Effective Date: March 1, 2018
Applicable FAM Policies: 305 - Appropriation Transfers
Applicability: GNWT Departments

Transfers of appropriations between activities within a department’s operations budget or within its infrastructure budget are permitted by the Financial Administration Act (FAA) under certain conditions.

INTERPRETATION

Operations Appropriation Transfer Criteria

Under section 73(4) of the FAA, an appropriation transfer for operating expenses is permitted if the transfer is a permanent reallocation of funds made because of a change to a program, a government priority, or the internal transfer of functions.

Internal transfer of functions are transfers of existing programs or functions (and related dollar amounts) where these functions and responsibilities are moved from one activity to a different activity within the same department. 

A permanent reallocation of funds means that appropriation amounts that are transferred will remain within the applicable activity or expenditure category line item until a future transfer of operating appropriations, meeting the criteria in section 73(4) of the FAA, is completed. Transfers of appropriations between activities, or between expenditure categories within an activity, to minimize variances between actual and budget amounts is not allowed.  This would minimize the usefulness of variance analysis and hide an issue that may require further action.

Infrastructure Appropriation Transfer Criteria

An approved infrastructure appropriation may only be reallocated subject to applicable consultation with Members of the Legislative Assembly (MLAs).  Acceptable circumstances for a capital appropriation transfer include project scope changes, timing adjustment, and the cancellation of a project.

Consultation with Members of the Legislative Assembly 

Acceptable circumstances mean any significant amendment to a capital project’s budget amount, scope, or timing.

Applicable consultation means a process of communicating proposed amendments to capital projects – which includes both tangible capital assets (TCAs) and infrastructure contributions (ICs) – that provides relevant MLAs, the appropriate standing committee and the Chair of the Financial Management Board (FMB) with a reasonable opportunity to review and respond to the proposed amendments. 

The consultation process includes a formal letter sent from the responsible minister to the MLAs that represent the communities in which the existing projects, or the amended projects, reside.  This formal letter is intended to identify the department’s intent to make significant amendments to its capital appropriation.

The letter must be copied to the appropriate Standing Committee, the Chair of the Financial Management Board, and the Secretary to the Financial Management Board.  At its discretion, a department may also choose to copy some or all MLAs.

The formal letter must contain at least the following elements:

1. Project name, description, and existing budget amount by fiscal year of each capital project that is being amended;

2. Communities where the affected capital projects to be amended are located;

3. The dollar amounts of each amendment for each project;

4. Rationale or reasons for amendments to the timing of the capital projects;

5. Rationale or reasons for amendments to the scope of the capital projects; and

6. Timing of when the planned changes are to occur and the date by which the Minister requires a response so that relevant MLA(s) has time to consider and respond to the responsible Minister in a timely manner.

If an MLA and/or the standing committee do not support the proposed significant amendment, the responsible minister advises the Chair of FMB in writing if he or she intends to proceed.

Significant amendment to a capital project budget amount means any increase or decrease in the budget amount of a capital project that, cumulatively for the fiscal year, exceeds $250,000 or represents a 30% change in the capital project budget.  For greater certainty, an increase or decrease includes the creation of a new capital project, or the cancellation of an existing capital project.

Significant amendment to the scope of a capital project means a change in the magnitude of the capital project (i.e. physical size, dimensions, location, type of project).

Significant amendment to the timing of a capital project means a delay in the estimated completion date of the capital project of one year or more from the completion date noted in the most recent Capital Estimates, or when the project was created (if created during the fiscal year via a capital appropriation transfer or a supplementary appropriation).

Departments are expected to exercise their discretion when deciding whether to undertake consultation for capital project amendments that do not meet the minimum criteria for mandatory consultation.

Information Technology Projects

In addition to the requirements under FAM policy 305 and the FAA, all transfers of infrastructure appropriations approved for information communication technology (ICT) projects must be approved by the Informatics Policy Council (IPC) prior to consultation with relevant MLA(s).  Any appropriation amount that is not used, or is not expected to be used for the approved ICT project in the fiscal year must be lapsed unless a transfer has been approved by the IPC.

Circumstances that are Not Appropriation Transfers

Inter-Departmental Transfers of Functions

Inter-departmental transfers of existing programs or functions (and related dollar amounts) whereby existing functions and responsibilities are moved from one department to a different department are not appropriation transfers for purposes of this policy.  These situations require a supplementary appropriation in one department and a negative supplementary appropriation in the other department.

Departmental Infrastructure Transfers between Votes

Departmental transfers that involve more than one vote (as defined in the FAA) are not appropriation transfers under this policy.  Transfers between vote/fund 2 capital projects and vote/fund 1 infrastructure contributions or deferred maintenance can only be done via a supplementary appropriation.

Amendments to Monthly Budget Allocation

At the beginning of each fiscal year, the Main Estimates and Capital Estimates amounts are uploaded into the System for Accountability and Management (SAM), allocating the total budget for each expenditure category line item across the twelve monthly periods.

It is expected that each department will review the timing of their expenditures while preparing the monthly budget allocation before the start of the applicable fiscal year, as well as during the year.

During the year, it may become apparent that the assumptions regarding the timing of certain budget amounts recorded in SAM are no longer valid. This can result in significant year-to-date variances between actual amounts incurred and budget amounts at a point in time.  In these cases, the monthly budget allocation should be amended in SAM when such circumstances become known.  This allows for improved variance reporting for departmental planning and analysis purposes. By having the timing of expected expenditures accurately allocated over the remaining months in the fiscal year, any future variances can be assessed for their root causes instead of being the result of previous assumptions regarding the monthly budget allocation.

Since amendments limited to the timing of budget amounts in SAM do not affect the activity, department, or expenditure category of the item, such amendments are not considered appropriation transfers for purposes of FAM policy 305.