litigation would be more than the expected recoveries or, when the debtor is on the verge of bankruptcy, that the settlement exceeds what the departments would receive if the debtor went bankrupt. It may be determined that a compromise settlement should be accepted either before or after the commencement of legal proceedings.
For settlements based on compassionate grounds or public interest considerations, a forgiveness or remission authority is required. Departments must write off the difference between the original debt and the amount of the compromise settlement in accordance with the Debt Write-off Regulations and the Policy on Deletion of Debts Due to the Crown.
There is a need to differentiate between administrative garnishment initiated by departments under authority of their program legislation and garnishment proceedings issued under provincial law. In the former, the Department of Justice Canada plays no role, except in circumstances when departments consider it appropriate. In the latter, the departmental legal counsel must be consulted.
Unless departmental legislation gives specific authority, all cases involving legal proceedings must be referred to the Department of Justice Canada.
Departmental legal services should be consulted to determine any other assistance they may provide in the collection of debts to the Crown.
Unless the limitation period for collections of debts is specified in program legislation, the applicable provincial statute may apply to federal debts. As the collection (including set-off) of Crown debts is not always bound by provincial legislation, advice should be sought from departmental legal counsel to confirm the applicable limitation period.
The authorities for sharing of information to locate debtors for the purposes of collecting amounts due to the Crown are as follows:
TB Policies regarding the administration of the Privacy Act, including the Privacy and Data Protection Policy, which includes the Policy on Data Matching and the Policy on the Use of the Social Insurance Number (SIN) must be observed.
To ensure compliance with the provisions of the Privacy Act, parties shall establish bilateral agreements governing the exchange of personal information identified in section 6.2 of this policy regarding policy requirements on sharing debtor information. The purpose of the agreements is to set out the parameters of the planned information exchange in accordance with sections 4 through 8 of the Privacy Act, which refer to the collection, use, disclosure, retention, disposal and protection of personal information.