Transfer Payment Accountability Directive

Transcription

1 Frequently Asked Questions Q.1. A.1. What is the Transfer Payment Accountability Directive? The Transfer Payment Accountability Directive is a mandatory directive that: Establishes the principles and requirements for implementing good governance and controllership practices to achieve accountability for transfer payments; and, Supports the efficient and effective delivery of services provided through transfer payment programs. Q.2. A.2. Why was the directive revised? The directive was revised to clarify government expectations of ministries and classified agencies that provide transfer payments to ensure transfer payment recipients use public funds properly and prudently. Q.3. What is the timing for implementing the requirements of the revised directive? A.3. The directive is effective August 31, 2007 for all new transfer payment programs. All current programs are expected to comply by April 1, 2008, or as existing transfer payment contracts expire if that occurs after April 1, Ministries that are not able to meet requirements by April 1, 2008 should discuss and seek advice from Treasury Board Office. See also Q13. Q.4. A.4. What has changed in the revised directive? The key changes emphasize managing risk to focus on higher risk programs and organizations. The directive requires ministries and classified agencies that provide transfer payments to set clear expectations for transfer payment recipients, and calls for greater diligence when setting up and monitoring transfer payment contracts to ensure: Public services are delivered and commitments are fulfilled; The right controls are in place to ensure the prudent use of taxpayers money; and There is streamlined reporting and limited administrative burden. 1

2 Q.5. A.5. What requirements must ministries and classified agencies meet in managing their transfer payments? Mandatory requirements for ministries and classified agencies that provide transfer payments include the following: A risk-based approach to program design and management is to be used; the level of risk determines the selection of corresponding accountability mechanisms; Transfer payments are to be provided only to legal entities, that is to legislated or incorporated entities, or to individuals; Ministries and classified agencies are to consider a transfer payment recipients governance capacity prior to flowing funds; All transfer payment programs are to be managed through written, signed agreements that set out all expectations in the accountability cycle; Reporting is to occur annually, at a minimum, and is to focus on performance and results; Corrective action is to be progressive and tailored to the nature and/or degree of non-compliance with contractual obligations; and Risk-based reviews are to occur regularly, to ensure service delivery objectives are achieved and risks are consistently and comprehensively identified and addressed. Q.6. A.6. How will ministries address the strengthened risk management component of the directive? Existing tools and frameworks such as the Ontario Provincial Controller s Risk Management Framework and How-to Guide for Risk Management in the OPS and the Internal Audit Division s Risk Management Workbook are available to ministries to support the design and implementation of their risk-based approaches. Ministries should apply this framework when identifying risks so that risk management activities can be linked to the formal risk reporting process. Tools to help ministries and classified agencies evaluate performance of their transfer payment programs and assess the risks associated with their programs that will help them demonstrate that they are systematically and proactively identifying risks are upcoming as part of an overall enterprisewide risk management initiative. 2

3 Q.7. A.7. Does this directive cover all types of transfer payments? The directive covers entitlements; shared cost agreements; and grants. Entitlements are transfers that a government must make if the recipient meets specified eligibility criteria. Such entitlements are nondiscretionary in the sense that both who is eligible to receive the transfer and how much is transferred are prescribed by legislation and/or regulations. Under programs establishing entitlements to individuals, the government normally sets no criteria for how the funds transferred must be used. Transfers under shared cost agreements are a reimbursement of eligible expenditures pursuant to an agreement between the transferring government and the recipient. Grants are transfers that are made at the discretion of a government. The government making the transfer has discretion in deciding whether or not to make a transfer, the conditions to be complied with, if any, how much will be transferred and to whom. Transfer payments that do not meet the requirements of this directive require Treasury Board / Management Board of Cabinet approval. Q.8. A.8. How does the revised directive impact our ministry s classified agencies? Classified agencies that provide transfer payments are now required to comply with the directive. Each agency will need to review its governance framework and accountability practices to ensure they are in line with the mandatory requirements of the directive. Those classified agencies that have not established a risk management framework should now do so, and all aspects of transfer payment management should take place within this context. This obligation should be reflected as ministries update their MOUs with classified agencies. Q.9. A.9. What approvals do ministries and classified agencies need to make changes to transfer payment programs? Ministries and classified agencies need Treasury Board/Management Board of Cabinet approval for changes to any existing program. Q.10. Does the transfer payment accountability directive apply to government business enterprises? A.10. No, this directive does not apply to companies such as Ontario Power Generation and Hydro One. 3

4 Q.11. What supports are available to assist ministries and classified agencies implement the amended directive? A.11. Supports will include: A governance and accountability best practices guide expected to be released in the fall; Risk management advice currently available through Internal Audit Service Teams as ministries fulfill their responsibilities to implement a risk management framework/process; and Courses relevant to transfer payment management such as governance and accountability, program evaluation, risk management and financial management are currently available through the Centre for Leadership and Learning. Q.12. Will new resources be made available to ministries to assist with implementation? A.12. Ministries are expected to manage within existing resources to address this government priority; resource requests can be made through the results-based planning process. Q.13. What are the monitoring mechanisms to ensure ministry compliance with the directive? A.13. Ministries will be required to provide the following reports and responses: Each ministry will be required to submit an attestation, confirming that the ministry and the ministry s classified agencies, where applicable, have fulfilled the obligations under the directive, including the use of signed agreements, appropriate controllership practices, risk and performance management. Ministries should be able to demonstrate how this obligation was met. This requirement will be coordinated through the Results-based Planning process. Compliance with the directive will be subject to audits by Ontario Internal Audit Division, as part of its audit schedule. Q.14. How will this information be shared with transfer payment recipients? A.14. Each ministry should discuss the requirements of the transfer payment accountability directive with their transfer payment recipients as part of their ongoing management of the transfer payment cycle. August 31,

5 Key Changes Application and Scope: Previous Directive Applied to all public servants responsible for managing those transfer payments that appear in the annual Estimates. Did not specify approvals required for exemptions Principles: Transfer payments should be managed wisely and prudently to achieve value for money Transfer payments should support the planned objectives and results of programs, through approved activities, and within authorized conditions and criteria Program managers are expected to account for all public funds Administration of transfer payments should be as straightforward and efficient as possible Mandatory Requirements: Risk management referenced only once; required program manager only to undertake risk assessment Program managers determined transfer payment recipient capacity; no mention of ministry capacity Requirement for recipients to be legal entities was implied but not stated Expectations focused more on measurable results than process; program review not required Responsibilities only for: Deputy head Secretary of Management Board Program manager Application and Scope: Revised Directive Applies to ministries and classified agencies that provide transfer payments Treasury Board/Management Board of Cabinet approval is required for exemptions to directive Principles: Recognition of multiple roles and responsibilities inherent in multi-party accountability relationship Risk management to balance independence of recipients with reporting and accountability requirements and service delivery expectations Transparency and value-for-money (Administration of transfer payments to be as straightforward and efficient as possible moved to Mandatory Requirements) Mandatory Requirements: Risk management framework provides the foundation for good governance Ministries and classified agencies to consider the governance framework, capacity, and controls transfer payment recipients have in place so service delivery is assured Funds flowed only to legal entities and individuals Ministries to have oversight capacity to ensure transfer payment recipients are providing services for funds received Risk-based reviews to ensure service delivery objectives are achieved and risks are consistently and comprehensively identified and addressed Responsibilities enhanced to include: Cabinet Treasury Board/Management Board of Cabinet Secretary of Treasury Board/ Management Board of Cabinet Minister or agency chair 5