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About This FAM

Responsible Agency: Government Accounting - Finance
Issued: Aug 2005
Last Updated: Aug 2005

1. Introduction

This directive provides direction for where it is suspected or believed that;

  1. a loss of public money or property (including that which is held in trust) as defined in the Financial Administration Act (FAA) has occurred;
  2. an offense under Part X of the FAA (e.g., fraud, theft, bribery, collusion to defraud, etc.) has been committed;
  3. a robbery, break-in or willful property damage has occurred;
  4. public or private property has been lost or destroyed through the misconduct, willful neglect of duty or negligence of a public officer; or,
  5. damage to any public asset, including real property, vehicles, mobile equipment, marine and aviation assets (hereafter referred to as “property”), whether government owned, leased or rented, has occurred.
 

2. Policy

2.1

Internal Reporting

  1. Deputy Ministers shall report all cases of suspected offences and/or loss of public money or property to the Comptroller General in accordance with the provisions of this directive; and,
  2. Deputy Ministers shall report all instances of robbery, break-in, property damage or other loss or destrucution to government assets to the Risk Management and Insurance section of the Department of Finance in accordance with the provisions of this directive.
2.2

Reporting Suspicion of Criminal Activity to the Police

Except in exceptional circumstances such as robbery, break-in or willful property damage, only the Comptroller General or persons authorized by the Comptroller General shall report suspicion to the Royal Canadian Mounted Police (RCMP), if necessary.
2.3

Consultation Regarding Appropriate Action

If an employee is suspected of involvement in a fraud or a theft, in addition to reporting this to the Controller General (ss. 3.4.1 below) , the Deputy Minister shall refer to the Human Resource Manual (section 701) and consult with the Employee Relations Division, Financial Management Board Secretariat (FMBS) regarding what action should be taken.
2.4

Financial Responsibility for Loss or Damage

If an employee is suspected of negligently causing loss of or damage to public or private property, the Deputy Minister shall consult with Employee Relations Division, Finance and Risk Management and Insurance, Department of Finance regarding notification to the employee that they may be held financially responsible for such loss.
2.5

Obligation to Report

Deputy Ministers shall ensure that all departmental employees are advised of their obligation under Part X of the FAA to report in writing to a supervisor any knowledge or information of a suspected fraud or a violation of the FAA. Where it is suspected the supervisor may be involved a report must be made to a more senior supervisor.

Deputy Ministers shall ensure that all department employees are advised of their obligation to report property losses in accordance with this directive (ss. 3.3 below).
2.6

Requirement for Confidentiality

The Deputy Minister and the Comptroller General are to take all reasonable precautions to keep confidential all records, information and the identity of individuals related to or dealing with an allegation of a loss or an offense.
 

3. Directives

3.1

Losses

A loss under this directive includes:

  1. loss of public money;
  2. disbursements made without proper authority;
  3. unauthorized use of privileged information;
  4. loss of financial assets;
  5. unauthorized use of government assets; or,
  6. loss of or damage to property except damage attributable to wear and tear.

The loss may be caused by [may be a result of] an offence under part X of the FAA (e.g., fraud, theft, bribery, collusion to defraud, etc.), misconduct, willful neglect of duty, negligence, accidents or Acts of God, involving any government activity, any activity on government property, or any government program, whether authorized or not and regardless of the amount involved.
3.2

Offenses

An offense under Part X of the FAA includes action by a public officer to:

  1. accept compensation, without lawful authority, for the performance of official duties;
  2. conspire with or assist any person to defraud the Government or a public agency;
  3. intentionally permit a person to violate the FAA or the FAA regulations;
  4. make or sign a false entry in any record;
  5. fail to report in writing to a supervisor any knowledge or information of a fraud against the government or a contravention of the FAA or the FAA regulations; or,
  6. demand or accept compensation for settlement of a charge, complaint or offense.
3.3

Reporting by the Employee

When an employee has reason to believe that a loss or offense has occurred, s/he shall immediately notify their supervisor in writing. Where the supervisor is suspected of causing a loss or committing an offense, the employee shall inform a more senior supervisor. The supervisor shall immediately notify:

  1. the Deputy Minister, if the supervisor is in headquarters (HQ);
  2. the departmental Regional Superintendent and the Deputy Minister, if the supervisor is in a region other than HQ; or,
  3. the Deputy Minister, if the supervisor is employed with a public agency.
3.4 Reporting by the Department
3.4.1

In addition to immediate notification of the Controller General and reporting under ss. 3.4.3 below, the Deputy Minister shall report in writing to the Comptroller General and Risk Management and Insurance, Department of Finance, within 30 days of the detection of a loss or offense identified in s. 3.1 and s. 3.2:

  1. how the loss or offense was detected;
  2. the cause and description of the loss or offense; and,
  3. the dates of detection and occurrence of the loss or offense.
3.4.2 Within 90 days from the detection of the loss or offense, the Deputy Minister shall report in writing to the Comptroller General any enhancements made to departmental internal controls in order to prevent repetition of the loss or offense. The Comptroller General may extend the time beyond 90 days if the Deputy Minister requests an extension in writing with substantiation of extenuating circumstances.
3.4.3 Within 10 days of the detection of a loss identified in ss. 3.1 (f), the Deputy Minister of the department sustaining the loss shall report in writing to Risk Management and Insurance for insurance purposes. Major losses identified in ss. 3.1 (f) (estimated to exceed $100,000) or any involving serious injury/loss of life shall be reported immediately by telephone.
3.4.4 In cases of supposed fraud or misuse involving a Government Credit Card, the Government Credit Card Coordinator (Government Accounting, FMBS) must be advised immediately to cancel or suspend the card with the Credit Card Company.
3.5 Consultation and Investigation
3.5.1

The Comptroller General will review the particulars of each case involving a loss or offense and may inform and consult with one or more of:

  1. Legal Division, Department of Justice;
  2. Risk Management and Insurance, Department of Finance;
  3. the Audit Bureau, FMBS;
  4. Labour Relations, FMBS, if an employee is involved in the loss or offense;
  5. Government Accounting, FMBS; and
  6. the Regional Superintendent, FMBS, if the loss or offense is in a region other than HQ.
3.5.2 The Comptroller General shall decide if the RCMP should be informed and, if so, inform the Department of Justice. The Comptroller General may inform the RCMP directly or authorize the Audit Bureau, FMBS or the Deputy Minister of the department sustaining the loss to inform the RCMP.
3.5.3 A public officer may inform the RCMP directly in exceptional circumstances such as automobile accidents, robbery, break-in or willful damage. However, informing the RCMP does not relieve the officer and anyone else from fulfilling the requirements of this directive.
3.6 Audit Investigation
3.6.1 At the request of the Comptroller General, the Audit Bureau, FMBS shall conduct an investigation to determine the nature and extent of the loss or offense. The Deputy Minister of the department sustaining the loss shall assist in the investigation.
3.6.2 The Comptroller General may enter into a contract with an external organization to conduct the investigation.
3.6.3 As soon as the investigation is completed a final written report by the investigator must be made to the Comptroller General and the Deputy Minister of the Department sustaining the loss/offense.
3.7 Insurance
3.7.1 When informed of a loss under this directive the Manager, Risk Management and Insurance, Department of Finance shall act immediately to comply with the terms and conditions of the Government Insurance Contract, including, if required, informing the Insurers of the loss. The Manager of Risk Management and Insurance shall inform the Deputy Minister of the department sustaining the loss and the Comptroller General of the relevant rights and responsibilities of the parties to the Insurance Contract.
3.7.2 Risk Management and Insurance, Department of Finance will review, and if necessary investigate, negotiate and settle all insurable claims regardless of policy deductible amounts. Any non-insurable claims may be referred to Legal Division, Department of Justice for further action as necessary.
3.7.3 Deputy Ministers will ensure that employees cooperate with Risk Management and Insurance, Department of Finance in the investigation, negotiation and settlement of claims.
3.8

Non-insurance Recovery Action
3.8.1 In addition to the process described in ss. 3.8.2, the Comptroller General and the Deputy Minister of the department sustaining the loss/offence shall decide if recovery action should be taken for any loss or offence identified as reportable to the Comptroller General under this directive. The Deputy Minister through the Legal Division, Department of Justice, may initiate where necessary, the recovery action and/or the penalties prescribed by the FAA Part X. The claims for recovery can only be for damages incurred which can be proven beyond a reasonable doubt.
3.8.2 The Manager, Risk Management and Insurance, Department of Finance and the reporting department shall decide if recovery action should be taken for losses identified in 3.1 (f), after consultation with the Legal Division, Department of Justice and the Employee Relations Division, FMBS if required.
3.8.3 Departments including their Boards and Agencies must not settle claims for damage to assets (nor settle claims made by third parties for damage they are alleged to have caused). Only Risk Management and Insurance, Department of Finance is responsible to deal with all insurable recoveries of money owing from a third party for deposit into General Revenues. Accordingly, with the exception of a Court Order of restitution or in cases of Fraud, any insurance recovery for damage to an asset must not be recorded as recovery of an expense and returned to the department's budget.
3.8.4 In cases of Fraud or Court Orders of Restitution, the loss as determined by the Court decision shall be immediately recorded by the department sustaining the loss as a receivable in the Government accounts in accordance with FAM Policy 4102.
3.9

Public Disclosure

All communications to the Press or Media agencies regarding the loss or offense shall be made in accordance with Government Communications Policy 11.21 and in consultation with the Comptroller General.
3.10

Accounting Records

Accounting entries to record losses shall be made in accordance with FAM Policy 4102 and the 2201 Tangible Capital Asset series.
 

4. Guidelines

4.1

Sharing Information with the Police

The Comptroller General may give an interim or final investigation report to the RCMP, whether the Audit Bureau, FMBS or a contracted investigator prepares the report.
The investigator may be expected to provide litigation support and may frequently need to cooperate with the Crown Prosecutor.
4.2

Investigation Progress Reports

The Comptroller General may request, when necessary, information on the progress of an audit investigation, RCMP investigation, court action or recovery action from:

  1. the Audit Bureau, FMBS;
  2. the Deputy Minister of the department sustaining the loss or offense;
  3. the Legal Division, Department of Justice;
  4. the RCMP; or,
  5. Risk Management & Insurance, Department of Finance.
4.3

Reporting

All losses under this directive will be reported to the Financial Management Board and the Legislative Assembly in accordance with section 51 of the FAA.
4.4

Loss of Personal Assets

Loss of personal assets (i.e., employee belongings) from Government premises is not covered by this directive. (The Government does not pay its employees for this type of claim unless it is legally liable).