715 - Commitment Accounting
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Effective: April 1, 2016
Section: Purchasing Cycle
Administrator: Office of the Comptroller General
Applicability: GNWT Departments and Public Agencies
POLICY
All material requisitions (pre-encumbrance commitments), purchase orders or other contractual or program obligations (hard commitments) that will incur a future expenditure or disbursement must be tracked against an approved appropriations/budget. This includes maintaining commitments records for multi-year contractual obligations.
PURPOSE
To ensure that appropriations and budgets are not overspent as a result of unrecorded obligations that will be incurred prior to the fiscal year end. Commitment accounting requires that all funds required to meet future obligations are tracked when known. This policy sets out the requirement to track all material commitments (requisitions, purchase orders and contractual obligations), regardless of the financial system capabilities presently in use.
SCOPE
This policy applies to all expenditures or disbursements that will be incurred against an appropriation or approved budget, including when there is a need to reserve funds to fulfil a future obligation, such as program grant or contribution expenses.
RESPONSIBILITIES
Deputy Heads
Ensure that regular analysis is undertaken to ensure that all known or estimable expenses will be accommodated within an approved appropriation or budget.
Comptroller General
May approve Interpretation Bulletins associated with this policy.
Financial Management Board
Act on all matters related to the financial management and financial administration of Government in respect of expenditure plans, financial commitments and programs; may issue a directive respecting the financial management or financial administration of a Public Agency.
AUTHORITIES and REFERENCES
- Financial Administration Act (FAA)
- s. 7 – Duties: Board
- s. 10 – Board directives
- s.16 – Comptroller General
- s. 18 – Public Agencies: Accountability
- s. 27 – Capital budget
- s. 42 – Agreements for delivery of programs and services
- s. 71 – Prohibition: limit on expenditure
- s. 83 - 85 – Designation of accounting and expenditure officers
- ss. 90, 92 – Expenditure controls
- s. 92 – Disbursements
- CPA Canada Public Sector Accounting Handbook
INTERPRETATION BULLETINS