CIRCULAR NO: 1986-11
T.B. NO: 801389
OUR FILE NO: 4295-09, 4295-14
DATE : March 25, 1986
TO: Deputy Heads of Departments and Heads of Agencies and
Crown Corporations
SUBJECT: Drawdown Policy for Crown corporation Funding
Purpose of Circular
1. The purpose of this circular is to inform departments, agencies, and Crown
corporations of a new Treasury Board policy on the funding of Crown
corporations.
Application
2. This policy applies to all Crown corporations receiving budgetary
appropriations, whether lapsing or non-lapsing, except where corporations use
Receiver General cheque issue services to pay all their accounts. The policy
does not pertain to funds held in trust, or to funds belonging to a program for
which there is no budgetary appropriation. The policy will apply from April 1,
1986.
Authority
3. Section 5(1) of the Financial Administration Act
(FAA).
Background
4. Over the last few years, concerns have been expressed about the fact that
some Crown corporations are drawing upon appropriated funds in advance of need.
5. After taking into account the views of Crown corporations and departmental
officials respecting the viability of alternative mechanisms to address these
concerns, the Treasury Board has concluded that a drawdown policy should be
implemented. A drawdown mechanism ensures that, while Crown corporations
continue to receive adequate funding to carry out their mandated activities,
this funding is received only when consistent with immediate cash requirements.
Definition
6. In this circular, "Crown corporation" has the same meaning as in
subsection 95(1) of the FAA.
Policy
7. Crown corporations shall draw on appropriated funds (including any amounts
owed to them in accordance with Section 9.13 of the Treasury Board Guide
on Financial Administration (TB Guide)), according to their short-term
need for funds to carry out the businesses and activities outlined in annual
corporate plans. Accordingly, draws will be closely tied to the net
disbursements (excess of payments over receipts) that have to be made in the
period encompassed by the drawdown. These individual draws shall be for as short
a period as operationally feasible (for example, twice monthly, or, in some
instances, monthly). Departments and agencies exercising payment authority over
appropriations relating to Crown corporations shall implement an acceptable
drawdown process with each Crown corporation on a case-by-case basis to give
full effect to this policy.
8. Unless specifically authorized by Parliament in respect of designated
appropriations, Crown corporations shall not draw upon appropriated funds in
advance of need. However, in the interests of good cash management, Crown
corporations may earn interest on any temporary
cash surpluses that may take place from time to time through the course of the
year.
9. Pursuant to section 30 of the FAA,
appropriations (other than those with non-lapsing authority) lapse at the end of
the government's fiscal year. Crown corporations shall not make drawdowns in
excess of need at year-end for the purpose of preventing appropriated funds from
lapsing.
10. Where section 26 (FAA) authority has been
delegated to officials of Crown corporations, they are reminded that they shall
observe the provisions of Chapter 9 of the TB Guide
concerning payment authority.
11. Crown corporations shall apply good cash management practices with
respect to their payables and receivables.
Guidelines
12. Government contracts with ongoing recurring payments contributing
significantly to the funding of individual Crown corporations (e.g., payments by
Transport Canada for marine and rail services) should include clauses consistent
with this policy. Where contracts are already in place as at April 1, 1986 and
cannot readily be adjusted, existing terms and conditions should be observed
until these contracts expire.
Implementation
13. A corporation may be exempted from this policy, in whole or in part,
through a submission to the Treasury Board.
Enquiries
14. Enquiries concerning this circular should be directed to the:
Director,
Cash Management Directorate,
Policy Development Branch,
Office of the Comptroller General,
Ottawa, Ontario.
K1A 1E4
Tel. (613) 957-9679
.
J.A. Macdonald,
Deputy Comptroller General,
Policy Development Branch
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