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HomeMy WebLinkAboutFIN 030 Financial Control Policy Policy Procedure Title: Financial Control Policy Policy Number FIN 030 Reference Resolution # 56/07 Resolution #48/19 Resolution #240/20 Resolution #440/24 Date Originated (m/d/y) March 5, 2007 Date Revised (m/d/y) March 25, 2019 February 24, 2020 March 25, 2024 Pages 15 Approval: Chief Administrative Officer Point of Contact Director, Finance & Treasurer Policy Statement and Objective The City of Pickering staff is committed to providing leadership, quality customer service and best value to the ratepayers of the City of Pickering through the provision of responsible and prudent fiscal management. We are committed to providing efficient and professional services as it relates to overall financial management, strategic financial planning, budget, internal audit and accounting services, financial reporting systems, and advice. The objective of this Policy is to: 1. Ensure the financial wellbeing of the City of Pickering is in accordance with Council and Corporate policies, Provincial and Federal Legislation and Regulations and professional accounting principles. 2. Establish and maintain a system of internal controls, policies and procedures to ensure the integrity and reliability of financial information. 3. Ensure that the financial assets of the City of Pickering are maximized and safeguarded at all times. 4. Ensure the liabilities of the City of Pickering are minimized and controlled to the best ability of staff. 5. Ensure the financial stability of the City including the management of financial risk. 6. Ensure the Council, the Chief Administrative Officer and staff have accurate, timely and authoritative financial advice and information. Policy Title: Financial Control Policy Page 2 of 15 Policy Number: FIN 030 Index 01 Definitions 02 Responsibilities 03 Authority 04 Purpose 05 Scope 06 Sole Authority 07 Budgets 08 Spending Authority 09 Commitments 10 Council Approval 11 Budget Variances 12 Temporary Financing 13 Treasurer’s Authority 14 Contracts and Agreements 15 Successive Agreements/Contracts 16 Notification to the Treasurer 17 Departmental Signing Authority 18 Insurance 19 Subsidy Applications 20 Bank Accounts and Investments 21 Petty Cash and Change Floats 22 Corporate and Purchasing Cards 23 Employee Advances and Expense Reimbursements 24 Donations Policy Title: Financial Control Policy Page 3 of 15 Policy Number: FIN 030 25 Real Property 26 Fixed Assets 27 Inventories 28 Administrative Procedures 01 Definitions 01.01 Approval of Council - the funding approval authorized by the adoption of the final current and capital budgets or the adoption of specific recommendations/resolutions. 01.02 Capital Budget - an annual plan that sets forth each project or other capital expenditure to be undertaken by the City and specifies the full resources necessary to finance the projected expenditures. 01.03 Capital Expenditure - an expenditure in excess of a predetermined dollar limit defined by the Treasurer, and which has a useful life extending beyond the current year. 01.04 Change Float - a sum of money to be maintained and used to provide change when cash is received from the public. 01.05 Chief Administrative Officer (CAO) - the senior appointed officer responsible for the administrative operations of the City. 01.06 City - The Corporation of the City of Pickering. 01.07 Committee - a Committee of Council established under the City’s Procedural By-Law No 3665/91, as amended. 01.08 Commitment - a contractual obligation for the purchase of goods, services, or construction, including the execution of any document evidencing the obligation. 01.09 Council - the elected officials of the City of Pickering. 01.10 Contingency Account - the money approved in the current budget to provide for funding of one-time expenditures that were not known or anticipated at the time the current budget was approved by Council. 01.11 Current Budget - an annual financial plan providing for the operation of the municipality for the current year incorporating both estimates of proposed expenditures and revenues, including property taxes to be raised. 01.12 Department - an organizational unit of the City headed by a Department Head. Policy Title: Financial Control Policy Page 4 of 15 Policy Number: FIN 030 01.13 Departmental Budget - the current and capital budgets of the department as approved by Council in adopting the estimates. 01.14 Disposal - the selling, trading, assignment, and/or scrapping of surplus assets. 01.15 Fixed Asset - vehicles, equipment, and computer hardware. 01.16 Grant - payments made to individuals or organizations, approved by Council for a purpose related to the well-being of the community or its citizens. 01.17 Inventory - materials or items used or consumed in the provision of City services. 01.18 Member – a Member of Council. 01.19 Petty Cash Fund - a sum of money to be maintained and used for miscellaneous payment of money for the purchase of goods or services not exceeding a specified amount. 01.20 Project - an undertaking, work, or scheme included in the capital budget. 01.21 Purchasing Card - a credit card used to purchase goods and/or services. The use of the card is restricted to selected merchant types and may be subject to spending and/or transaction limits. 01.22 Real Property - lands, buildings, tenements or any interest, estate or right or easement affecting it. 01.23 Reserve Funds - a reserve fund differs from a reserve in that reserve fund assets are segregated and restricted to meet the purpose of the reserve fund. All interest earnings derived from such investments must form part of the reserve fund. 01.24 Reserves - an allocation of accumulated net revenue. It has no reference to any specific assets and does not require the physical segregation of money or assets. Reserves are part of the revenue fund and therefore do not earn interest on their own. Any earnings derived from the investment of reserves’ money are reported as revenue in the operating fund. 01.25 Treasurer - the Director, Finance and Treasurer of the City. 02 Responsibilities 02.01 Council to: (a) Approve and support this Policy. Policy Title: Financial Control Policy Page 5 of 15 Policy Number: FIN 030 02.02 Chief Administrative Officer to: (a) Support the Financial Control Policy. (b) Approve amendments for the consideration of Council. 02.03 Department/Division Heads/Managers/Supervisors to: (a) Support the Financial Control Policy. 02.04 Director, Finance & Treasurer to: (a) Support the Financial Control Policy. (b) Maintain proper financial controls and procedure guidelines to ensure accountability in the matters of finance and related administration. (c) Review amendments to this Policy for the consideration of Council. (d) Provide final interpretations and rulings in regard to the understanding and application of this Policy. (e) Approve procedures as prepared by the Manager, Accounting Services. 02.05 Manager, Accounting Services to: (a) Prepare and maintain administrative procedures required to implement the provisions of this Policy. (b) Present such administrative procedures to the Director, Finance & Treasurer for approval. 03 Authority 03.01 This Policy shall be administered by the Finance Department and the Treasurer shall have the authority to interpret any provisions in this Policy necessary for the good and efficient conduct and business of the City. Any changes shall be approved by Council. 03.02 In all cases the Municipal Act, 2001, as amended, any Regulations passed there under and any other Provincial or Federal Legislation or Regulations and professional accounting principles shall prevail as it may pertain to the duties and responsibilities of the Treasurer and any financial matters. 04 Purpose Policy Title: Financial Control Policy Page 6 of 15 Policy Number: FIN 030 04.01 The collection of revenues, the commitment of funds and the payment of expenditures of the City shall be carried out by the Treasurer in accordance with the provisions of this Policy and any Acts, Regulations or directions of the Province of Ontario or the Government of Canada, and generally accepted accounting principles. 05 Scope 05.01 This Policy applies to all operations of the City of Pickering including any Agencies, Boards and Commissions. It applies to the Library to the extent that it does not conflict with the role of the Board or Chief Executive Officer under the Public Libraries Act. 06 Sole Authority 06.01 Council has the sole authority to allocate funds for corporate expenditures and projects and for approving corporate programs and objectives, unless otherwise provided for in this Policy. 07 Budgets 07.01 Council, in adopting the total of all sums required during the year for the operating purposes of the City shall, in accordance with the Municipal Act, 2001, as amended, determine the current budget required to provide for the sums required for every purpose and the sums required for the various categories. 07.02 Council, in adopting the capital budget, shall determine the sums required for each capital project included in the capital budget and each sum provided therefore shall be a capital account. 07.03 The Treasurer, after consultation with the appropriate Department Head, may close any capital project account when the project is considered to be complete and may, subject to the provisions of the Municipal Act, 2001, as amended, apply any surplus funding to any other capital project at his/her discretion or transfer surplus funds back to their respective source. 07.04 Departments shall be allowed to incur, before the adoption of the current budget for the year, interim spending for the sums required in that year for the period from the 1st day of January to the date the estimates for that year are adopted, operating costs up to an amount of 50 percent of the prior year’s budget. 07.05 Prior to the approval of the annual budgets, expenditures for capital assets and projects shall be approved by the appropriate Department Head, the Treasurer, the Chief Administrative Officer, and Council prior to committing or expending funds for the purchase or undertaking. These pre-budget approvals may be Policy Title: Financial Control Policy Page 7 of 15 Policy Number: FIN 030 subject to the provisions for Emergency Purchases provided for in the Purchasing By-law and Policy. 07.06 Budgets for Furniture Fixtures and Equipment or FFE shall include a breakdown of expenditures to allow the Treasurer to fulfill the obligations of Financial Control Policy FIN 030 and the Municipal Act subsection 286(1) (d). 07.07 The Treasurer shall prepare, as part of the annual budget, a summary listing of all department requests for staff to attend international conferences and this summary shall include the following information: a. Cost (Conference, travel, accommodation & meals) b. Attendee (number of participants and job titles) c. Justification (Is there a similar conference in Canada and what are the benefits to the Corporation? d. If the above information is not all available at the time the budget is presented to Council, then the department requesting to attend the conference shall prepare a report for Council approval before undertaking any financial commitment for staff to attend the conference. 08 Spending Authority 08.01 The current and capital budgets approved by Council establish the spending authority for a program. Department Heads shall ensure that expenditures do not exceed the approved program budget. 08.02 Spending or funds control is based on the total gross expenditures approved for a program. Department Heads must address revenue shortfalls in this review of expenditure levels. Unforeseen revenues are not to be expended or committed without the approval of the Treasurer. 08.03 Department Heads shall report any anticipated significant over-expenditure or revenue shortfall to the Treasurer as soon as such is known. 08.04 The Chief Administrative Officer, together with the Treasurer, may amend the spending authority of any staff member. 08.05 That a capital project contingency guideline be established at 12 percent and the contingency target of 12 percent excludes permits, and inspection services materials and soils testing. Contingency requests above 12 percent requires an explanation and/or justification. Policy Title: Financial Control Policy Page 8 of 15 Policy Number: FIN 030 09 Commitments 09.01 No financial commitment shall be made, no debt shall be incurred, no lease or other financial obligation entered into, no expenditure shall be made and no monies shall be paid by, or on behalf of, the City except as delegated to the Treasurer by Council in accordance with the provisions of this Policy or by specific direction of Council. 10 Council Approval 10.01 No contract shall be entered into nor any expenditure or debt incurred involving an amount exceeding that provided in the budget without the prior approval of the Treasurer and Council, except as otherwise provided herein. 10.02 That Council approval be required for out of country conferences funded by the City. 11 Budget Variances 11.01 The Chief Administrative Officer and the Treasurer may jointly approve changes within an approved departmental Current Budget upon request of a Department Head, provided that: (a) such over expenditures do not exceed $50,000.00; (b) all such over expenditures are offset by corresponding under expenditures in other activities of the department so as to remain within the total budget provision for the department; and, (c) in no case shall the total budget for personnel costs for the department be increased under this section without prior approval of the Chief Administrative Officer in consultation with the Treasurer. 11.02 Where authority has been given in the annual Capital Budget for a particular project, the Chief Administrative Officer, the appropriate Department Head(s) and the Treasurer may jointly approve changes to such authorized amounts provided that the total amount of the over expenditures: (a) does not exceed the lesser of 10 percent of the approved capital expenditure or $100,000.00; and, (b) are offset by corresponding under expenditures in other approved capital expenditures. 11.03 Financing of the over expenditure must have additional prior approval of the Treasurer. Any change to debt financing and/or transfers from Reserve or Reserve Funds must also have Council approval. Policy Title: Financial Control Policy Page 9 of 15 Policy Number: FIN 030 11.04 The appropriate Department Head, Treasurer, and Chief Administrative Officer may jointly approve unbudgeted capital expenditures of up to $35,000.00 as long as appropriate funding (see 11.03) can be provided from other approved expenditures. 11.05 Current and Capital Budget expenditures in excess of the limits established under Section 11.01, 11.02, 11.03 and 11.04 shall require the approval of the Treasurer, the Chief Administrative Officer, and Council. 12 Temporary Financing 12.01 Capital projects temporarily financed by a specific loan from an external source shall be charged the actual cost of that loan. 13 Treasurer’s Authority 13.01 The Treasurer is responsible for maintaining accurate records and accounts of the financial affairs of the City. This includes providing the Council with such information as it requires or requests. 13.02 The Treasurer is responsible for the collection and receipt of all revenue and any monies owing, and for depositing such funds in a financial institution. All monies collected must be adequately safeguarded and promptly deposited into a City bank account. 13.03 The Treasurer is authorized to extend payment terms and conditions on any amounts due the City and outstanding where it is deemed necessary by the Treasurer in order to collect such amounts. 13.04 Notwithstanding any other provision in this Policy or any other policy or By-law, the Treasurer is authorized to pay the following, provided that funds are available in the budgets as approved by Council: (a) All salaries, wages and benefits due to any person in the employment of the City. (b) All retiring allowances and any past retirement benefits due to any person previously in the employment of the City. (c) All amounts due for goods and services supplied to the City. (d) All taxes, fees and levies payable to the Federal, Provincial or other Municipal Government, or to any other agency board. (e) All payments of principal or interest on debentures, loans, or overdrafts, including foreign exchange. (f) All amounts due to the Region and School Boards of amounts raised for them by the tax levy. Policy Title: Financial Control Policy Page 10 of 15 Policy Number: FIN 030 (g) All advances to Agencies and Boards on account of the current budget as authorized by Council for their purposes. (h) All employee and employer pension contributions in respect of salaries and wages, which are payable in respect of any duly registered pension plan on behalf of the respective employee. (i) All grants to any person or body as provided for in the current budget without passing a by-law. 13.05 The Treasurer is authorized to write-off outstanding amounts owing to the City, deemed as uncollectible, provided that such amount shall not exceed $10,000.00 and is not an amount raised as taxation or deemed to be taxes. Uncollectable amounts owing to the City in excess of $10,000.00 shall only be written off with Council’s approval. 13.06 In extenuating circumstances, the Treasurer or designate may authorize the cancellation of any or all penalties and interest on taxes. 13.07 The Treasurer has the authority to write off small balances up to $15.00 for outstanding taxes for property tax roll maintenance. 13.08 The Treasurer has sole authority over the expenditure of funds from the contingency account. 13.09 The Treasurer has authority, during any recess, break, or absence of Council, to draw from Reserves or Reserve Funds provided that the transfer from Reserves or Reserve Funds does not exceed the lesser of 5 percent of any particular approved expenditure or $100,000.00 and a report respecting those approvals is subsequently submitted to Council for information purposes. 13.10 The Treasurer is authorized to make draws from Reserve and Reserve Funds for projects included in the Capital Budget up to the amount approved. 13.11 The Treasurer is authorized to undertake internal loans, where an internal loan was the approved funding source in the Capital Budget. 13.12 The Treasurer is authorized to refinance any capital expenditures that fail to meet the Canada Community Benefit Fund (previously called the Federal Gas Tax) reporting criteria from other sources including transfers of funds from Reserves and Reserve Funds. 13.13 The Treasurer is authorized to use any under-expenditures from projects funded from Reserves or Reserve Funds to fund over-expenditures for approved projects funded from the same source(s), and that any unfinanced capital may be funded by a transfer from Reserves or Reserve Funds. 13.14 The Treasurer is authorized, at their discretion, to change the financing source of any capital project, or portion thereof, in the Capital Budget to be financed from the issuance of debt, to internal loans or transfer(s) from Reserves or Policy Title: Financial Control Policy Page 11 of 15 Policy Number: FIN 030 Reserve Funds, or a combination thereof, where is it deemed to be in the best interest of the municipality to do so. 13.15 The Treasurer is authorized to apply any excess funds obtained through the issuance of debentures as provided for under Section 413 of the Municipal Act, 2001 as amended, (i) to repay the principal or interest of the debentures; or (ii) to repay any other capital expenditure of the municipality if the debt charges for the other expenditure are or will be raised from the same class of ratepayers from which the amounts required for the repayment of the debentures are raised. 13.16 The Treasurer be authorized to close any current and completed prior year’s capital expenditure accounts, and to first apply any excess funding from property taxes to any over expenditure in other accounts and to secondly transfer any remaining excess funding back to the original sources of funds; and, 13.17 That the Director, Finance & Treasurer be authorized to close any capital or consulting account expenditure and corresponding revenue source that is over two years from the original purchase order date of issuance. 14 Contracts and Agreements 14.01 As a general rule, any contract or agreement may be entered into only with the authorization of Council and the Mayor and City Clerk who possess the authority to legally bind the City. The underlying approval process must be followed before a document can be presented to the Mayor and Clerk for signing. 14.02 Council may delegate authority, either complete or restricted, to persons to approve a contract or expenditure. 14.03 Notwithstanding the foregoing, the Treasurer or his/her designate has the authority to enter into agreements: for the provision of goods or services; for expenditures or undertakings approved in the annual budgets; or, by specific approval of Council. 14.04 No Committee of Council has the authority to commit the City or to approve or expend funds. 15 Successive Agreements/Contracts 15.01 The Treasurer is authorized to pay for goods and services deemed essential to the ongoing operations of the City for any period from the expiry of an agreement or contract until a new agreement or contract is executed. Such Policy Title: Financial Control Policy Page 12 of 15 Policy Number: FIN 030 payments shall be at the same rates, and on the same basis as the last previously executed agreement. 16 Notification to the Treasurer 16.01 The Treasurer shall be notified of all agreements and contracts containing financial terms or conditions, and all the original documents of insurance and certificates thereof, bonds, letters of credit, and other securities for the due performance thereof, executed by or on behalf of the City, shall be delivered to the Treasurer. 17 Departmental Signing Authority 17.01 The Treasurer is responsible for maintaining signing authorities for the provision of goods and services and the payment thereof. 17.02 Department Heads shall, in a form provided by the Treasurer, maintain a current schedule specifying the delegation of financial signing authority within their Department and the respective authority limits. The schedule shall be signed by the respective Department Head and then by the Chief Administrative Officer. The original schedule with specimen signatures of the relevant staff of the department shall be forwarded to the Treasurer. 18 Insurance 18.01 The Treasurer has the authority to undertake the Risk Management Program and for the purchase of all appropriate insurance coverages, adjusting claims, and related services for the City, the Library and any other Boards. 19 Subsidy Applications 19.01 The Treasurer and the appropriate Department Head have the authority to apply to the Provincial and Federal Governments for grants, subsidies, or any other form of funding for the City’s programs and projects. 20 Bank Accounts and Investments 20.01 The Treasurer is authorized to open bank accounts in any Canadian bank as required, and only Council is authorized to change signatories for these accounts. 20.02 All monetary receipts and disbursements, other than petty cash, must be made through a City bank account. Policy Title: Financial Control Policy Page 13 of 15 Policy Number: FIN 030 20.03 The Treasurer is authorized to invest the surplus funds of the municipality at the maximum rate of return, at minimal risk, in compliance with current Legislative requirements and the City’s Investment Policy. 21 Petty Cash and Change Floats 21.01 The Treasurer has the authority to establish petty cash funds and change floats for operational requirements in amounts and in locations the Treasurer deems appropriate. 21.02 The Treasurer is authorized to reimburse a petty cash fund upon delivery of original receipts and such other documentation as the Treasurer may require. 21.03 Petty cash funds and change floats shall only be used for City business and there shall be no personal use of the monies. 22 Corporate and Purchasing Cards 22.01 Purchasing cards are provided to the Mayor and Chief Administrative Officer to be used for City business and shall not be used for expenses of a personal nature. 22.02 City staff (Departments & Library) will be given a purchasing card where the nature of their responsibilities requires such use. Purchasing card assignments and limits are subject to the approval of the Treasurer. 22.03 City staff should use purchasing cards for transactions where they have been determined by the Treasurer to be the most efficient way to handle payments. 22.04 Purchasing cards shall only be used for City business and shall not be used for expenses of a personal nature. 22.05 Purchasing cards shall not be used to circumvent the City’s purchasing policy and procedures. 23 Employee Advances and Expense Reimbursements 23.01 Employees may be advanced funds for City purposes when the nature and approximate amount of the expense(s) has been approved beforehand. 23.02 Employees may be reimbursed for travel and other business related expenses subject to the required approvals and within the limits of the approved current budget. 24 Donations Policy Title: Financial Control Policy Page 14 of 15 Policy Number: FIN 030 24.01 Any donations received by the City shall be recorded as revenue in the fund to which the expenditure relates. If none exists, the donation is to be recorded in general revenue of the City. 24.02 All donations provided to the City of Pickering are to be forwarded to the Treasurer for credit to the City’s accounts. 24.03 Receipt for donation will not be prepared unless specifically requested by the donor and must be issued by the Treasurer. 24.04 Donations in kind are not acceptable without prior approval of the Treasurer. 25 Real Property 25.01 All real property surplus to the requirements of the City shall be disposed of in accordance with the policies adopted by Council from time to time. 25.02 All net proceeds from the sale of real property or any other assets of the City shall be credited to the general revenue of the City, unless otherwise approved by Council. 26 Fixed Assets 26.01 It is every employee and elected officials duty to ensure that City fixed assets shall be safeguarded to the extent practical to prevent loss or theft. 26.02 The City’s fixed assets shall be recorded by the Treasurer and the records updated for acquisitions and dispositions. The accuracy of these records should be verified annually. 27 Inventories 27.01 City inventories shall be physically secured to prevent loss or theft. 27.02 Accurate records shall be maintained of all City inventories, which include recording transfers in and out of inventory where practical. The accuracy of these records should be verified annually. 28 Administrative Procedures 28.01 This Policy shall be read in conjunction with Purchasing Policy PUR 010 and any other approved City Policies or administrative procedures. 28.02 This Policy shall be reviewed by the Treasurer every five years; however, approved amendments can be made at any time. Policy Title: Financial Control Policy Page 15 of 15 Policy Number: FIN 030 Please refer to all associated Procedures and Standard Operating Procedures, if applicable, for detailed processes regarding this Policy.