8.1
Objectives
- effectively manage
and safeguard government assets
- ensure that asset
purchases and disposals are properly authorized and carried out in accordance
with core policy, legislation and regulations
- maintain accurate
and timely asset information for decision-making and reporting purposes
- encourage efficient
and economic use of government assets
8.2
General
Government assets include tangible capital assets and property such as buildings, computer
hardware and software, transportation equipment, highway infrastructure
and Crown land, as well as public monies, accounts receivable, inventories,
investments, and other non-capital assets including hand-held
devices and the information stored on a medium
with information capacity such as magnetic tape, magnetic disks, optical
disks, hard drives, jump drives, memory cards, etc.
Statutory authority
for the management and control of government assets is set out in the Financial Administration Act. The Act holds ministers and deputy
ministers accountable for government assets.
See CPPM 20, Loss
Management, for information on identifying and reporting asset loss.
Roles and Responsibilities
- Treasury Board
is responsible for policy governing the management, custody and control
of government assets.
- Each ministry is
responsible for the administration, control, proper accounting and safeguarding
of government assets coming under its custody or control.
- The Procurement
and Supply Services Division, Ministry of Labour and Citizen's Services,
plans and negotiates corporate supply arrangements, ensures acquisitions
and disposals are in accordance with legislation, core policy and trade
agreements, provides warehousing and storage services, and advises on
procurement practices and proposed policy.
- Ministry of Agriculture
and Lands is responsible for the management, development and marketing
of the majority of Crown land uses.
8.3
Policy
8.3.1
Inventory
Inventory consists
of items in stores or held in stock that will be consumed in ministry
operations. Inventory also includes materiel and supplies that are held
for issue at a later date. Inventory needs to be safeguarded from the
point of purchase, to the receipt of goods through to usage. Procedures
to account for and safeguard inventories until disposed or consumed can
vary, depending on dollar values, quantities and attractiveness. Control
over inventories should be established whenever the benefits of additional
information or incremental control outweigh the associated implementation
costs.
- Ministries must establish appropriate control systems for the effective
management, control and reporting of inventory, and ensure that processes
are clearly communicated to staff.
- Ministries must ensure that inventory items purchased can be subsequently
accounted for. Inventories must be adequately protected and safeguarded
from unauthorized personnel.
- Inventories must be physically verified at least once a year. Significant
differences from accounting records must be investigated and corrective
action taken. A report of inventory losses must be filed (see CPPM M, Loss Reporting), as appropriate.
- Ministries must review at least annually the adequacy of inventory
levels on hand. If there is a surplus and supplies are no longer required,
ministries must notify Procurement and Supply Services (PSS) for transfer
and reuse elsewhere.
- Ministries must not dispose of damaged or obsolete items without
authority of PSS. Disposal of inventory must be by PSS (unless authority
has been specifically delegated to a ministry for that purpose). With
adequate notice, the Asset Investment Recovery Branch, PSS, will fund
the cost of transporting supplies or assets for disposal or reuse.
8.3.2
Tangible Capital Assets and Other Assets
Tangible
Capital Assets (TCAs) are identifiable long-term government assets
that are acquired, constructed or developed and held generally for use
rather than for sale. TCAs, for example, include land, highways, buildings,
automobiles, equipment, computer hardware and software, but not inventories. Other Assets consist of all government assets (other than TCAs,
public monies, accounts receivable, inventories or investments) that are
normally non-capitalized, expendable public property and include the information stored on a medium with information capacity.
- Tangible Capital
Assets and applicable Other Assets must be (a) purchased through Procurement
and Supply Services, unless purchasing authority has been specifically
delegated to a ministry (see chapter
6.3), and (b) properly recorded or accounted for in the ministry
accounting records.
- Ministries must
implement adequate safeguarding techniques for government assets commensurate
with the asset value and attractiveness. TCAs must be physically verified
at least annually, any significant discrepancies investigated and any
losses reported in line with CPPM M, Loss
Reporting.
- Information stored on a medium with information capacity must be evaluated and categorized
for sensitivity/confidentiality in accordance with the Security
Standards and Guidelines (government access only). Reasonable safeguards
and security measures must be in place to adequately protect the information
commensurate with its value and sensitivity.
- Safeguard processes
and control requirements must be clearly communicated to the responsible
asset and information custodian.
- The disposal or
transfer of Tangible Capital Assets and applicable Other Assets must
be done in accordance with 6.3.4(d) Disposal
of Surplus Assets.
- The disposal of
a medium with information capacity must be done in a manner to protect
the stored information in accordance with information and records disposal
policy:
- An appropriate
signing officer must authorize the disposal (or trade-in) of a government
asset.
Procedure
Requirements - I.6
8.3.3
Equity Investments
Equity investments
by government are generally restricted to investments that provide some
measure of financial support to commercial or quasi-commercial business
entities consistent with fulfilling government objectives. Equity investments
by government have also occurred as the result of the settlement of a
business entity's financial affairs where a government guarantee was called
and the equity and assets are turned over to the government. An equity
investment can also arise when a loan made by government is converted
or exchanged for shares in the business entity that received the loan.
- The policies in this section apply regardless of whether the equity
investment is the purchase of a controlling interest in a business entity
(thus determining its status as a government corporation) or the purchase
of a minority interest.
- Where legislation permits the making of an equity investment, the
ministry responsible must develop the program policy and criteria that
determine when an investment can be made.
- Approval requirements for equity investments are summarized as follows:
Program
Minister |
Minister
of
Finance |
Treasury
Board |
Lieutenant
Governor in Council |
Directive
to make equity investments under legislation |
X
|
|
X
|
Program
policy and criteria for making an equity Investment |
X
X |
|
X
|
Conversion
of a government loan to an equity investment |
X
X
|
|
X
|
A guarantee
in respect of the government and the invested entity |
X
X
(unless
delegated) |
|
|
Dilution
of the government's equity (shareholdings) in the invested
entity |
X
|
X |
|
Disposal
of the equity investment |
X
|
X |
|
If agreement
with invested entity does NOT impose conditions and protective
restrictions (see policy 4) |
X
X |
|
|
- The terms of an equity investment generally include restrictions
on the invested entity, which are written as an agreement between the
government and the entity. All agreements entered into with respect
to the purchase of equity investments require, as a minimum, that:
- proper accounting books and records be maintained by the invested
entity;
- audited financial statements of the invested entity are provided
to the ministry at least annually. Copies of audited statements
must be submitted to the Office of the Comptroller General;
- the equity in the invested entity must not be diluted without
the prior written authorization of the appropriate minister and
the approval of Treasury Board; and
- the invested entity may not acquire or dispose of assets nor assume
any new debt obligations without the prior authorization of the
appropriate minister or deputy minister. An exemption to a maximum
of $100,000 may be specifically provided for in the agreement so
as not to unduly hamper the operations of the entity.
- The invested entity may be restricted in the payment of management
and employee bonuses, dividends, stock dividends and similar items
until debt has been reduced to a prescribed level or until certain
profit targets are met. Modification to the above requirements may
be made in the case of minor equity investments, but avoidance of
any obligation requires the prior approval of the Minister of Finance.
- Equity investments must be properly accounted for and reported according
to government accounting policies. Equity investment files must include
agreements between the government and the investee, the latest financial
reports and permanent information of the investee, terms and conditions
of ownership, changes in shareholdings and percentage ownership since
initial purchase and, where required, approval of the Lieutenant Governor
in Council.
- The Consolidated Revenue Fund (including approved revolving funds)
must be credited with dividends (revenue) received from the invested
entity and with full or partial repayments of the investment. All repayments
are recorded as repayment of an asset.
- Ministries must determine the book value of equity investments at
least annually. The ministry must report to the Minister of Finance
if the book values of equity investments have materially decreased from
their original cost.
- The accounting policies of an invested business entity that is controlled
by the Province must be referred to the Office of the Comptroller General
to review and determine if any differences in accounting policies require
accounting adjustments when the government reports its equity investments.
- The security instrument bestowing title in the Province of its percentage
share in the invested business entity must be deposited for safekeeping
with the Debt Management Branch, Ministry of Finance. The ministry's
chief financial officer must retain copies of these documents at the
time the investments are made.
8.3.4
Performance and Security Bonding
Individuals or organizations
holding licenses or other statutory privileges may be required by statute
to post a performance bond (security or other financial guarantee) to
safeguard the government when doing business with it. The Bonding Act,
other statutes and, in some instances, government agreements require persons
or companies to post performance bonds or other security with the government
to:
- guarantee the performance
of future acts;
- ensure the financial
security of the government; and
- safeguard the interests
of individuals doing business with persons or companies holding licenses
or other statutory privileges.
A performance or surety
bond is used extensively in construction contracts and in licensees providing
services to the public. The surety company agrees to pay to the government
if a contractor fails to fulfill an obligation. The contractor brings
the bond into force by the payment of a fee to the surety and the surety's
maximum liability is the amount specified in the surety bond.
A financial guarantee
may also be in the form of a security deposit, the value of which is intended
to provide redress in the event of non-performance.
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