CFOB Accountable Advances Policy

For questions or comments, please contact us : NC-CFOB-Financial_Policy_Questions_Politique_Financière-GD

This policy replaces and merges departmental policies on Accountable Advances and Petty Cash and complies with the new Oct 1, 2009, TB Directive on Accountable Advances.
Effective Date: April 1, 2010

Please Note: This policy/document is currently under review and is being updated to reflect new procedures and terminology associated with the implementation of myEMS (SAP)

Temporary advances made for limited purposes such as temporary travel advances, vacation and salary advances. Standing advances are issued from the departmental Working Capital Account in a specific amount and for an indeterminate period. The dollar value of the Account is approved annually by Public Works and Government Services Canada (PWGSC) and forms a part of the government wide Central Working Capital Advance Fund. Petty cash and change funds are issued from the departmental Working Capital Account.

Temporary accountable advances are issued from a budgetary appropriation. There is no involvement of the Working Capital Account in the transaction.

On an annual basis, PWGSC requests a forecast of standing advances for the ensuing calendar year. Based on the forecast provided, PWGSC will allocate the Department funds to operate the Working Capital Advance Account.

At the conclusion of each fiscal year, departmental holders of standing advances are required to complete a certificate acknowledging the need, existence, amount and responsibility of each standing advance.

1. Policy Objective

To establish an effective and cost efficient use of all accountable advances while maintaining the required level of internal controls, aiming at and achieving prudent, risk mitigating management of the existing funds and their reporting at year end.

2. Policy Statement

Accountable advances are established only when required, are properly authorized, calculated based on the realistic estimates of expenses, or the volume and the nature of transactions for the change fund, are used solely for the purpose for which they were issued, are properly safeguarded, accounted for and accurately reported on a timely basis. Prior to issuing an accountable advance, other alternatives, such as credit cards and the exact change, should be examined.

3. Application

This policy applies to Human Resources and Skills Development Canada (HRSDC) including Service Canada hereinafter referred to as the “Department” or Departmental.

4. Policy Requirements

Establishing and Recording of Accountable Advances

All accountable advances including petty cash and the change fund must be entered in and accounted for on a timely basis in the departmental financial system which must facilitate reimbursement, collection and reporting of all outstanding advances. All Accountable advances must be accounted for in accordance with the - Accountable Advances Regulations, SOR/86-438

4.1 Establishing Petty Cash Funds

Petty cash funds shall be established throughout the department to facilitate the prompt payment of small amounts of money for miscellaneous purchases of goods or services.

Allocations of petty cash funds to the Regions are provided by the Chief Financial Officer Branch (CFOB) Corporate Accounting and Reporting, NHQ.

The establishment of an individual petty cash fund is authorized as follows:

	For $2,000 or less, by the Corporate Accounting and Reporting (CARD), CFOB
	For more than $2000 by the Treasury Board. A request for a petty cash fund in excess of $2,000, as well as any single expenditure in excess of $200 including taxes, requires a Treasury Board Submission.

Preference should be given to establishing smaller funds.

The amount of each petty cash fund is to be sufficient to meet the estimated petty cash needs including peak periods, based on a maximum period of one month between reimbursements. This will facilitate timely recording of expenditures against the RC budget.

Increases to petty cash funds can only be approved if the increase will not result in a total amount greater than the allocation made to the region.

4.2 Issuing a Petty Cash Fund

A petty cash fund is an accountable advance issued to an employee who has been appointed as the custodian by his/her manager.

A petty cash custodian is an individual who is responsible for the control, safeguarding and operation of a petty cash fund including requests for its replenishment.

Custodians must be employees of the Federal Government as defined in the Public Service Labour Relations Act.

Custodians should not have other responsibilities associated with the handling of Accounts Receivable or with verifying accounts and requisitioning payments (i.e. FAA sections 34 and 33).

There will be only one custodian of a petty cash fund at any given time.

If the custodian is absent no one else may access the fund unless the account is formally transferred.

If the custodian leaves the position, the petty cash fund must be counted and closed before the custodian leaves and another fund opened for the new custodian

4.3 Operating a Petty Cash Fund

Petty cash disbursements should be made for low value payments and only when it is more cost effective than other payment methods such as the Receiver General cheques or a departmental bank account cheque. The acquisition card should be the preferred alternative unless none is available or its usage is not suitable.

As a guideline, payments for petty cash purchases should be less than $50, but under no circumstances (except specific TB authority) can payments be greater than $200 including taxes.

Regional CFOB Accounting Operations may set the maximum petty cash payment at a lower level based on operational requirements.

A petty cash transaction that may exceed $200 cannot be split in two or more transactions to avoid the limits prescribed by the - Accountable Advances Regulations, SOR/86-438 for petty cash.

All petty cash funds shall be operated on an imprested basis. In other words, the cash plus the disbursement receipts on hand must equal the amount of the fund at all times.

Petty cash funds cannot be used to:

Make change
Cash personal cheques
Provide a money-changing service for employees
Give salary advances
Make loans
Pay for parking violation
Pay for purchases of any personal use items

If petty cash is used for any expenditure requiring pre-authorization, e.g. hospitality proper authorization with required documentation must be obtained before the expenditure is made.

If there is no preauthorizing document, the petty cash receipt must also be approved by the employee with the delegated expenditure initiation authority.

The fund custodian must verify all supporting vouchers/ documents being presented for payment from petty cash.

Each receipt to be reimbursed must be stamped and signed by an employee who has FAA section 34 signing authority for the relevant responsibility centre.

It is not acceptable under any circumstance for a custodian with section 34 authority to sign his/her own receipts for reimbursement; they must be signed by the employee’s superior with delegated signing authority for the relevant responsibility centre.

4.4 Safeguarding Accountable Advances

Both the petty cash fund and the change fund (float) must be safeguarded at all times, in a lockable cash box in a safe or filing cabinet approved by the RCMP or departmental security.

The petty cash custodian must keep keys in a secure place.

Custody of petty cash or change fund is limited to an employee of the Government of Canada as defined in the Public Service Labour Relations Act.

Employees must not remain custodians over an extended period of time unless an alternate control such as an independent periodic verification is performed.

Change of custodian of either change fund or petty cash fund along with the acknowledgment of the associated responsibilities must be documented. One of the following methods is to be used to change the fund custodian:

Closing out the fund so that the current custodian accounts for vouchers on hand and refunds the balance. A cheque is then issued to the new custodian; or

Transferring the fund by means of a written statement showing cash on hand and receipts. The statement is to be signed by the current and the new custodian and witnessed by a supervisor. If the current custodian is absent, the RC manager and the new custodian will together, to ensure the integrity of the funds, retrieve the petty cash fund and will both count and summarize the contents. Both the RC manager and the new custodian will, in writing, acknowledge the transfer.

When disbursements are not made frequently, petty cash funds should be checked at least once a week by the custodian to ascertain that the funds are secure and accounted for.

CFOB Regional Office Coordinators are to arrange for periodic unannounced verifications of the petty cash and change fund to take place at least once every 6 months to determine whether the funds are being used properly and to ensure that they are adequately protected against loss or misuse.

It must be ensured that the accountable advance custodian is informed that the custodian is personally responsible and accountable for the advance and any loss of that advance may be recovered from this individual.

At the end of the fiscal year, for the purposes of the Public accounts, the Standing Advance Certificate must be completed by each custodian to acknowledge responsibility for the petty cash fund.

4.5 Replenishment, settlement and refund

Standing advances are replenished to their original amount unless their use justifies a decrease, increase, or a complete closure and recovery of the advance.

Accounting for and replenishment of advances should be made no later than 10 days after the end of the month.

All payments made from the petty cash imprest account must be supported by the vouchers, verified, checked for approvals and reconciled with the total amount of imprest before the fund is replenished. Accompanying vouchers are to be voided in a manner that will prevent their reuse.

Temporary accountable advances are to be settled and fully refunded in a single payment. Accountable Advances Regulations, SOR/86-438. Standing advances are to be immediately refunded when:

The advance is no longer required in whole or in part; or

The holder is transferred to another government department; or the holder is no longer an employee of the department.

4.6 Reconciliation

The petty cash fund should be reconciled, and documented, at least monthly, but weekly reconciliation may be necessary depending on the frequency of usage of the fund. Cash on hand in the petty cash plus all the vouchers for purchases from the petty cash should be reconciled against the amount of petty cash fund authorized and maintained in the CMS. Results of the reconciliation must be promptly reported to the supervisor.

The change fund if used daily should be counted daily.

Cash shortages must be documented, reported, investigated and accounted for following the reconciliation of a petty cash or change fund.

Losses of money must be treated in accordance with the TB Directive on Losses of Money or Property and departmental Policy on Losses of Money and Illegal Acts Against the Crown. If it is determined that a cash shortage is the responsibility of the fund custodian because of malfeasance or negligence or because the fund has not been duly accounted for, the shortage is to be recovered from the fund custodian in accordance with the subsection 76(4) or section 78 of the Financial Administration Act.

If it is determined that the cash shortage is not the responsibility of the fund custodian, a replenishment of the fund is to be charged to the departmental appropriation in accordance with the TB Directive on Losses of Money or Property.

Cash overages must be documented and investigated. If the source of the overage can be identified, it is to be refunded to its rightful owner.

If the source of overage cannot be determined the overage is to be deposited in the Miscellaneous Other Revenue account in accordance with Directive on Receipt, Deposit and Recording of Money.

4.7 Segregation of Duties

An adequate separation of duties of employees who deal with petty cash and change funds and other advances is maintained. No employee should have custody of both a petty cash and a change fund (float).

A complete separation of duties related to maintaining accounts receivable records, verifying accounts for payment, exercising financial signing authority and requisitioning payments must be implemented whenever possible.

When a complete separation of duties cannot be implemented because of organizational structure, availability of staff, or materiality, duties must be combined in such a way that a maximum separation is achieved. Wherever feasible, periodic rotation of functions should be practiced.

The beneficiary of any accountable advance or a petty cash fund custodian is not to exercise financial signing authority pursuant to section 33 or 34 of the Financial Administration Act under any circumstances.

The function of a custodian should be rotated on a regular basis. If operational circumstances do not allow for a rotation, an independent, unannounced periodic count should be implemented.

4.8 Change Fund (float)

The change fund should normally be at a maximum of $100 per custodian and the maximum of $500 per office.

Any deviations from these amounts must be justified in writing by the Citizen Services office manager requesting the increase and approved by the Regional CFOB coordinator.

Consideration for an increase per office or the float holder will be based on the following:

The volume of cash payments received in an office;

The type of payments normally received in this office;

The proximity to a financial institution where employees can have large denomination exchanged for smaller bills; and

The number of Customer Service Officers (CSOs) in the office in the absence of an employee while they are visiting the financial institution to exchange large denominations.

4.9 Temporary Advances- Travel, Emergency Salary and Vacation

All temporary advances must be charged to the proper annual appropriation when issued.

The amount of any temporary advance must comply with any limitations imposed by directives, regulations and departmental policies. Travel advances must be issued in accordance with the National Joint Council Travel Directive, emergency salary advances must be issued in accordance with the TB Directive on Term and Conditions of Employment and vacation advances are governed by collective agreements.

Departmental HR should be consulted when emergency salary advances and vacation advances are being considered.

All required documentation to obtain a temporary advance should normally be submitted for action in accordance with either regional or NHQ requirements.

Any temporary advance or funds from these advances that are unused or are no longer required in whole or in part must be immediately refunded.

Any amount received as a refund or repayment of a temporary advance in the same fiscal year in which the advance was made must be deposited to the credit of the Receiver General and be credited to the appropriation against which the advance was charged.

5. Roles and Responsibilities

5.1 Chief Financial Officer Branch (CFOB) National Headquarters (NHQ) – Corporate Accounting and Reporting

Is responsible for:

The request and the administration of the total Working Capital Advance allocated annually to the department by PWGSC;

The issue of advances and the associated instructions and guidelines to the CFOB Regional offices and for ensuring that the CFOB Regional Offices efficiently and effectively administer working capital advances, in accordance with the Treasury Board and PWGSC directives and regulations;

The maintenance of a small working capital reserve to allow for the unforeseen emergency situations and other unforeseen demands for advances from the regions;

The maintenance of central and subsidiary records of all advances in the financial system;

The regular, at least monthly reconciliation of all advances and investigation and corrective action if necessary;

The annual reporting of the departmental Working Capital Advance in the Public Accounts of Canada;

The consultations with the Financial Policy and Internal Control on issues resulting from non- compliance with this policy and or TB Directive on Accountable Advances; and

The corrective action if non-compliance with the Directive on Accountable Advances has occurred.

5.2 CFOB Regional Office Coordinator

CFOB Regional Office Coordinators are responsible for:

Reassessing, on an annual basis, the need for each standing advance issued taking into consideration expected and or unforeseen expenditures and the volume and the nature of transactions, associated with the use of the change fund and communicating it to the headquarters;

Forecasting and submitting to the CFO national headquarters, annually by November 15, the amount of each type of working capital advance required for the Region for the new fiscal year;

Ensuring the effective and efficient administration of the working capital advance granted by the CFOB national headquarters;

Issuing of instructions and guidelines to the advance holders within their regions;

Ensuring, unless otherwise specified, that temporary advances are reimbursed within a reasonable period of time or recovery action is initiated;

Obtaining a certificate from advance holders confirming the amount of each accountable advance for each fiscal year.

5.3 Departmental Responsibility Centre Managers

Responsibility centre managers have overall responsibility for ensuring the integrity of all advances. They are responsible for:

Assessing the need and estimating and rationalizing the amount of advances requested;

Reviewing on a semi-annual basis the continued need for advances;

Ensuring that the dollar value of advances does not exceed operational needs;

Providing to the Regional CFOB Coordinator written justification for change float amount in excess of the stipulated limit;

Conducting a semi-annual surprise count of the petty cash to ensure the integrity of the fund;

Requesting regional accounting operations to transfer advances between responsibility centres;

Ensuring that all advances are issued in the name of an individual and that such individuals are fully aware that they are personally responsible and accountable for the advance and any loss or shortage in respect of that advance may be recovered from them;

Ensuring that employees responsible for accountable advances are provided copies of the CFOB Accountable Advances Policy and the Policy on Losses of Money and Illegal Acts against the Crown;

Ensuring that the CFOB instructions and guidelines are adhered to;

Providing information regarding the advances under their control if requested by CFOB; and

Consulting/ cooperating sharing with the CFOB on issues of accountable advances

5.4 CFOB Regional Financial Services Offices

CFOB financial services offices are responsible for:

Reassessing the need of each standing advance issued taking into consideration expected and or unforeseen expenditures and communicating it to the regional coordinator;

Scrutinizing all requests for advances including standing travel advances;

Ensuring that advances authorized are kept to a minimum and reimbursed quickly and efficiently;

Ensuring that all advances are issued in the name of an individual and that such individuals are fully aware that they are accountable for the funds;

Ensuring that all advances are entered/ reflected in the departmental financial system and supported by the subsidiary records, if applicable;

Ensuring that all permanent advances are agreed to the entries in the CMS, especially when the amount of the permanent advance changes from the amount established at the beginning of the fiscal year;

Requesting refund of advances or part of an advance that is no longer required or which is too high for operational needs; and

Ensuring that each advance holder submits a reimbursement claim in accordance with instructions.

6. Delegation of Authority

All standing advances must be approved in accordance with the delegation of authority for standing advances.

7. Monitoring and Compliance

The CFO will monitor the implementation of this policy in the department. Any significant deviations resulting from non-compliance with this policy will be investigated and corrective steps recommended. Major cases of non-compliance, and corrective steps taken, will be reported to the Office of the Comptroller General of Canada.

This policy must be applied in conjunction with the Treasury Board Directive on Accountable Advances and Treasury Board Guideline on Accountable Advances.

8. Defenition

Accountable Advance means:

A sum of money advanced to a person from an appropriation, such as a vacation advance; and
A sum of money advanced to a person from the sum of money described in paragraph (a) for which the person is accountable and includes imprest funds and working capital advances, such as Petty Cash administered under an imprest system.

Standing Advance Forecast - Working Capital Advance Forecasting Report for the period beginning January 1 of each year provided by the department to the Banking and Cash Management Sector of Public Works and Government Services Canada, showing total amounts of each type of standing advance required by the department for the next calendar year.

Change Fund (float) - cash held by a cashier or other individual for the purpose of making change.

Petty Cash Fund – cash kept on hand under an imprest system for making cash payments for small miscellaneous and often unforeseen expenditures.

Imprest System – cash plus disbursement receipts equal the approved amount of fund.

Petty Cash Expenditure – a disbursement made from a petty cash fund.

Standing Accountable Advance - an accountable advance made in a fixed amount to a person or an office for incurring expenditures on a continuing basis and reimbursed to that fixed amount each time an accounting for expenditures is made. Such advances should be accounted for shortly no later than 10 days after the end of any month in which expenditures are incurred.

Temporary Accountable Advance – an accountable advance such as a salary or vacation advance charged directly to an appropriation.

Standing Advance Year-End Certificate - a special individual certificate that, when completed, confirms/verifies the existence, amount, possession and location of each standing advance being used within the department.

Standing Travel Advance - an accountable advance given to an employee whose duties require them to travel on a frequent basis. These advances are issued rarely due to the government- wide preference for the use of an Individual Travel Card.

Working Capital Advance - funds approved by and given annually to the Department by the PWGSC, based on the Standing Advance Forecast, to operate Petty Cash, and Change Funds.

Employee of the Government of Canada – a person employed in the Public Service as defined in the Public Service Labour Relations Act.