Search Book

Contents

 

About This FAM

Responsible Agency: Office of the Comptroller General
Issued: Aug 2009
Last Updated: Aug 2009

1. Introduction

The Legislative Assembly approves the Government's annual expenditure budgets in two separate votes: Operations Expenditures and Capital Investment Expenditures. Sections 27 to 37 of the Financial Administration Act (FAA) establish appropriation controls for the Government with regards to these voted expenditures.

This policy formalizes the classification of and appropriation controls for annual voted expenditures. This policy should be read in conjunction with the following Financial Administration Manual (FAM) Policies:

Government expenditures, as referenced in this policy, do not include expenditures on behalf of others (i.e. Disbursements funded by Third Parties; see FAM Policy 2101.)

 

2. Policy

Every Government expenditure must be:

  1. Classified as an Operations Expenditure or Capital Investment Expenditure;
  2. Pursuant to an appropriation; and
  3. Recorded in accordance with generally accepted accounting principles, the Government's accounting policies and the Directives identified below.
 

3. Directives

3.1

CLASSIFICATION OF VOTED EXPENDITURES

Every voted Government expenditure must be classified as follows:

3.1.1

Operations Expenditures

Operations Expenditures are normally of a recurring or continuing nature and are associated with the administration and delivery of Government programs and services. Examples include:

  1. Staff salaries, wages and benefits;
  2. Materials and supplies;
  3. Travel, fees, and other program operation expenses;
  4. Grants and contributions to communities, organizations, groups, or individuals for program operation or acquisition of capital assets which the Government will not own;
  5. Maintenance, repair, utility, and other operating costs;
  6. Operating lease costs;
  7. Expenditures incurred for the acquisition of assets which are under the threshold value for capitalization - with the exception of land, which should be capitalized and included in Capital Investment Expenditures regardless of its cost;
  8. The interest portion of capital lease payments (not the principal component); and,
  9. Amortization expense.
3.1.2

Capital Investment Expenditures

Capital Investment Expenditures include expenditures for the acquisition, construction, or development of tangible capital assets; and betterments to existing tangible capital assets (See FAM 2201).
3.2

Appropriation Controls

Sections 27 to 37 of the FAA establish the following appropriation controls for the Government with regards to voted expenditures:
3.2.1

Each department shall ensure that:

  1. Every expenditure of funds from within an approved appropriation is recorded as an expenditure against that appropriation;
  2. Every expenditure is charged against a vote, item and activity; and
  3. No expenditure is charged that causes a department's appropriation to be exceeded.
3.2.2

A Deputy Minister shall take reasonable measures to ensure that no expenditure is incurred in respect of his or her department that causes an activity budget to be exceeded.
3.2.3

Where an expenditure is incurred that causes an activity to be exceeded, the Minister responsible for the department shall submit to the Minister of Finance a report providing the details of each such case.
3.2.4

The Minister of Finance shall:

  1. Submit the report referred to in Directive 3.2.3 to the Financial Management Board by July 31 following the end of the fiscal year; and,
  2. Present to the Legislative Assembly a report providing the details of each case where an expenditure exceeded the activity budget by $250,000.
 

4. Authorities and References

 

5. Consequences from Failure to Comply

Failure to comply with policies and directives of the Financial Administration Manual may result in actions under Part X of the Financial Administration Act . The Government of the Northwest Territories may seek legal remedy in the Territorial Courts.