1INTRODUCTION 1.1Context
Accounts receivable are classified as current assets of the Department and are generally created and recovered during the same fiscal period. They include trade accounts receivable (amounts owed by customers for goods or services rendered as part of normal business operations) and non-trade accounts receivable (amounts related to various transactions, such as interest income, refund of overpayments and recoveries).2
As shown in Table 1, on March 31, 2008, the balance of Environment Canada’s accounts receivable was $7.6 million. Accounts receivable from external parties (excluding those with other federal departments and organizations) accounted for $3.3 million of that amount.
Table 1 - Breakdown of accounts receivable as at March 31, 2008
|
Amount
(thousands of dollars)
|
%
|
External
Cash in Hands of Departments Awaiting Deposit to the Receiver General
Other revenue
|
420
2,917
|
5.6
38.6
|
Internal
Goods and Services Tax and Harmonized Sales Tax
|
2,459
|
32.5
|
Other Government Department
|
1,762
|
23.3
|
Total
|
7,558
|
100.0
|
Source: Departmental financial system
Close to $80 million were generated in revenue during the 2007–2008 fiscal year. Approximately half of that amount was generated by the Ontario Region. Table 2 shows the types of revenue.
Table 2 – Types of revenue for the 2007-2008 fiscal year
|
Amount
(thousands of dollars)
|
%
|
Sales of Goods and Information Products
|
43,561
|
54.40
|
Services of a Non-Regulatory Nature
|
17,749
|
22.17
|
Services of a Regulatory Nature
|
5,141
|
6.42
|
Lease and Use of Public Property
|
4,615
|
5.76
|
Other revenues
|
3,811
|
4.76
|
Revenue from Joint Project and Cost Sharing Agreements
|
2,988
|
3.73
|
Environmental Damages Fund
|
649
|
0.81
|
Rights and Privileges
|
616
|
0.77
|
Gain on Disposal of Assets and Foreign Exchange Valuations
|
485
|
0.61
|
Found Assets Credited to Revenue
|
411
|
0.51
|
Interest on Overdue Accounts Receivable (net of write offs and cancellations)
|
33
|
0.04
|
Other Fees and Charges
|
9
|
0.01
|
Fines
|
3
|
0.00
|
Total
|
79,794
|
100.00
|
Source: Departmental financial system
Departmental Requirements
The roles and responsibilities of Environment Canada as they pertain to the management of accounts receivable are defined by the Treasury Board of Canada Secretariat Policy on Receivables Management. That policy stipulates that:
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departments must ensure that all of the government’s receivables are managed fairly, efficiently and effectively to recover such receivables and minimize the loss of risk;
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departments must charge interest on overdue accounts;
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departments must take progressive collection actions, which include legal proceedings, if necessary; and
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departments must take action on a timely basis with respect to any write-off of debts when they are not settled in full.
In situations where the Department determines that a debt is uncollectible, it is responsible for writing off that debt, and it must comply with the levels of approval required by the Delegation of Financial Signing Authorities that it has set up. The write-offs must appear in the financial statements as expenses in the statement of operations.
Financial Information Strategy
Since the implementation of the Financial Information Strategy in 2001, departments are required to record their revenues on an accrual accounting basis, i.e., when the sale of goods or the provision of services takes place. Previously, departments recorded revenues on a cash basis, i.e., when the deposit was made.
Financial System
Accounts receivable are recorded in the accounts receivable module in the MERLIN financial system. The system is used for invoicing, monitoring suspense accounts, entering payments, adjustments and interest, and also for writing off debts, when necessary.
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