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Core Policy and Procedures Manual


Revenue Management

Table of Contents

7.0

 Revenue Management
  Part I Revenue
  7.1

Objectives
  7.2 General
  7.3 Policy
    7.3.1

Revenue Recognition
    7.3.2 Fees and Licences
    7.3.3 Cost Sharing Arrangements
    7.3.4 Internal Control of Public Money
    7.3.5 Delegation of Authority
    7.3.6 Credit Management
    7.3.7 Billing and Payment
    7.3.8 Acceptance of Electronic Payments
    7.3.9 Receipts and Deposits
    7.3.10 Accelerated Transfer Accounts
    7.3.11 Refunds
    7.3.12 Dishonoured Cheques
    7.3.13 Exchange Rates
    7.3.14 Suspense Accounts
    7.3.15 Insurance Proceeds
  Part II Accounts Receivable
  7.1

Objectives
  7.2 General
  7.3 Policy
    7.3.1

Recording of Accounts Receivable
    7.3.2 Control and Subsidiary Accounts
    7.3.3 Statements to Debtors
    7.3.4 Reporting Requirements
    7.3.5 Interest on Accounts Receivable
    7.3.6 Ministry Collection Action
    7.3.7 Employee Collection Action
    7.3.8 Set-offs
    7.3.9 Third Party Demands and Garnishments
    7.3.10 Collection and Loan Management Branch
    7.3.11 Private Collection Agencies
    7.3.12 Write-offs
    7.3.13 Extinguishments
    7.3.14 Remissions

PART I Revenue

7.1 Objectives

  • ensure that revenue from all sources is identified, claimed, recorded, collected and reported in a timely and effective manner

  • receipts of money are accurately and completely accounted for and adequately controlled to prevent or detect error, fraud or omission

  • proper administrative and control processes are established for accelerated transfer accounts, including authorization, review and reconciliation

  • minimize, wherever practicable, the creation of accounts receivable

7.2 General

Ministries are responsible for ensuring that public money is adequately controlled, collected and reported.

Government Caucus Committee on Government Operations and the Economics Branch, Ministry of Competition, Science and Enterprise, reviews ministry proposals for new or modified fees, licenses and other charges.

Banking/Cash Management Branch, Provincial Treasury, is responsible for approval of corporate payment solutions that consider client and government needs, and approves accelerated transfer accounts with financial institutions.

Risk Management Branch, Provincial Treasury, receives and reviews reports on losses of public money.

Intergovernmental Fiscal Relations Branch, Treasury Board Staff, Ministry of Finance, is responsible for reviewing cost sharing arrangements.

Financial Management Branch, Office of the Comptroller General, develops and maintains revenue management policy.


7.3 Policy

7.3.1 Revenue Recognition

  1. Revenue must be recorded at the earliest point at which goods or services or rights under an agreement are provided or performed, or when fines or penalties are imposed and taxes come due.

  2. Revenue from the sale of goods must be recorded when government has transferred the significant risks and rewards of ownership to the buyer.

7.3.2 Fees and Licences

  1. Ministries (and certain taxpayer-supported Crown entities and agencies) must submit proposals for changes to fees, licences and fines to the Treasury Board Fee Sub-Committee, Treasury Board Staff, as part of the budget process. Full instructions on the fee review process are available on the Treasury Board Staff Budget Information website (government access only).

  2. Ministries must maintain a complete and up-to-date inventory of fees, licenses and other non-tax charges, and services that are provided at no charge.

7.3.3 Cost Sharing Arrangements

  1. Ministries must maintain an inventory of intergovernmental or public/private cost sharing arrangements and make claims under these agreements promptly. At each fiscal year-end, ministries must report cost sharing arrangements to the Intergovernmental Fiscal Relations and Income Security Branch, Ministry of Finance.

  2. Senior financial officers must participate in the negotiation and monitoring of cost sharing arrangements to ensure that there are appropriate financial systems and internal controls in place.


7.3.4 Internal Control of Public Money

  1. Ministries must establish effective systems and controls for the identification, receipt, collection and safeguarding of public money. Accounting records must be supported by a complete audit trail.

7.3.5 Delegation of Authority

  1. Deputy Ministers must approve their ministry revenue authorities matrix that lists those officers who are authorized to:

    1. receive public money;

    2. extend credit;

    3. issue invoices;

    4. write off debts;

    5. approve credit notes;

    6. approve refunds;

    7. approve journal vouchers;

    8. initiate set-offs; and

    9. waive dishonoured cheque service fees.

  2. Specimen signature cards approved by the signing authorities officer must be maintained in respect of the authorities granted under policy 1.

  3. Officers authorized to receive public money (policy 1(a)) must not be given any other authority described in policy 1.

  4. Officers authorized to issue invoices (policy 1(c)) must not be given authority to receive public money, write off debts, approve credit notes, refunds or journal vouchers, or initiate set-offs.

  5. Any exception to policy 3 or 4 to accommodate an extraordinary ministry operational requirement (e.g., limited office staff) must be checked by appropriate compensating controls and balanced against the risks in the circumstances. Ministry senior financial officers must approve any such exception to policy.

7.3.6 Credit Management

  1. Ministries must grant credit only where:

    • the terms and conditions of a loan agreement or other program provide for payment; or

    • services, goods or rights under an agreement are provided on specific credit terms.

  2. Ministries providing loans, or goods, services or rights under an agreement on credit must assign an officer with responsibility for credit management functions.

7.3.7 Billing and Payment

  1. When payment is not received at the time that goods and services are provided, an invoice or other type of debit note must be issued as soon as possible (e.g., within 30 days). Where goods and services are provided on a continuing basis or over a long period of time, invoices must be issued at regular intervals.

7.3.8 Acceptance of Electronic Payments

Ministry programs will provide for electronic payment instruments for consumer convenience and consistency when accepting public money.

  1. The Banking/Cash Management Branch, Provincial Treasury, will coordinate ministry acceptance of electronic payments. This ensures that adequate security and process standards are maintained including safeguarding the integrity and non-repudiation of transactions and data storage, retention and use.

  2. Ministries are responsible for any costs associated with electronic payment transactions incurred by program areas operating within their mandate, including disputed sales.

  3. Banking/Cash Management Branch, Provincial Treasury, will determine a standard suite of electronic payment options based on program type and delivery models. Consideration will be given to corporate solutions and government agreements with banks and card processors in addition to ministry and program objectives.

7.3.9 Receipts and Deposits

  1. Public money must be deposited promptly to the credit of the Minister of Finance:

    • to an accelerated transfer account at a financial institution;

    • with a government agent;

    • or other person appointed by the Minister of Finance to receive deposits of public money on behalf of the government.

  2. Post-dated cheques must be listed and secured until their payment date and deposited promptly at that time.

  3. Ministries must issue a receipt to payers of public money that is paid in cash at the time the exchange takes place. Ministries must discourage the remittance of cash through the mail. Ministries must record the collection of all public money.

  4. Payment may be made by cash, cheque, or electronically. Ministries can refuse to accept cheques in certain circumstances, which must be approved by the ministry senior financial officer.

  5. Cheques and other negotiable instruments must be endorsed "For Deposit Only to the Credit of the Minister of Finance" immediately upon receipt, except for remittances where conditions for payment have not been met (e.g., security deposits). Payments that do not meet payment conditions (e.g., conditional payment) must be returned immediately to the remitter.

  6. Whenever payment is made by a cheque by a member of the public in person, ministries must make reasonable checks before accepting the payment. For example, compare the cheque details to the person's separate identification to match the name and address.

  7. Ministries must provide adequate facilities for the safekeeping of public money at all times (e.g., from the time received until it is banked).

  8. Deposits must be made daily except where circumstances dictate this is not practicable or cost effective. The ministry's senior financial officer must approve any exceptions.

Procedure Requirements - G.1

7.3.10 Accelerated Transfer Accounts

  1. Ministries must keep the number of accelerated transfer accounts to a minimum. Ministry applications for accounts must be consistent with operating requirements.

  2. The Banking/Cash Management Branch must only set up accelerated transfer accounts with financial institutions.

  3. Ministries must keep an adequate record of deposits to accelerated transfer accounts, and provide this record to the Office of the Comptroller General, upon request, for bank reconciliation purposes.

  4. Ministries must keep an adequate record of their accelerated transfer accounts. This ministry record must be reconciled at least annually to the central record maintained by Banking/Cash Management Branch.

  5. Ministries must review accelerated transfer accounts at least annually to ensure each account is still required. Any account not required must be closed.

Procedure Requirements - G.2

7.3.11 Refunds

  1. Ministries must define "money received for any purpose that is not fulfilled", and must determine whether refunds are permitted, and the minimum amount to be refunded. In making these determinations, ministries must take into account enabling legislation and regulations under which revenues are collected.

  2. Ministry policies regarding refunds must be documented and communicated as part of the schedule of fees and licences, and must be consistently applied.

  3. Refunds must be identified and recorded in the ministry's accounting records.

  4. Where a partial refund is made, the reason for refunding a reduced amount must be documented.

7.3.12 Dishonoured Cheques

  1. Where a cheque has been deposited by the Province in settlement of a claim and it has been subsequently dishonoured, an accounts receivable must be set up. The amount must include a dishonoured cheque fee shown separately on any billing. A fee of $20 will be levied against each cheque that is dishonoured.

  2. Persons must be immediately advised of their dishonoured cheque and the fee charged.

  3. Payments received for dishonoured cheque fees must be paid into the Consolidated Revenue Fund and identified from other public money by use of a separate STOB.

7.3.13 Exchange Rates

  1. The Office of the Comptroller General (OCG) establishes a Canadian/U.S. dollar exchange rate at the start of each fiscal quarter, or more frequently where fluctuations are significant. OCG must advise ministries and government agents of the prevailing quarterly rate two working days preceding each fiscal quarter.

  2. The difference between the actual premium received from or discount paid by the financial institution and the established exchange rate must be recorded in the U.S. Fund Exchange STOB established by OCG.

  3. Overpayments resulting from payments received by mail in U.S. funds must be credited initially to a miscellaneous STOB of the ministry. Underpayments resulting from payments received by mail in U.S. funds must be accepted or returned according to the amount of the underpayment and the status of the debtor.

  4. All payments received in U.S. funds exceeding $10,000 must be deposited according to procedures established by the Banking/Cash Management Branch, Provincial Treasury. Ministries must consult with Provincial Treasury in respect of these deposits.

Procedure Requirements - G.4

7.3.14 Suspense Accounts

  1. Where public money has been received and cannot be immediately identified, it must be paid into the Consolidated Revenue Fund and credited to a suspense account established for that purpose.

  2. Entries in suspense accounts must be cleared to appropriate accounts as soon as sufficient information is received. In no case should this time exceed one month.

  3. Monthly, each ministry must analyze its suspense accounts and reconcile them with the balance reported in the central accounting system.

7.3.15 Insurance Proceeds

  1. Ministries must ensure that insurance claims are submitted to the Risk Management Branch, Provincial Treasury, for presentation to the insurer. Ministries must maintain a record of claims submitted and insurance proceeds received.

  2. Ministries, in consultation with the Risk Management Branch, must identify the value of and likelihood of receiving proceeds from an insurance claim. A ministry must record the claim as an account receivable when the value is determinable and expected to be received.

  3. When insurance proceeds are received before incurring an expenditure, they must be paid into the Consolidated Revenue Fund and credited to a suspense account.

  4. When insurance proceeds are received in the same fiscal year to replace an insurable loss not involving tangible capital assets, ministries must credit the proceeds to the expenditure service line. Unless an account receivable for the claim has been recorded (as in policy 2), proceeds received in a subsequent fiscal year must be credited to a miscellaneous revenue STOB, "Insurance Proceeds."

  5. Insurance proceeds from loss or damage to tangible capital assets, regardless of the fiscal year, must be recorded as proceeds of disposition/disposal and form part of the gain/loss calculation on disposal of tangible capital assets.

  6. Where no expenditure has resulted from a loss, damage or other event, insurance proceeds must be paid into the Consolidated Revenue Fund and credited to a miscellaneous revenue STOB, "Insurance Proceeds". Proceeds from loss or damage to tangible capital assets must be recorded as proceeds of disposition/disposal and form part of the gain/loss calculation on disposal (as in policy 5 above) and the write down of the asset not replaced.

  7. Where the amount of insurance proceeds is greater than any expenditure resulting from a loss, the surplus must be paid into the Consolidated Revenue Fund and credited to miscellaneous revenue STOB, "Insurance Proceeds". Surplus proceeds from loss or damage to tangible capital assets must be recorded as required in Policies 5 and 6.

PART II Accounts Receivable


7.1 Objectives

  • manage accounts receivable effectively, including prompt and vigorous collection to minimize amounts owing to government

  • provide consistent and equitable treatment to debtors, and regular communication on amounts owing

  • charge interest on overdue accounts receivable

  • ensure uncollectible accounts receivable are written off under the proper authority, and only after all reasonable and appropriate collection action has been taken

  • ensure that debts extinguished by legislation are adjusted in a timely manner

7.2 General

Ministries are responsible for effective communication with debtors, third parties and the Collection and Loan Management Branch (CLMB); and ensuring that accounts receivable are adequately reported, collected, extinguished or written off as appropriate.

CLMB, Ministry of Small Business and Revenue, is authorized to collect delinquent non-tax debts on behalf of ministries that do not specialize in the collection function or have specific authority under legislation other than the Financial Administration Act. CLMB also has the authority to sign third party demands on behalf of the Minister of Finance and to set off taxes owed to the debtor by Canada Customs and Revenue Agency.

The Office of the Comptroller General maintains policy for the administration of accounts receivable and provides quarterly and annual government-wide receivables performance reports.

7.3 Policy

7.3.1 Recording of Accounts Receivable

  1. All amounts determined to be due to the government must be promptly recorded as an accounts receivable by the ministry. Each account receivable must be recorded and maintained until payment is received or the recorded amount is written off or extinguished.

  2. An adequate provision for doubtful accounts must be established. When all reasonable efforts fail to collect an account receivable and it has been approved for write off, the related provision for doubtful accounts should be reduced.

7.3.2 Control and Subsidiary Accounts

  1. Ministry accounting systems must incorporate control accounts, where applicable, to ensure the completeness and accuracy of individual accounts.

  2. A ministry's accounts receivable control STOB must include all receivables except loans, mortgages and accountable advances. Separate control STOBs must be maintained for loans, mortgages and accountable advances. Each control STOB must consist of total amounts due, less total amounts received, and any authorized adjustments.

  3. Ministries must maintain subsidiary accounts for individual debtors in a manner that discloses, at a given point in time, the aggregate amount owed by each debtor as well as individual amounts making up the aggregate amount. Ministries must also produce aged trial balances for review by senior officers.

  4. Monthly, ministries must reconcile subsidiary accounts with the control STOB for each accounts receivable, loans receivable, mortgages receivable and accountable advances.

7.3.3 Statements to Debtors

  1. Ministries must issue periodic statements to debtors providing meaningful and concise information on the status of their debts (e.g., identifying principal and interest components). Ministries must determine the frequency of issuing statements based upon the nature of the accounts receivable.

  2. Where an amount is due under a loan or other agreement, the debtor must be notified at least 30 days before the due date. If interest is to be assessed for late payment, it must be specified on the invoice and statement.

7.3.4 Reporting Requirements

  1. By July 20, October 20, January 20 and April 30 of each year, the ministry senior financial officer must report to the Financial Management Branch, OCG, accounts receivable on an aged basis, and by each major revenue source or program as at the quarterly period ended. Explanations of significant variances from the report for the previous quarter must be included with each quarterly report. The aging categories must be as follows:

    • accrued/not accrued;

    • current;

    • 31 - 60 days;

    • 61 - 90 days;

    • 91 days - 1 year;

    • 1 - 2 years;

    • 2 - 3 years;

    • over 3 years.

  2. By April 30 of each year, the senior financial officer must report to the Financial Management Branch, OCG, a summary of accounts receivable activity by source or program for significant revenue and accounts receivable at fiscal year-end (revenue normally exceeding $25 million, or accounts receivable balances normally exceeding $5 million).

7.3.5 Interest on Accounts Receivable

  1. Ministries must charge interest on amounts owing to the government in accordance with the Interest on Overdue Accounts Receivable Regulation.

  2. Ministries must calculate interest on overdue accounts receivable on a prorated basis (compounded monthly as in policy 9) commencing on the first day after the money becomes due. Money is due when:

    • an invoice or a written request to the debtor for payment had been issued and not paid within 30 days; or

    • the goods have been delivered in good condition or the services have been performed in accordance with the contract and not paid within 30 days.

    Where the amount of interest calculated is $5.00 or more it must be added to the accounts receivable. Where the amount is less than $5.00 it is deemed not due to the government.

  3. When a debtor pays an account in full within 30 days, the ministry must accept payment of that amount as full settlement of the account.

  4. Ministries must record interest charges owing separately in their accounts receivable records and identify individual amounts owing for each debtor.

  5. Ministries must advise each debtor of all interest charges to the debtor's account either by separate invoice or through periodic statements of account.

  6. Ministries must deposit payments for interest charges to the Consolidated Revenue Fund.

  7. Where interest arises from a loan agreement or similar contractual arrangement, interest on the past due principal and interest must be calculated according to the terms and conditions of the contract.

  8. When a debt has been written off, ministries must stop recording interest as revenue and an amount owing. If a debt that was written off is reactivated, the ministry must record interest from the date the debt was written off until the debt is paid.

  9. The interest calculated must be compounded monthly. Monthly compounding occurs on the same day, as the due date in any subsequent calendar month (i.e., if the due date is May 11, then the first compounding date is June 11). Compounding is based on the number of days from, but excluding the last compounding date (or if no compounding date has yet occurred, the due date) to and including the current compounding date.

Procedure Requirements - G.7

7.3.6 Ministry Collection Action

  1. Each ministry must establish a collection strategy that takes advantage of the full range of available collection methods, tools and specialists. The collection strategy needs to complement program needs and statutory requirements.

  2. Ministries must establish an accurate and timely reporting system to notify collections staff when an accounts receivable becomes overdue.

  3. Ministries must take prompt and vigorous action to collect overdue accounts receivable. Ministries must establish fair but determined processes to recover these accounts.

  4. Ministries must document all actions taken to collect overdue accounts.

  5. Each ministry is accountable for its own accounts receivable collection results. This accountability for collection results does not end on the transfer of a ministry's accounts receivable to a central government collection branch, a private collection agency or by any other alternative method of collection.

  6. Accounts receivable are considered overdue when a debtor does not pay or resolve the debt within 30 days after the government issues an invoice or a written request for payment to the debtor.

  7. Accounts receivable, in most cases, should be at least 30 days overdue (i.e., 60 days after invoice notification), before ministries advise debtors that their accounts are overdue and that the accounts may be:

    • turned over to a central government collection or private collection agency; or
      subject to legal action.

  8. In circumstances where the government owes money to a person, and that same person owes money to the government, recovery must be initiated by the creditor ministry by way of:

    • adjustment to payment, if within the ministry; or

    • set-off through Legal Encumbrance Section, OCG if between ministries.

  9. When a payment has been received and two or more ministries have claims against a debtor, they must be addressed in the following order:

    • first, by the expressed statements or implied actions of the debtor;

    • second, to the government's advantage; and

    • third, to the earliest debt in time, and to interest before principal.

  10. Ministries must enter into information sharing agreements when sharing personal information with another ministry or public body for the purpose of collecting government debt, as indicated by section 33 (i) (i) of the Freedom of Information and Protection of Privacy Act.

7.3.7 Employee Collection Action

  1. Ministries must immediately inform employees of any salary or other overpayments and establish a mutually agreeable schedule for full repayment. The repayment schedule must be signed off by the ministry and the employee, and placed on the employee's payroll file. The amount owing must be recorded as an account receivable until the overpayment has been recovered. Where the employee will not agree to a reasonable repayment schedule, deductions from pay can be made without the employee's written authorization. The deduction may be considered repayment of an advance.

  2. Ministries must consult with Strategic Human Resources in any situation where the collection action being considered is beyond the scope of this policy.

7.3.8 Set-offs

  1. Before set-off action is initiated, ministries must ensure that all regular means of collecting the debt have been considered and attempted.

  2. Ministries must forward interministry set-off requests submitted under section 38 of the Financial Administration Act to the Comptroller General for approval.

  3. After approval by the Comptroller General, the account receivable of the debtor may be reduced once processing of the cheque or payroll requisition is completed.

  4. Where the amount due to the government is less than or equal to the amount owing by the government, the payment requisition must include the amount to be set-off against the gross amount to be paid. This policy does not apply to contractual arrangements containing a specific provision not to set-off.

  5. The ministry must initiate set-off action to protect the government's interest for any goods or services provided prior to the date of appointment of a receiver or of an assignment in bankruptcy. Any residual amount payable is to be paid to the receiver or trustee in bankruptcy, as appropriate. The ministry must consult with its legal counsel if there is any doubt as to the legality of the payment.

  6. When the ministry wishes to take set-off action against a Crown corporation or a public body of the Province, it must first consult with the ministry responsible for the debtor entity. The result of this consultation must be included with the request to the Comptroller General for set-off action. A copy of the request must be sent to the senior financial officer of the ministry responsible for the debtor.

  7. Before initiating a trust account set-off, ministries must obtain a legal opinion that this action is acceptable, either under statutes governing the trust or under the trust instrument itself. Ministries must include a copy of the opinion with the set-off request.

  8. When a set-off is made, the debtor must be informed in writing of the gross payment, the set-off amount and the net payment.

  9. Where two or more ministries are pursuing set-off action with a debtor and the government receives a payment for less than the total of all claims, the funds must be allocated to the ministries in the order outlined in Ministry Collection Action, section 7.3.6, policy 9. Where ministries do not agree on the priority of their respective claims, the Comptroller General must allocate the funds.

  10. With the exception of salary overpayments, ministries must provide employees who owe money to the Province with written notice of the intent to set-off. Notice must be presented to the employee directly.

  11. Where third party demands are initiated at the same time as set-off action, the ministry must inform the Assistant Manager, Legal Encumbrance Branch, OCG, immediately when payment is received. When a debt is recovered in full, all set-offs and third party demands relating to the debt must be cancelled and any surplus funds must be returned promptly.

7.3.9 Third Party Demands and Garnishments

  1. The ministry senior financial officer must ensure that the following information is retained on file prior to approving a request for a third party demand:

    • how and when the debt arose;

    • evidence that the debt can be collected legally;

    • collection action taken to date;

    • the reason for initiating the third party demand;

    • third parties known to do business with, or who employ, the debtor;

    • set-off action instituted or recommended; and

    • a completed (but unsigned) Third Party Demand Notice.

  2. Prior to issuing a request for a third party demand, ministries must ensure:

    • accounts receivable collection has been pursued consistent with policy;

    • the debt can be collected legally. Where doubt exists, the ministry must request that legal counsel obtains a judgment against the debtor; and

    • consider set-off action; or

    • consider a defined payment schedule.

  3. Ministries must forward unsigned Third Party Demand Notices together with documentation indicating the senior financial officer's approval to the Collection and Loan Management Branch (CLMB) for sign-off.

  4. The debt must include interest in accordance with policy. The third party demand must stipulate that interest is accruing.

  5. Normally, ministries should not initiate a demand on a third party until at least 90 days after the debt was incurred. In certain instances, however immediate collection may be warranted. A third party demand must be requested promptly and normal means of collection can be bypassed or shortened.

  6. A third party demand on an employer must not exceed 30 per cent of the net wages or salary per pay period of the employee (debtor) except where the ministry considers it is unlikely that the remainder of the debt will be collected, or the debtor will remain employed with that employer.

  7. The debtor must be notified by the ministry at the same time and in the same manner as a demand is made on a third party.

  8. Ministries must not execute against joint bank accounts unless all parties to the account are debtors of the Province.

  9. If set-off relating to the same debt has been initiated, the ministry must also inform the Assistant Manager, Legal Encumbrances Branch, OCG, upon receipt of payments.

  10. When a debt to the government is paid in full, all demands and set-offs for that debt must be cancelled. Surplus funds received from the third party or from the debtor must be returned promptly.

  11. Verbal instructions to the third party by a ministry officer are sufficient to cancel a demand notice. Verbal cancellation of a demand notice must be confirmed in writing by the ministry.

  12. A third party demand expires when the debt is paid in full, or if applicable, at the end of the term set out in the demand notice.

  13. Where there is any doubt about government proceedings, ministry legal counsel must be consulted to ensure that garnishment orders are obtained in an appropriate manner.

7.3.10 Collection and Loan Management Branch

  1. Ministries must obtain approval from Treasury Board Staff to transfer the collection of delinquent debts to the Collection and Loan Management Branch (CLMB).

  2. Either the ministry or CLMB can seek to establish a memorandum of understanding for the transfer of delinquent debts. The parties must submit a joint proposal to Treasury Board Staff providing the general framework for the transfer of debts from the ministry to CLMB.

  3. The ministry and CLMB must complete a memorandum of understanding, based on a netting model, for the recovery of administrative costs. The memorandum of understanding should set out any direct reimbursement by the ministry to CLMB for services or costs not covered by the netting model.

  4. Prior to a ministry referring debts to CLMB, the ministry must validate all accounts and ensure that the debts are clear of any appeals and/or adjustments.

  5. The ministry and CLMB must sign an information sharing agreement that provides direction on the reasons for collection and for the use and disclosure of that personal information.

7.3.11 Private Collection Agencies

  1. Ministries must only consider the services of private collection agencies to recover debts owed to the government after the ministry's normal collection activities have been exhausted, or when a business case supports this collection option.

  2. Commission costs for private collection agencies to collect ministry delinquent accounts receivable must only cover fees payable for the successful collection of debt. The cost of additional services that are not directly related to the successful collection of debt (e.g., skip tracing, credit checks, credit bureau reporting) cannot be netted from collection proceeds and must be funded by the ministry.

  3. Ministries must not use private collection agencies for debts due from the following:

    • other ministries or agencies, trusts, boards or commissions and government organizations;

    • provincial government employees from whom the ministry can recover by set-off action;

    • other governments; and

    • participants in a current appeal or a court proceeding.

  4. The ministry and the private collection agency must complete a contract specifying the transfer of delinquent debts and the details of collection. The contract must include the commission rate for accounts collected, the cost of additional services and the rights and obligations of each party.

  5. The amount of a fee or the rate of commission must be reviewed by the ministry and approved by Treasury Board as part of the annual review of fees and licenses.

7.3.12 Write-offs

  1. Only those debts for which all reasonable and appropriate collection action has been taken can be submitted for write-off.

  2. Ministries must ensure that uncollectible debts are reviewed at least once a year and identify those debts that should be submitted for write-off.

  3. All write-off submissions must include the relevant debt information. Submissions for the write-off of debts exceeding $5,000 must be appropriately categorized, and must include details of the collection action taken, the debtor's financial status (if relevant), and why further collection action is not possible.

    The categories for submission are:

    • debtors who have died leaving no estate;

    • debtors who cannot be located;

    • debtors who are indigent;

    • debtors residing outside of Canada in locations where there are no apparent means of collection and there is no indication that the debtor has family or business ties that might encourage return to Canada;

    • debts where, in the view of the creditor ministry, further expenses to collect are not justified in relation to the amount of the debt and the possibility of collection;

    • debts where legal counsel has indicated that the amount involved does not warrant the prospective costs of action to collect;

    • debts where liability has not been admitted by the debtor and where the success of proceedings to collect is unlikely;

    • debts where the existence of an enforceable debt due the Crown cannot be readily established (e.g., where records have been lost or destroyed and the ministry is unable to prove receipt of services by the debtor); and

    • debts where a corporation is inoperative and without assets.

  4. The senior financial officer must authorize the write-off of receivables of $5,000 or less. This authority may be delegated to officers within the ministry to write off individual debts of $500 or less. Officers must maintain adequate records of any amounts that they have written off and report quarterly to the senior financial officer on any write-off action taken during the quarter.

  5. The executive financial officer must recommend the write-off of debts greater than $5,000 and less than or equal to $100,000. Submissions for approval must be made to the Comptroller General through the Financial Management Branch, OCG.

  6. The respective minister must sign on the recommendation of the executive financial officer all submissions for the write-off of debts greater than $100,000. Submissions for approval must be made to Treasury Board through the Financial Management Branch, OCG.

  7. Ministries must not submit the following debts to the Comptroller General or to Treasury Board for write-off:

    • bankrupt individuals – when an order of discharge has been granted, the ministry must remove the account on the basis of the order;

    • judgment or other court orders – when it is determined that the Province can collect a lesser amount than the recorded debt, the ministry must adjust the account on the basis of the court's order;

    • restrictions imposed by statute – where a statute restricts the amount of a debt (e.g., the Court Order Enforcement Act, the Limitation Act), the ministry must adjust the account on the basis of the recoverable amount.

  8. Debts of a bankrupt corporation must be written off through the normal procedures since, according to the Federal Bankruptcy and Insolvency Act, a corporation may not apply for a discharge unless it has fully satisfied the claims of its creditors.

  9. After consulting with its legal counsel, a ministry may accept a compromise settlement of a debt. A portion of the original debt must be written off as identified under the terms of an agreement.

  10. When authority has been received to write off a debt, the debt must be transferred from the ministry accounts to a reference file of "debts written off", where it must remain until paid, or forgiven (pursuant to section 18 or 19 of the Financial Administration Act), or extinguished pursuant to other legislation.

  11. Annually, ministries must submit statements of debts written off during the fiscal year, together with supporting authorizations, to Financial Reporting and Advisory Services, OCG, for Public Accounts reporting purposes.

7.3.13 Extinguishments

  1. The responsible minister must authorize all submissions for extinguishment. Proposals must be forwarded for review to the Minister of Finance, through the Financial Management Branch, OCG, prior to submission to the Lieutenant Governor in Council.

  2. The Minister or the Deputy Minister of Finance, or the Assistant Deputy Minister, Provincial Treasury, pursuant to BC Regulation 269/92, can conclude a settlement agreement or compromise settlement to forgive some or all of a debt or obligation not exceeding $100,000. In addition, the following CLMB officers have authority to conclude a settlement agreement to forgive some or all of a debt or obligation (principal plus interest) to the following limits:

    • the director – $40,000;

    • a manager – $20,000;

    • a collection officer – $10,000.

  3. A ministry may accept a compromise settlement of a debt only after approval by Legal Services, Ministry of Attorney General. A portion of the original debt can be extinguished under the terms of an agreement.

  4. Annually, ministries must submit statements of debts extinguished during the fiscal year, together with supporting documentation, to Financial Reporting and Advisory Services, OCG, for Public Accounts reporting purposes.

7.3.14 Remissions

  1. Submissions for remission orders must be:

    • prepared by the ministry officials responsible for revenue management;

    • recommended by the senior and executive financial officers;

    • recommended by the Minister of Finance; and then

    • submitted to the Executive Council (i.e., Cabinet).

  2. Recommendations submitted pursuant to policy 1 must be to:

    • approve;

    • approve with conditions;

    • not approve; or

    • provide no opinion because of conflict of interest or some other circumstance that makes an opinion inappropriate or impossible.

  3. All submissions for individual ministry remission orders must, at a minimum, contain the following information:

    • the name and address of the person whose obligation is to be forgiven;

    • the amount to be remitted;

    • justification for remission;

    • sufficient background information to enable Cabinet to form an opinion on the question of whether "great public inconvenience", "great injustice" or "great hardship" will result if the remission is not granted; and

    • other information, including ministry comment for or against the remission.

  4. Annually, ministries must submit statements of remissions granted during the fiscal year, together with supporting documentation, to Financial Reporting and Advisory Services, OCG, for Public Accounts reporting purposes.

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