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Contents

About This FAM

Responsible Agency: Office of the Comptroller General
Issued: Nov 2004
Last Updated: Nov 2004

1. Introduction

This policy should be read with FAM Policy 2102 - Accountable Advances and FAM Policy 1801 - Delegation of Powers and Duties, in this manual. Any terms in italics that are not defined in this directive are defined in other directives within this directive series 2100. Temporary advances are issued under exceptional circumstances only. They do not include accountable advances made under contribution agreements, which are covered in the 1900 series of directives, and they do not include petty cash accounts or standing travel advances, covered in FAM Policies 1706 and 2103.
 

2. Definitions

"temporary advance" an accountable advance that substitutes for reimbursement for expenses or for payment for goods, services or construction already received and invoiced, i.e., payment arrangements that would ordinarily be used under similar circumstances. Examples are duty travel advances (other than standing travel advances) and contract advances. An example of a contract advance is a cash advance to a construction contractor for materials received on site, which departs from the usual practice of paying only for work that has already been erected, inspected, and accepted.
 

3. Policy

Every temporary advance must be issued in accordance with the requirements for accountable advances in the Financial Administration Act and the following Provisions.
 

4. Directives

4.1 A temporary advance must be issued only when it would be unnecessarily costly, unreasonable or impossible to reimburse the recipient for expenses or to pay a supplier only after the goods, services or construction have been received in full and accepted.
4.2 Notwithstanding section 4.1 above, Departments may issue a temporary advance on a contract without having goods, services or construction received in full where in the professional judgement of the department’s Director of Finance (or equivalent) the payment is not material and also low risk and the contractor has an established good working relationship with the Government. For example, a payment of 15% due upon signing under the terms of a $50,000 contract with an established northern supplier could be considered not material and low risk if there is reasonable assurance that the goods or services will be delivered on time, in accordance with the agreed contract schedule.
4.3

The amount of a temporary advance must be no greater than as necessary to:

  1. enable or assist a contract supplier in providing services, goods, or construction;
  2. enable a duty traveler to carry essential cash; or,
  3. avoid costs that would be incurred if the temporary advance was not made.
4.4 The recipient of a temporary advance shall be required to safeguard, expend, account for, and return any unexpended or unaccounted-for portion of the temporary advance in accordance with the general requirements for accountable advances set out in FAM Policy 2102 - Accountable Advances, in this manual.
4.5

For audit or control purposes, the Comptroller General may:

  1. recall any or all funds issued under a temporary advance if the required accounting for expended funds or the repayment of unexpended or unaccounted-for funds becomes overdue;
  2. recover any overdue repayment of unexpended or unaccounted-for funds by offsetting other payments which may become due to a temporary advance recipient; and,
  3. require a potential temporary advance recipient to provide credit securities before any funds are advanced, in order to protect the Government in the event of default or bankruptcy by the recipient.
4.6

Every temporary advance must be approved by the responsible Program Manager or other expenditure officer with delegated authority and must identify:

  1. the reason the temporary advance is needed;
  2. the amount required; and
  3. the responsible custodian.
4.7 Every temporary advance must be issued within the terms of the applicable service contract, transfer agreement, or duty travel arrangement. It must apply directly to the goods, services or construction for which the contract, agreement, or arrangement is made and must not be disbursed for any other purpose.
4.8 Directors of Finance (or equivalent) shall review outstanding temporary advances and obtain from the responsible Program Manager an accounting for any temporary advance that has become due. (The Financial Information System provides a trial balance listing of outstanding accountable advances, sorted by department.)
4.9 Recording temporary advances
4.9.1 Every temporary advance must be recorded as an accountable advance and be charged to the applicable appropriation.
4.9.2 The issuing department shall ensure that accounting for every temporary advance is received from the recipient in accordance with the terms of the contract, agreement, or arrangement.
4.9.3

Directors of Finance (or equivalent) shall ensure that proper accounting entries are made to:

  1. clear returned and accounted-for temporary advances;
  2. establish accounts receivable for temporary advances that are not returned or accounted for; and,
  3. record as prepaid expenses any unused temporary advances that are carried over a fiscal year end, in accordance with Year-end Instructions issued by the Financial Management Board Secretariat.