Effective Date: April 1, 2016

Applicable FAM Policies: 625 - Credit Granting and Control

Applicability: GNWT Departments and Public Agencies

INTERPRETATION

The Financial Reporting and Collections Section shall maintain and make available on request to departments and certain public agencies a current and cross-referenced Schedule of Principals of Business Entities with Debts Written Off.  The Schedule will:

1. list separately the name of every individual who is a principal in any business entity that owes a debt written off by the Government; and,
2. list separately the name of every business entity that owes a debt written off by the Government, along with the total written-off amount attributed to that entity and the name of every individual who is a principal of that entity.

When credit is being granted by departments or by the Comptroller General it is the intent that related parties shall be considered in the determination of creditworthiness.  At the extreme, the provision is in place to ensure that principals of legal entities that are indebted to the GNWT do not incorporate another legal entity to access GNWT funds and avoid their legal obligation to the GNWT.

It also protects the GNWT where related companies may have effective control and influence over one another and should, therefore, be treated as a single entity from a credit granting perspective.  The debts or financial obligations of related and controlled companies must be considered when granting credit to an applicant.

In determining what factors constitute related companies and control reference is made to the CPA Canada Public Sector Accounting Handbook Sections PS 2200 and PS 4250.

Should departments require assistance they can contact Accounting Services – Financial Reporting and Collections, Department of Finance.