CPPM Policy Chapter 7: Revenue and Receivables Management

Core Policy and Procedures Manual chapter content covers policy to support a revenue and accounts receivable management framework that accounts, monitors and reports revenue from the point of claim and recognition to collection. This includes resolution by actions, such as set-off, write-off, extinguishment and remission.

• 7.0 Revenue and Receivables Management
  • 7.1 Revenue and Receivables Management Policy Overview
    • 7.1.1 Revenue and Receivables Management Policy Guiding Principles
  • 7.2 Revenue and Receivables Management Policy
    • 7.2.1 Revenue Recognition
    • 7.2.2 Fees and Licenses
    • 7.2.3 Cost Sharing Agreements
    • 7.2.4 Control over Public Money
    • 7.2.5 Delegation of Revenue Responsibilities
    • 7.2.6 Credit Management
    • 7.2.7 Billing and Payment
    • 7.2.8 Acceptance of Electronic Payment
    • 7.2.9 Receipts and Deposits
    • 7.2.10 Revenue Bank Accounts
    • 7.2.11 Refunds
    • 7.2.12 Dishonoured Banking Instruments
    • 7.2.13 Exchange Rates
    • 7.2.14 Suspense Accounts
    • 7.2.15 Insurance Proceeds
    • 7.2.16 Recording of Receivables
    • 7.2.17 Control and Subsidiary Accounts
    • 7.2.18 Statement to Debtors
    • 7.2.19 Reporting Requirements
    • 7.2.20 Interest on Overdue Accounts Receivable
    • 7.2.21 Ministry Collection Action
    • 7.2.22 Employee Collection Action
    • 7.2.23 Set-offs
    • 7.2.24 Third Party Demands and Garnishments
    • 7.2.25 Revenue Division
    • 7.2.26 Write-offs of Uncollectible Debts or Obligations
    • 7.2.27 Extinguishments
    • 7.2.28 Remissions
  • 7.3 Revenue and Receivables Management Policy Framework and Authorities
  • 7.4 Supplementary Information, References and Guides

7.1 Revenue and Receivables Management Policy Overview

7.1.1 Revenue and Receivables Management Policy Guiding Principles

Revenue and receivables management policies within this manual are developed with the intention of:

• Ensuring alignment of consistent revenue and receivables management across government
• Using cost-effective  tools and techniques to maximize the collection of amounts owing to the Province
• Minimizing  the value of receivables recommended for write-off by: ensuring that revenue from all sources is identified, claimed, classified, recorded, collected, safeguarded and reported in a timely and effective manner
• Ensuring that receipts of money are accurate, complete, accounted for and controlled to prevent or detect error, fraud or omission
• Ensuring that public facing payment services are managed in compliance with Payment Card Industry Data Security Standards
• Ensuring that proper administrative and control processes are established for revenue bank accounts, including authorization, review and reconciliation
• Ensuring  prompt and vigorous collection to minimize amounts owing to government
• Providing fair and impartial treatment to debtors and clear and regular communication on amounts owing
• Charging interest on overdue receivables
• Ensuring  that uncollectible receivables are written-off under the proper authority, and only after all appropriate collection action has been taken
• Ensuring that debts or obligations owing to government which are extinguished or remitted by enactment are recorded and removed from the books.

7.2 Revenue and Receivables Management Policy

7.2.1 Revenue Recognition

1. Revenue must be classified and recorded at the earliest point at which goods or services or rights under an agreement or by enactment are provided, or when fines or penalties are imposed and when taxes, fees, royalties or other sums imposed or authorized to be imposed under an enactment are assessed (owed or earned).
2. Revenue from the sale of goods or rights provided for under an agreement or by enactment must be recorded when government has transferred the significant risks and rewards of ownership to the buyer.
3. While not recognized as revenue when collected by a ministry in respect of a taxable transaction, certain sales taxes apply to specified supplies of taxable goods and services.  Ministries must charge and collect sales tax as required by statutes and regulations. GST is recorded as a Balance Sheet Item in the "GST/HST Collected" STOB 1576. PST recorded on sales is posted to the Ministry of Finance clearing account STOB 1509.

 Procedure Requirements - M.4

7.2.2 Fees and Licenses

1. Ministries (and applicable taxpayer-supported Crown agencies) must submit proposals for new fees, licences and fines, and changes to existing fees, licences and fines to Treasury Board. Full instructions on the fee review process are available on the Treasury Board Staff Budget Information website (government access only).
2. Ministries must ensure that fees charged by their ministry are posted in the government fee inventory found on the Budget Information website, (government access only) and that the information in the inventory is accurate.  Ministries must provide information to Treasury Board Staff on all changes to their fee structure and/or related legislative authorization.

7.2.3 Cost Sharing Agreements

1. Ministries must maintain an inventory of inter-governmental or public/private cost-sharing arrangements relating to their programs and make claims under these agreements promptly.  At each fiscal year-end, ministries must report their cost-sharing arrangements to Treasury Board Staff, Ministry of Finance.
2. Chief financial officers must participate in the negotiation and monitoring of their ministry’s cost-sharing arrangements to ensure that there are appropriate financial systems and controls in place over government revenues arising under them.
3. Government transfers include transfers of monetary assets or tangible capital assets to the Province from an individual, a business, or other entities. They are non-exchange transactions where the Province is not the direct beneficiary of any goods or services, repayment, or investment. See CPPM 21.3.3.6.

7.2.4 Control over Public Money

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

7.2.5 Delegation of Revenue Responsibilities

1. The objective of this policy is to establish a complete separation between authorization, custody, record-keeping and control functions.  Deputy Ministers  are responsible for approving their ministry delegated revenue responsibilities matrix.  A person formally acting in a position may exercise the responsibility delegated to that position, but cannot further delegate that responsibility to another individual. Responsibilities that may be included in a delegated revenue responsibility matrix are:
   1. extend credit in accordance with 7.2.6;
   2. issue invoices or statements of account (7.2.7 & 7.2.18);
   3. approve credit notes;
   4. approve refunds; (7.2.11);
   5. receive public money (7.2.9);
   6. initiate set-offs (7.2.23);
   7. write-off debts(7.2.26) ; and,
   8. approve journal vouchers.
2. Specimen signature cards approved by the signing authority officer must be maintained in respect of the responsibilities granted under policy 1.
3. Officers responsible for receiving public money (policy 1(e)) must not be given any other responsibilities described in policy 1.
4. Officers responsible for issuing invoices (policy 1(b)) must not be given responsibility to receive public money, write-off debts, approve credit notes, process refunds or journal vouchers, or initiate set-offs.
5. Any exception to policy 3 or 4 to accommodate an extraordinary ministry operational requirement (for example, limited office staff) must be checked by appropriate compensating controls and balanced against the risks in the circumstances and be approved by the Comptroller General.

7.2.6 Credit Management

1. Ministries must grant credit only where:
   • the terms and conditions of a loan agreement or the applicable program provide for extensions of credit ; or
   • goods, services or rights under an agreement or an enactment are provided on specific credit terms.
2. Ministries providing loans, or goods, services or rights under an agreement or an enactment on credit must assign an officer with responsibility for credit management functions.
3. Where credit is granted under policy 1, it must be granted in accordance with the terms and conditions of the applicable agreement or program and any governing legislation.

7.2.7 Billing and Payment

1. When payment is not received at the time that goods and services and rights under an agreement or an enactment are provided, an invoice, statement of account or other type of debit note must be issued as soon as possible (for example, within 30 days) subject to the provisions of any applicable agreement or enactment.  Where goods and services and rights under an agreement or an enactment are provided on a continuing basis or over a long period of time, invoices or statements of account must be issued at regular intervals subject to the provisions of any applicable agreement or enactment.

7.2.8 Acceptance of Electronic Payment

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

1. The Province, through Banking & Cash Management Branch, Provincial Treasury (government access only), has adopted the payment card industry standards (PCI) for its electronic payment systems for government.
2. Banking & Cash Management Branch, Provincial Treasury, is responsible for approving and coordinating 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.
3. Ministries are responsible for any costs associated with electronic payment transactions incurred by program areas operating within their mandate, including disputed sales.
4. Banking & Cash Management Branch, Provincial Treasury, is responsible for determining and approving a standard suite of electronic payment options based on program type, and delivery models and payment card industry requirements. Consideration will be given to corporate solutions and government agreements with financial institutions and card processors in addition to ministry and program objectives.

7.2.9 Receipts and Deposits

1. All public monies received  must be deposited promptly to the credit of the Minister of Finance:
   • to a revenue bank account at a financial institution as described in 7.2.10;
   • with a government agent; or
   • with a person appointed by the Minister of Finance to receive deposits of public money on behalf of the government.
2. Ministries must list and secure post-dated cheques until their payment date and deposit them promptly at that time.
3. Ministries must issue a receipt for any cash remittances at the time a remittance takes place.  Ministries must discourage the remittance of cash through the mail.  Payment may be made by cash, cheque, or electronically.  Ministries can only refuse to accept cash and/or cheques in circumstances which have been approved by the ministry chief financial officer.
4. 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 yet been met (for example, security deposits).  Payments that do not meet payment conditions (for example, conditional payments) must be returned immediately to the remitter and tracked separately on the balance sheet.
5. Ministries must provide adequate facilities for the safekeeping of public money at all times, for example from the time received until it is deposited at a financial institution.
6. Deposits must be made daily except where the ministry chief financial officer has determined this is not practicable or cost-effective and has made a record of that determination.

Procedure Requirements - G.1

7.2.10 Revenue Bank Accounts

Revenue bank accounts are ministry accounts at financial institutions for depositing public money, which are transferred each day to the consolidated revenue account.

1. Revenue bank accounts must only be set-up by the Banking & Cash Management Branch, Provincial Treasury, Ministry of Finance.
2. Ministries must keep the number of revenue bank accounts to a minimum.  Ministry applications for accounts must be consistent with operating requirements.
3. Ministries must keep an adequate record of deposits to revenue bank accounts, and provide this record to the Office of the Comptroller General, upon request, for reconciliation with financial institution statements.
4. Ministries must keep an adequate record of their revenue bank accounts. This ministry record must be reconciled at least annually to the centralized bank account registry (CBAR) maintained by Banking & Cash Management Branch, Ministry of Finance.
5. Ministries must review revenue bank accounts at least annually to ensure each account is still required.  Any account not required must be closed.

Procedure Requirements - G.2

7.2.11 Refunds

1. Ministries may only make refunds (including partial refunds) from the consolidated revenue fund or a trust fund if permitted by section 16 of the Financial Administration Act or other applicable authority.
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.

7.2.12 Dishonoured Banking Instruments

1. Where a banking instrument (for example, a cheque, pre-authorized debit or electronic funds transfer) has been deposited by the Province in payment of a debt or other obligation and it has been subsequently dishonoured, an accounts receivable must be set up by the responsible ministry.  The amount must include a dishonoured banking instrument fee shown separately on any billing.  In accordance with the applicable fee directive issued by the Minister of Finance, a fee of $30, or any other amount set by applicable agreement, program or enactment, may be payable by the payer submitting a banking instrument that is dishonoured.
2. Ministries must immediately advise payers of their dishonoured banking instrument and any fee charged.
3. Payments received for dishonoured banking instrument fees must be paid into the Consolidated Revenue Fund and identified from other public money by use of a separate STOB.

7.2.13 Exchange Rates

1. The difference between the actual premium received from or discount paid by the financial institution as the exchange rate amount must be recorded in the U.S. Fund Exchange STOB (4612).
2. 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 materiality of the amount of the underpayment and the status of the debtor.
3. All payments received in U.S. funds exceeding $10,000 and other foreign currencies 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

7.2.14 Suspense Accounts

1. Where public money has been received and the associated debt or obligation 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.
3. Monthly, each ministry must analyze its suspense accounts and reconcile them with the balance reported in the central accounting system.

7.2.15 Insurance Proceeds

1. Ministries must ensure that insurance claims are submitted to the Risk Management Branch, Provincial Treasury (government access only), 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, they must be paid into the Consolidated Revenue Fund and credited to an Insurance Claim Receipts revenue STOB.
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 an insured loss, damage or other event, insurance proceeds must be paid into the Consolidated Revenue Fund and credited to a miscellaneous revenue STOB, "Insurance Proceeds".  Insurance 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 the insured loss, damage or other event, 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.

7.2.16 Recording of Receivables

1. All amounts determined to be due to the government must be promptly recorded as a receivable by the ministry.  Each receivable must be recorded and maintained until payment is received or the recorded amount is written-off or forgiven (for example, extinguished or remitted).
2. An adequate provision for doubtful accounts must be established.  When all appropriate efforts fail to collect a receivable and it has been approved for write-off, remission, or extinguishment, the related provision for doubtful accounts should be reduced.

7.2.17 Control and Subsidiary Accounts

1. Ministries must establish control accounts, where applicable, to ensure the completeness and accuracy of individual accounts.
2. A ministry's 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.
4. Monthly, ministries must reconcile subsidiary accounts with the control STOB for each accounts receivable, loans receivable, mortgages receivable and accountable advances.

7.2.18 Statement to Debtors

1. Ministries must issue periodic invoices or statements to debtors providing meaningful and concise information on the status of their debts (for example, identifying principal and interest components).  Ministries must determine the frequency of issuing invoices or statements based upon the nature of the receivable and the provisions on any applicable agreement or enactment.

7.2.19 Reporting Requirements

1. Quarterly aged receivable reports; that is, for trade and tax receivables only, must be signed off by the ministry chief financial officer and submitted to the Financial Management Branch, Office of the Comptroller General by July 20, October 20, January 20 and April 30 for the preceding quarterly period ended. See template (XLS) (government access only)  Explanations of significant variances from the report for the previous quarter must be included with each quarterly report. The quarterly aged receivable aging categories are:
   • accrued/not due;
   • current;
   • 31 - 60 days;
   • 61 - 90 days;
   • 91 days - 1 year;
   • 1 - 2 years;
   • 2 - 3 years;
   • over 3 years
2. An annual summary report of receivables activity must be signed off by the ministry chief financial officer and submitted to the Financial Management Branch by April 30 of each year. See template (PDF) (government access only)

7.2.20 Interest on Overdue Accounts Receivable

1. Ministries must charge interest on overdue amounts owing to the government as provided in the Interest on Overdue Accounts Receivable Regulation subject to the exceptions set out in that regulation.  An example of such an exception is where a loan or other contract specifically provides for interest to be paid to the government on past due amounts.
2. Ministries must record interest charges owing separately in their accounts receivable records and identify individual amounts owing for each debtor.
3. Ministries must advise each debtor of all interest charges to the debtor's account either by separate invoice or through periodic statements of account.
4. Ministries must deposit payments for interest charges to the Consolidated Revenue Fund or applicable trust fund.
5. 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.

Procedure Requirements - G.7

7.2.21 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 in the context of individual program needs and statutory requirements.
2. Ministries must establish an accurate and timely reporting system to notify collections staff when a receivable becomes overdue.
3. Ministries must take prompt and vigorous action to collect overdue receivables.
4. Ministries must establish fair but determined processes to recover these accounts.
5. Ministries must document all actions taken to collect overdue accounts.
6. Each ministry is accountable for its own receivables collection results.  The accountability for collection results does not end on the transfer of a ministry's receivable to a central government collection branch, a collections agent of the government, a private collection agency or any other alternative method of collection.
7. In circumstances where the government owes money to a person, and that same person owes money to the government, if permitted by law, recovery may  subject to policy 7.2.23, be initiated by the creditor ministry by:
   • An intra-ministry set-off where the payable and receivable are within the same ministry, or
   • An inter-ministry set-off.
8. When a payment has been received and two or more ministries have claims against a debtor, they must be addressed in the following order unless otherwise provided in an applicable agreement or enactment:
   • 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.
9. Ministries should refer to the Freedom of Information and Protection of Privacy Act and any other applicable enactment which may address the sharing of personal information in order to determine requirements for sharing personal information related to the collection of government debt.

7.2.22 Employee Collection Action

Ministries must immediately inform employees of any salary or other overpayments and attempt to 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 a receivable until the overpayment has been recovered.  Ministries must consult with Strategic Human Resources in any situation where the collection action being considered is beyond the scope of this policy.

7.2.23 Set-offs

A set-off is a useful collection tool which involves a process established within government by ministries that are owed money by a debtor external to government.  Where the debtor is owed money by the government for some purpose the amount owed to the government can be deducted in deciding the final amount to be paid to the debtor.  There are three types of set-offs currently used in government:

1. Canada Revenue Agency (CRA) set-offs.  Involves setting off the amount owing against a debtor’s CRA income tax and/or GST/HST refund.   Revenue Division, Ministry of Finance is the designated contact for the government’s CRA set-off program.
2. Intra-Ministry set-offs.  Where the amount owed to the ministry can be deducted off the next payment owing to the debtor (for example, next contract payment).
3. FAA Section 38, Inter-Ministry set-offs.  The amount owed to the ministry can be deducted off another ministry payment owing to the debtor.   

Inter-Ministry Set-offs

1. Before set-off action is initiated, ministries must ensure that due diligence has been performed on collecting the debt.
2. Ministries must forward inter-ministry set-off requests (form FIN 011 - government access only) submitted under section 38 of the Financial Administration Act to the Comptroller General for approval. Approval of inter-ministry set-off requests in amounts under $50,000 may be given by the Executive Director, Corporate Compliance and Controls Monitoring Branch or any other official in the Office of the Comptroller General designated by the Comptroller General to do so.
3. After an inter-ministry set-off is approved by the Comptroller General (or authorized official) and processing of the cheque requisition is completed, the receivable of the debtor may be reduced.
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 or enactments containing a specific provision not to set-off amounts owing.
5. The ministry must initiate set-off action in a timely manner to protect the government's interest for any goods, services or other rights.  The ministry must consult with its legal counsel if there is any doubt as to the legality of the set-off or 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 chief financial officer of the ministry responsible for the debtor.
7. Before initiating a set-off against amounts payable from a trust fund, ministries must obtain a legal opinion that this action would not be contrary to an enactment or the trust, instrument or other authority by which the trust fund is held.  Ministries must include a copy of the opinion with the set-off request.
8. Once set-off action has been initiated, the ministry must notify the Corporate Compliance Controls and Monitoring Branch, Office of the Comptroller General, immediately if it receives payment through any other means. When a debt is recovered in full, all set-offs relating to the debt must be cancelled and any surplus funds must be returned promptly.

7.2.24 Third Party Demands and Garnishments

The prerequisite to issuing a demand on third party under Section 83 of the FAA is that a person owes money to the government and the Minister of Finance receives information that another person is or is about to become indebted to the debtor.

1. The ministry chief financial officer must ensure that the following information is retained on file prior to approving a request for a third party demand pursuant to section 83 of the Financial Administration Act:
   • 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;
   • set-off action instituted; and
   • a completed (but unsigned) Third Party Demand Notice.
2. Prior to issuing a request for a third party demand, ministries must ensure:
   • receivable collection has been pursued consistent with policy;
   • the debt is legally valid.  Where doubt exists, the ministry must request that legal counsel obtain a judgment against the debtor or consider other collection actions (for example, negotiating a compromise settlement or pursuing write-off or extinguishment of the debt instead) and;
   • a defined payment schedule has been considered.
3. Ministries must forward unsigned Third Party Demand Notices together with documentation indicating the chief financial officer's approval to the Revenue Division, Ministry of Finance (government access only), for sign-off.
4. The debt must include interest in accordance with any applicable enactment, agreement or policy.  The third party demand must stipulate any interest that is accruing.
5. Ministries should not generally initiate a demand on a third party until at least 90 days after the debt was incurred. However, in instances, where prompt collection action is considered necessary or advisable to collect the debt (for example, the ministry has learned that the debtor is about to leave the jurisdiction), a third party demand may be requested sooner.
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 that the debtor will remain employed with that employer.
7. The Minister of Finance must notify the debtor of the demand and give the debtor particulars of it at the same time and in the same manner as a demand is made on a third party.
8. Ministries must not request third party demands in relation to joint bank accounts unless all parties to the account are responsible for the debt sought to be collected.
9. If set-off relating to the same debt has been initiated, the ministry must also inform the Corporate Compliance and Controls Monitoring Branch (3CMB), Office of the Comptroller General, upon receipt of payments from third party demands.
10. When a debt to the government is paid in full, all third party demands 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 in a timely manner.
12. A third party demand expires when the debt to the government sought to be collected 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 third party demands, ministry legal counsel must be consulted to ensure that third party demands are obtained in an appropriate manner.

7.2.25 Revenue Division

1. Either a ministry or the Revenue Division, Ministry of Finance, can seek to establish a memorandum of understanding with each other for the transfer of administration of delinquent debts between the ministry and the Revenue Division, Ministry of Finance.
2. A memorandum of understanding as described in policy 1 should set out any direct reimbursement by the ministry to Revenue Division, Ministry of Finance, for services or costs.
3. Prior to a ministry referring debts to Revenue Division, Ministry of Finance, the ministry must validate all accounts and ensure that the debts are clear of any appeals and/or adjustments.
4. The ministry and Revenue Division, Ministry of Finance, must sign an information-sharing agreement that addresses the collection, use and disclosure of any personal information obtained in the course of managing receivables.

7.2.26 Write-offs of Uncollectible Debts or Obligations

1. Only those debts or obligations for which all appropriate collection action has been taken can be considered for write-off.
2. Ministries must ensure that uncollectable debts or obligations are reviewed at least once a year and identify those debts that should be submitted for write-off.
3. A write-off removes a receivable from the accounts recorded in the Corporate Accounting System, but does not extinguish the legal right of the government to collect the debt or obligation.  Collection action is resumed for debts or obligations previously written-off when information indicates that there are prospects of recovering the debt or obligation, or any portion of the debt or obligation.
4. Write-off submissions must include all relevant information (any information the ministry possesses relevant to the debt or obligation and its collectibility).  Submissions for the write-off of debts or obligations exceeding $5,000 must be appropriately categorized.  The categories for submission are:
   • debtors who have died and the estate has been probated without any assets;
   • debtors who cannot be located;
   • debtors who are indigent;
   • debtors residing outside of the province of British Columbia 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 the province of British Columbia;
   • 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 to the Crown cannot be readily established (that is, 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.
5. All write-off submissions must include details of the collection action taken, the budget impact, the debtor's financial status if relevant, and why further collection action is not possible or practical.
6. The chief financial officer of a ministry is responsible for authorizing the write-off of ministry debt or obligations of $5,000 or less. This authority may be delegated to officers within the ministry to write off individual debts or obligations of $500 or less.  Officers must maintain adequate records of any amounts that they have written-off and report quarterly to the ministry’s chief financial officer on any write-off action taken during the quarter.
7. The executive financial officer is responsible for recommending the write-off of ministry debts or obligations 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.
8. The respective minister is responsible for signing off on the recommendation of the executive financial officer for all submissions for the write-off of ministry debts or obligations greater than $100,000.  All submissions for write-off approval must be sent to Treasury Board and copied to the Comptroller General for review.
9. Ministries do not  have to send a request to write-off debts or obligations to the Comptroller General or to Treasury Board in the following circumstances:
   • bankrupt individuals – when an order has been granted discharging the ministry debt or obligation, the ministry must remove the account on the basis of the order
   • judgment or other court orders – when it is determined that the Province is entitled only to a lesser amount than the recorded debt, the ministry must adjust the account on the basis of the court's order
   • extinguishments by operation of statute – where a statute extinguishes a debt  or obligation (for example, the Limitation Act where the applicable limitation period has expired), the ministry must adjust the account on the basis of the statutory extinguishment
   • a legal opinion from the ministry solicitor that concludes that debt or obligation is invalid, unlawful, unenforceable or otherwise uncollectible.
10. 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.
11. When authority has been received to write-off a debt or obligation, the debt or obligation must be transferred from the ministry accounts to a reference file of "debts written off", where it must remain until paid, extinguished, or remitted (pursuant to section 18 or 19 of the Financial Administration Act or by another enactment).
12. 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.

7.2.27 Extinguishments

1. The minister is responsible for authorizing all submissions for extinguishment in relation to debts or obligations relating to activities of their ministry.  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 or the appropriate official specified in the Forgiveness of Debts and Obligations Regulation BC Regulation 269/92 as amended (or other applicable authority), for approval.
2. The Minister of Finance or the Deputy Minister of Finance, the Assistant Deputy Minister, Corporate Services Division, Ministry of Finance, the Assistant Deputy Minister, Revenue Division or the Comptroller General, pursuant to the Forgiveness of Debts and Obligations Regulation, may approve a settlement agreement to forgive some or all of a debt or obligation where the total amount to be forgiven (principal plus interest) does not exceed $100,000.  In addition, the following Receivables Management Office officers have authority to approve a settlement agreement to forgive some or all of a debt or obligation where the total amount to be forgiven (principal plus interest) does not exceed the following limits:
   • the Executive Director – $50,000;
   • a director, manager or supervisor of a collection officer – $25,000.
3. Ministries should seek legal advice prior to entering into a settlement agreement to forgive some or all of a debt or obligation to which Section 18 of the Financial Administration Act applies.
4. Ministries should also seek legal advice for non-FAA extinguishments.  Some examples of  debts and obligations extinguished outside Section 18 of the Financial Administration Act are:
   • bankrupt individuals – when an order has been granted discharging the debt or obligation, the ministry must remove the account on the basis of the order
   • judgment or other court orders – when it is determined that the Province is entitled only to a lesser amount than the recorded debt, the ministry must adjust the account on the basis of the court's order
   • extinguishments by operation of statute – where a statute extinguishes a debt or obligation (for example, the Limitation Act where the applicable limitation period has expired), the ministry must adjust the account on the basis of the statutory extinguishment
   • settlements involving fines, pecuniary penalties, taxes, royalties, fees or other sums imposed or authorized to be imposed by an enactment.
5. Annually, ministries must submit statements of debts or obligations extinguished (FAA and non-FAA) during the fiscal year, together with supporting documentation, to Financial Reporting and Advisory Services, OCG, for Public Accounts reporting purposes.

7.2.28 Remissions

FAA Section 19 remissions refer to debts or obligations owed to the government consisting of forfeitures, fines, pecuniary penalties, taxes, royalties, fees or other sums imposed or authorized to be imposed under an enactment.

1. Submissions for remission orders must be:
   • prepared by the ministry officials responsible for revenue management;
   • recommended by the ministry’s chief and executive financial officers;
   • recommended by the Minister of Finance; and then
   • submitted to the Executive Council (Cabinet).
2. Submission pursuant to policy 1 must:
   • recommend the remission be authorized in whole or in part without conditions;
   • recommend the remission be authorized in whole or in part subject to conditions;
   • recommend the remission not be authorized; or
   • provide no recommendation on the remission because of conflict of interest or some other circumstance that makes a recommendation from the submitting ministry 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 remitted;
   • the amount to be remitted;
   • justification for remission;
   • sufficient background information to enable Cabinet to consider whether authorizing the remission is in the “public interest” in a case or class of case where "great public inconvenience", "great injustice" or "great hardship" to a person has occurred or is likely to occur if the remission is not granted; and
   • other information, including the matters set out in policy 2.
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.

7.3 Revenue and Receivables Management Policy Framework and Authorities

Revenue and receivable management policies are established by legislation and Treasury Board Directives. The authorities and roles related to revenue and receivables policy are defined in the table below

Revenue and Receivables Management Policy Authorities and Roles

7.4 Supplementary Information, References and Guides (government access only)

7.4.1 Banking & Cash Management

7.4.2 Treasury Board's Fee/ Fine Review Process

7.4.3 Revenue Division

7.4.4 PCI Compliance Resources

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