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The pay system is both a personnel and a financial system. In accordance with the Guide on Financial Administration, the senior financial officer in the department is responsible for ensuring that proper accounting controls are in place and operating within the departmental portion of the pay process. Similarly, the processing of pay and issuance of cheques within the Department of Supply and Services should incorporate adequate financial controls.
principles Contained in Guide
Spending authority is subdivided into two elements, before and after an expenditure; that is
1) authority to initiate an expenditure against a budget; and
2) authority to certify satisfactory contract performance and price before requisitioning payment.
The authority to initiate an expenditure is given to the Minister and deputy head of a department by the Financial Administration Act, the Government Contract Regulations, Travel Directive, Removal Expense Regulations and a host of similar regulations made under authority of the Act. Section 27 of the Act requires the certification of contract performance and price by the deputy or other person designated by the Minister.
Spending authority has been defined in this way in an attempt to allow responsibility centre management to work. It gives primary responsibility to operational managers for authorizing expenditures charged to their budgets and they are accountable for the prudence and propriety of each individual transaction.
The initial control point is where a decision is made to expend funds for staff, supplies or services. The second control point is where the manager (or delegate) confirms that the goods or service was satisfactorily provided in accordance with the contract and that the price is correct.
In the application of these principles to pay administration, the initial stage of authorizing expenditures should be delegated to the manager. The second stage of authorizing expenditures requires a certification under FAA Section 27 by the manager (or delegate).
For appointment and revision type transactions, each of which would have been authorized by the manager, Section 27 can be certified by Pay and Benefits on behalf of the manager. This certification is made under Section 27(b) which allows for advance payment because, in fact, no services have been provided at the time of pay input, but controls applied subsequently in the departmental system must ensure entitlement to cheques requisitioned on a recurring payment basis before individual cheques are released to employees.
For extra duty payments or payments in arrears, the certification is being made under Section 27(a) because services have been provided. Wherever possible, such as where departments input leave and extra duty pay documents to a departmental system on an occurrence level reporting basis, Section 27 should be certified by the manager.
Current practices concerning bulk salary revisions initiated by Treasury Board, e.g. collective bargaining agreements, will be reviewed for consistency with the principles of this circular.
It should be emphasized that whoever is delegated this Section 27 authority, is responsible to ensure accurate input to the pay system; errors subsequently identified by manual verification or computer edit within DSS will be returned for correction to their source.
Principles Contained in Guide
Payment authority is the authority delegated by the Minister, under Section 26 of the FAA, to financial officers of the department. Officers with payment authority are responsible for:
(a) ensuring that there is a complete and proper system of verification designed, developed and implemented at the responsibility centre level;
(b) performing adequate sampling tests to assess the quality of the review at the primary level of responsibility;
(c) checking that the charge is legal; and
(d) certifying that there are sufficient funds to pay the obligation and meet all other outstanding commitments.
The guide also states that spending authority and payment authority must not be exercised by the same person in respect of a particular payment. This principle recognizes the need for a division of duties in order to maintain probity.
In the previous Section, it was recommended that spending authority be delegated to managers and that certification be made by the manager (or delegate) according to the type of transaction. Because of the need for independent control and to ensure that all the requirements for the control of funds and the requisitioning of payments are met, payment authority should be vested with financial officers. An important factor in recommending that financial officers certify under Section 26 is that the certification required under this section includes the statement that the payment will not result in an expenditure in excess of the appropriation and will not reduce the balance in the appropriation to the extent that it would be insufficient to meet the commitments charged against it.
Certain pay-related data, such as status changes which are input to the pay system, do not require certification under the FAA. For control purposes, however, these documents should be approved in the same manner as other documents to ensure that changes other than pure status changes are not being input without proper approval.
Principles Contained in Guide
Authority to give commitment certificates is delegated by the deputy head to appropriate officers. Before a commitment is entered into, a commitment certificate is required under Section 25 (l) of the FAA that there is sufficient unencumbered balance available in the relevant appropriation. This authority, which is basically a sub-division of spending authority, may be delegated to the some officers having spending authority or to some central organization, as best suits the department.
The pay administration process has two major responsibilities relative to commitment control. Firstly, it must ensure that the Section 25 certification is obtained where required before any further processing is carried out. Secondly, the pay administration process must supply the required information to finance for the maintenance of the commitment control system.
Commitment control over extra duty pay and certain allowances must be handled in a different manner. In this case, the commitment is made when a manager instructs or gives permission to an employee to work extra duty. After the overtime has been worked and an extra duty report is prepared resulting in a pay input, an expenditure situation exists and a Section 25 certification should not be required by the pay process.
The control here should be based on financial reports which show the manager the amount expended against the amount budgeted.
Treasury Board Circular 1970-131 sets out the requirements for man-year control within departments, including a quarterly report to Treasury Board Secretariat. The Circular indicates that man-year utilization may be measured using information from paylists. Many departments have much more sophisticated systems which get their man-year utilization data from special reports prepared by managers, time sheets or management information systems, which perhaps use the 2517T for input.
Nevertheless, the need for man-year control within the department may require a combined certification for the availability of man-years and dollars on the staffing action request documentation.
The certification of availability of man-years would be a departmental requirement in response to a TBS control; it is not
statutory or pay requirement unless used as a basis for certification of availability of funds in departments where salaries are
held in a single departmental allotment.