Policy on Recording Receipts of Money

Table of Contents

1. Effective date
2. Policy objective
3. Policy statement
4. Application
5. Policy requirements
6. Procedural requirements
7. Monitoring
8. References
   8.1 Authority
   8.2 Relevant legislation
   8.3 Treasury Board Secretariat publications
   8.4 Other publications
9. Enquiries

Appendix A - Definitions

1. Effective date

This chapter contains the entire text of the policy as revised June 1, 1996. Chapter 3-2 of the "Comptrollership" volume dated October 1, 1994, is cancelled and replaced by this policy and Chapter 3-5, Policy on Receivables Management.

2. Policy objective

To ensure that all receipts of money are accurately accounted for and adequately controlled to prevent or reduce error, fraud, or omission.

3. Policy statement

It is government policy that all receipts of money be recorded in both departmental accounts and the accounts of Canada.

4. Application

This policy applies to all organizations considered to be departments under section 2 of the Financial Administration Act.

5. Policy requirements

5.1 Departments must establish procedures to ensure that:

• receipts of money are properly classified and promptly recorded in both the accounts of the department and the accounts of Canada; and
• there are proper internal controls over receipts and the recording of money.

5.2 Departments must classify receipts of money into either public or non-public moneys. Please refer to Appendix A for their definitions.

5.3 Departments must record the following receipts of money in the accounts of a fiscal year that has just ended:

• receipts of money deposited and credited to the Receiver General by the Bank of Canada or any other financial institution by March 31;
• receipts of money identified as belonging to the fiscal year that just ended in the cut-off process in accordance with the directive on year-end procedures by the Receiver General issues every year.

5.4 Departments must record repayments of revenues and receipts of money in the fiscal year in which the repayment is made:

• if the repayment occurs in the same fiscal year as the reception occurred, the refund is recorded against the account to which the original revenue or receipt was posted;
• if the repayment occurs in a subsequent year, it is generally recorded against a statutory expenditure account "Refund of previous year revenue".

5.5 Departments must provide a complete audit trail of their recording process:

5.6.1 By using paper or electronic documents that serve as proper authorization and objective evidence (e.g., inventory release memoranda, official receipts and cash register slips) to generate, authorize, and support accounting entries. These documents must contain the same authorizations and information as those required by the operational staff to provide the goods or services.

5.6.2 Departments must provide for control of the serial-number sequence of accounting documents and Electronic Funds Transfer (EFT) transactions, both at the time of issue and periodically thereafter; and

5.6.3 The audit trail must permit the tracing of any transaction from its inception to the final outcome and from the accounting records back to the original transaction.

6. Procedural requirements

6.1 Departments must separate the duties of employees who deal with receipts of money. A complete separation of duties is the ideal. However, depending on the organizational structure, availability of staff, materiality, alternative controls and other pertinent conditions, departments must at the very least, combine duties judiciously of the functions related to granting credit, maintaining accounting records, and handling and reconciling cash.

6.2 Employees must not control any one function continously for an extended period of time. Mandatory annual leave and job rotation can reveal any undesirable practices.

6.3 Departments must design control accounts, which summarize and provide a total of all related individual receipts of money, to ensure the integrity and reliability of the individual accounts.

7. Monitoring

7.1 Departments must ensure that their recording of receipts of money activities are effective and efficient.

7.2 Departments should undertake periodic reviews and audits of their recording of receipt of money to ensure that they are established and operated in accordance with this policy.

7.3 The Treasury Board Secretariat will monitor the effectiveness of this policy by reviewing departmental audit reports and performance reports.

8. References

8.1 Authority

This policy is issued pursuant to the Financial Administration Act.

8.2 Relevant legislation

Financial Administration Act (R.S.C., 1985, Chapter F-11) sections 2, 17, 17.1, 20, 39 and 159.

Receipt and Deposit of Public Money Regulations, C.R.C., c. 728, as amended by SORs/80-449, 83-828 and 94-402.

Repayment of Receipts Regulations, C.R.C., c. 729, as amended by SOR/81-920 and SOR/93-258.

Revenue Trust Account Regulations, C.R.C., c. 730, as amended by SORs/83-829, 93-258 and 94-402.

8.3 Treasury Board Secretariat publications

Policy on Deposits, chapter 3-3, "Comptrollership" volume of the Treasury Board Manual.

Policy on Specified Purpose Accounts, chapter 5-7, "Comptrollership" volume of the Treasury Board Manual.

Chart of Accounts volume, Treasury Board Manual, sections 8.2.2 and 8.3.2.

8.4 Other publications

Receiver General Directive on year-end procedures.

9. Enquiries

Please direct enquiries about this policy to your departmental headquarters. For interpretation of this policy, departmental headquarters should contact:

Financial Management Policy Division
Financial and Contract Management Sector
Financial and Information Management Branch
Treasury Board of Canada, Secretariat
Ottawa, Ontario
K1A 0R5

Telephone: (613) 957-7233
Facsimile: (613) 952-9613

Appendix A
Definitions

1. Money and negotiable instruments

Section 2 of the Financial Administration Act (FAA), defines those terms:

"money" includes negotiable instruments;

• "negotiable instrument" includes any cheque, draft, traveller's cheque, bill of exchange, postal note, money order, postal remittance and any other similar instrument.

2. Public moneys

(a) Public moneys are defined by the FAA as those moneys which belong to Canada and which the Receiver General or any other public officer or authorized persons receives and collects. These include:

duties and revenues;

money borrowed or received through the issue or sale of securities;

• money received or collected for or on behalf of the Government of Canada; and
• money received for a special purpose.

(b) Public moneys are classified by major source (e.g., tax and non-tax revenue).

3. Non-public moneys

Non-public moneys are those that are specifically defined as non-public money in a statute, such as the National Defence Act. They also include money that the Government of Canada receives in error.

Note:

The Chart of Accounts volume of the Treasury Board Manual provides further details on the classification of revenues and receipts of money.