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Audit of

Accounts Receivable
June 22, 2009

Audit Key Steps
Planning completed August 2008
Field work completed February 2009
Draft report completed and sent for management response February 2009
anagement response recei!ed arc" 2009
Final report completed April 2009
#eport presented to t"e $%ternal Audit Ad!isory &ommittee April 2009
Appro!ed by t"e Deputy inister June 2009
Prepared by the Audit and Evaluation Team
Acknowledgments
'"e team responsible for t"is audit, comprised of Julie &la!et(Drolet, under t"e
super!ision of )runo Pilotte and t"e direction of Jean *eclerc, would like to t"ank t"ose
indi!iduals w"o contributed to t"is pro+ect, and particularly, employees w"o pro!ided
insig"ts and comments as part of t"is audit,
-riginal signed by
....................
&"ief Audit $%ecuti!e
'able of &ontents
$/$&0'12$ 30A#4,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,, i
5 16'#-D0&'1-6,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,, 5
5,5 &onte%t,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,, 5
5,2 Analysis of #isks,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,7
5,7 -b+ecti!es and 3cope,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,8
5,8 et"odology,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,, 8
2 F16D1693 A6D #$&-$6DA'1-63,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,:
2,5 #eco!ery of Debts,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,:
2,5,5 &ollection actions,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,:
2,5,2 2alue of 3ums to be #eco!ered,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,;
2,2 Administrati!e &"arges and 1nterest,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,<
2,2,5 Administrati!e &"arges,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,<
2,2,2 1nterest,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,, 8
2,7 =riting off Accounts #ecei!able,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,9
2,7,5 Appro!al and onitoring of =rite(offs,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,9
2,7,2 Aut"ori>ation for =riting off of 1nterest,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,50
2,7,7 Financial &oding 0sed for =rite(offs,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,50
2,8 Financial 3ystem,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,, 55
2,8,5 Accessibility to t"e Accounts #ecei!able odule,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,55
2,8,2 #econciliation of t"e Accounts #ecei!able odule wit" t"e 9eneral *edger
52
2,: 3egregation of Duties,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,57
2,; #ecording #e!enue in t"e Appropriate Fiscal Period,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,58
2,< Departmental Policies and Procedures,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,5:
7 &-6&*031-6,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,, 5;
Anne% 5 Audit &riteria,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,, 5<
Anne% 2 Aut"ority Description,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,, 59
Audit of Accounts #ecei!able
EXE!T"#E S!$$AR%
onte&t
1n accordance wit" $n!ironment &anada?s #isk()ased Audit and $!aluation Plan for
2008@2055, t"e Audit and $!aluation )ranc" conducted an audit t"e accounts recei!able,
'"e purpose of t"e audit was to ensure t"at $n!ironment &anada?s accounts recei!able
are managed fairly, efficiently and effecti!ely in order to reco!er suc" recei!ables and
minimi>e t"e risk of loss, =it" t"is in mind, t"e specific ob+ecti!es of t"e audit were to
e!aluate t"e adeAuacy of t"e management control framework of accounts recei!able as
well as t"e degree to w"ic" t"e Department is in compliance wit" t"e applicable
accounting regulations, policies and standards,
During t"e initial planning of t"e audit, a risk analysis was conducted in order to identify,
e!aluate and prioriti>e t"e risks associated wit" t"e management of accounts recei!able,
'"e analysis was based upon an e%amination of t"e accounting regulations, policies,
manuals and standards t"at go!ern t"e management of accounts recei!able, on data
analysis, and on t"e results of preliminary inter!iews wit" personnel considered key in t"e
management of accounts recei!able, '"e criteria and met"ods used in t"e audit were
based on t"e identified risks,
Accounts recei!able are di!ided into two categoriesB internal accounts Ccreated for
transactions wit" ot"er federal departments or organi>ationsD and e%ternal accounts
Ccreated for ot"er types of clientsD, '"e audit dealt wit" bot" internal and e%ternal accounts
recei!able created during t"e 200<@2008 fiscal year and wit" accounts recei!able as at
April 5, 2008,
5
-n arc" 75, 2008, t"e balance of accounts recei!able was E<,; million,
E7,7 million C87,8FD of w"ic" were wit" e%ternal parties,
'"e met"odology used included data analysis, re!iew of t"e rele!ant documentation, and
inter!iews wit" specialists in accounts recei!able,
Statement of Assurance
'"is audit "as been conducted in accordance wit" t"e International Standards for the
Professional Practice of Internal Auditing and t"e Policy on Internal Audit of t"e
'reasury )oard of &anada,
1n our professional +udgement, sufficient and appropriate audit procedures were
completed and e!idence gat"ered to support t"e accuracy of t"e conclusions reac"ed
and contained in t"is report, '"e conclusions are based on a comparison of t"e
situations as t"ey e%isted at t"e time of t"e audit wit" t"e establis"ed criteria,
1
Analyses were also done on subseAuent dates for specific reAuirements, since some reports could not be produced
retroacti!ely,
$n!ironment &anada i
Audit of Accounts #ecei!able
Summary of 'indings
'"e main findings of t"e audit s"ow t"at, in general, t"e Department?s accounts
recei!able are managed in accordance wit" t"e principles of due diligence and in
compliance wit" t"e main reAuirements t"at go!ern t"em,
Gowe!er, certain processes could benefit from furt"er re!iew in order to impro!e t"eir
efficiency, fairness and consistency, For e%ample, t"e Delegation of Financial 3igning
Aut"orities could be modified in order to reduce t"e le!el of appro!al reAuired for t"e
writing off of interest, &urrently, t"e appro!al of t"e Director of Financial Policy and
-perations is reAuired to write off interest amounts t"at are often less t"an a dollar,
9uidelines s"ould also be communicated to accounting offices across t"e Department
in order to standardi>e t"e accounts recei!able management process, '"is sub+ect is
dealt wit" in greater detail in !arious sections of t"e report,
&ertain controls s"ould also be re!iewed or reinstituted, For e%ample, t"e definition of
t"e roles and responsibilities of key personnel s"ould be re!iewed and documented,
segregation of duties s"ould be reintroduced in certain accounting offices, and regular
monitoring at t"e end of fiscal periods and t"e fiscal year s"ould be reinstituted,
ost of t"ese items could be resol!ed wit" a reasonable amount of effort,
commensurate wit" t"e anticipated benefits,
'"e re!iew of t"e accounts recei!able management process s"ould be integrated into
ot"er initiati!es in t"e Department, suc" as t"e e!aluation of t"e state of preparedness
of audit(ready departmental financial statements,
'"e following eig"t recommendations "a!e been made to t"e Assistant Deputy inister,
Finance and &orporate )ranc",
5, '"e Assistant Deputy inister, Finance and &orporate )ranc", s"ouldB
take t"e actions necessary to reco!er or write off t"e amounts o!er 7;: days
past dueH and
ensure t"at guidelines are sent to t"e Department?s accounting offices
concerning t"e management of amounts to be collected, '"ose guidelines
s"ould set out items suc" asB
- t"e roles and responsibilities of t"e main personnel responsible for
collections Cmanagers, accounting offices, Departmental AccountingDH
and
- t"e met"ods of collection t"at are a!ailable and t"e w"en to use t"em
Cstandardi>e t"e processD,
2, 1n order to recoup t"e costs arising from t"e processing of 6ot 3ufficient Funds
C63FD c"eAues, t"e Assistant Deputy inister, Finance and &orporate )ranc",
s"ould ensure t"at all of t"e Department?s accounting offices in!oice t"e
administrati!e c"arges stipulated in t"e 'reasury )oard of &anada Interest and
Administrative Charges Regulations,
$n!ironment &anada ii
Audit of Accounts #ecei!able
7, '"e Assistant Deputy inister, Finance and &orporate )ranc", s"ould ensure t"at
guidelines concerning t"e management of interest Cc"arging and writing offD are
sent to t"e Department?s accounting offices,
8, '"e Assistant Deputy inister, Finance and &orporate )ranc", s"ouldB
ensure t"at t"e guidelines concerning t"e writing off of debts, including t"e
writing off of interest, are sent to t"e Department?s accounting officesH
ensure t"at regular monitoring of t"e many ad+ustments and of credit notes is
carried out to ensure t"at t"e write(offs are appro!ed in accordance wit" t"e
$n!ironment &anada delegation instrumentH and
suggest a modification to t"e $n!ironment &anada Delegation of Financial
3igning Aut"orities in order to c"ange t"e le!el of aut"ori>ation reAuired for t"e
writing off of interest so t"at t"e efficiency of t"e process may be impro!ed,
:, '"e Assistant Deputy inister, Finance and &orporate )ranc", s"ould ensure t"at
access to t"e accounts recei!able module is limited to employees w"o reAuire
access to it during t"e normal course of t"eir duties, Access s"ould be re!iewed
regularly, '"e managers of t"e financial system s"ould be promptly notified of t"e
departure of any employee so t"at accounts can be deacti!ated in a timely
manner,
;, 1n order to ensure t"at all t"e information contained in t"e accounts recei!able
module is posted correctly to t"e general ledger accounts, t"e Assistant Deputy
inister, Finance and &orporate )ranc", s"ould ensure t"at t"e information from
t"e accounts recei!able module is reconciled wit" t"e general ledger regularly and
t"at all differences are documented, e%plained and corrected,
<, '"e Assistant Deputy inister, Finance and &orporate )ranc", s"ould address t"e
deficiencies in t"e segregation of duties in t"e accounting offices as soon as
possible and ensure t"at all t"e managers responsible for accounts recei!able are
informed of t"is,
8, 1n order to comply wit" generally accepted accounting principles, t"e Assistant
Deputy inister, Finance and &orporate )ranc", s"ould ensure t"at all re!enues
are accounted for during t"e period in w"ic" t"ey are earned,
Management agreed with all of the recommendations and provided a detailed action
plan to address them.
$n!ironment &anada iii
Audit of Accounts #ecei!able
( ")TR*+!T"*)
1.1 Context
Accounts recei!able are classified as current assets of t"e Department and are
generally created and reco!ered during t"e same fiscal period, '"ey include trade
accounts recei!able Camounts owed by customers for goods or ser!ices rendered as
part of normal business operationsD and non(trade accounts recei!able Camounts
related to !arious transactions, suc" as interest income, refund of o!erpayments and
reco!eriesD,
2

As s"own in 'able 5, on arc" 75, 2008, t"e balance of $n!ironment &anada?s
accounts recei!able was E<,; million, Accounts recei!able from e%ternal parties
Ce%cluding t"ose wit" ot"er federal departments and organi>ationsD accounted for E7,7
million of t"at amount,

Table ( , -reakdown of accounts receivable as at $arch .(/ 0112
Amount
3thousands of
dollars4
5
E&ternal
&as" in Gands of Departments Awaiting Deposit to t"e
#ecei!er 9eneral
-t"er re!enue
820
2,95<
:,;
78,;
"nternal
9oods and 3er!ices 'a% and Garmoni>ed 3ales 'a% 2,8:9 72,:
-t"er 9o!ernment Department 5,<;2 27,7
Total 6/772 (1181
Source: Departmental financial system
&lose to E80 million were generated in re!enue during t"e 200<@2008 fiscal year,
Appro%imately "alf of t"at amount was generated by t"e -ntario #egion, 'able 2 s"ows
t"e types of re!enue,
2
Financial 1nformation 3trategy Accounting anual, 'reasury )oard of &anada 3ecretariat, section 7,2,
$n!ironment &anada 5
Audit of Accounts #ecei!able
Table 0 9 Types of revenue for the 0116,0112 fiscal year
Amount
(thousands of
dollars)
5
3ales of 9oods and 1nformation Products 87,:;5 :8,80
3er!ices of a 6on(#egulatory 6ature 5<,<89 22,5<
3er!ices of a #egulatory 6ature :,585 ;,82
*ease and 0se of Public Property 8,;5: :,<;
-t"er re!enues 7,855 8,<;
#e!enue from Joint Pro+ect and &ost 3"aring Agreements 2,988 7,<7
$n!ironmental Damages Fund ;89 0,85
#ig"ts and Pri!ileges ;5; 0,<<
9ain on Disposal of Assets and Foreign $%c"ange 2aluations 88: 0,;5
Found Assets &redited to #e!enue 855 0,:5
1nterest on -!erdue Accounts #ecei!able Cnet of write offs and
cancellationsD
77 0,08
-t"er Fees and &"arges 9 0,05
Fines 7 0,00
Total 6:/6:; (11811
Source: Departmental financial system
+epartmental Re<uirements
'"e roles and responsibilities of $n!ironment &anada as t"ey pertain to t"e
management of accounts recei!able are defined by t"e 'reasury )oard of &anada
3ecretariat Policy on #ecei!ables anagement, '"at policy stipulates t"atB
departments must ensure t"at all of t"e go!ernment?s recei!ables are managed
fairly, efficiently and effecti!ely to reco!er suc" recei!ables and minimi>e t"e
loss of riskH
departments must c"arge interest on o!erdue accountsH
departments must take progressi!e collection actions, w"ic" include legal
proceedings, if necessaryH and
departments must take action on a timely basis wit" respect to any write(off of
debts w"en t"ey are not settled in full,
1n situations w"ere t"e Department determines t"at a debt is uncollectible, it is
responsible for writing off t"at debt, and it must comply wit" t"e le!els of appro!al
reAuired by t"e Delegation of Financial 3igning Aut"orities t"at it "as set up, '"e write(
offs must appear in t"e financial statements as e%penses in t"e statement of
operations,
$n!ironment &anada 2
Audit of Accounts #ecei!able
'inancial "nformation Strategy
3ince t"e implementation of t"e Financial 1nformation 3trategy in 2005, departments
are reAuired to record t"eir re!enues on an accrual accounting basis, i,e,, w"en t"e
sale of goods or t"e pro!ision of ser!ices takes place, Pre!iously, departments
recorded re!enues on a cas" basis, i,e,, w"en t"e deposit was made,

'inancial System
Accounts recei!able are recorded in t"e accounts recei!able module in t"e $#*16
financial system, '"e system is used for in!oicing, monitoring suspense accounts,
entering payments, ad+ustments and interest, and also for writing off debts, w"en
necessary,
1.2 Analysis of Risks
During t"e planning of t"e audit, a risk analysis was carried out to identify, e!aluate and
prioriti>e t"e risks associated wit" t"e management of accounts recei!able, '"is
analysis was based upon an e%amination of t"e accounting policies, manuals and
standards t"at go!ern t"e management of accounts recei!able and on an analysis of
t"e data contained in t"e Department?s financial system, Iey personnel in t"e
management of accounts recei!able were also inter!iewed,
'"e identified risks were t"en e!aluated in terms of t"e probability of t"eir becoming a
reality and of t"eir impact on t"e Department?s acti!ities, As s"own in 'able 7, t"e risk
e!aluation acti!ity did not re!eal any "ig"(le!el risks associated wit" t"e management
of accounts recei!able,
Table 3. Matrix of risks associated with the ana!eent of accounts recei"able
=ow $edium >igh
"
m
p
a
c
t
>igh
Problems with
invoicing 3delays/
amounts4

"nade<uate controls
$edium
!n?ustified or
unauthori@ed write,
offs
"neffective collection
measures

=ow
"nefficient
management of
deposits 3delays/
protection of assets4
'ailure to comply
with year,end
procedures
'ailure to charge
interest on overdue
accounts
!ncollectible debts
not written off
"ncorrect amounts for
the allowance for
uncollectible debts
3A4
Probability
Anne% 5 sets out t"e auditing criteria t"at were de!eloped following t"e risk analysis,
$n!ironment &anada 7
Audit of Accounts #ecei!able
1.3 #b$ecti"es and %co&e
'"e purpose of t"is audit was to ensure t"at $n!ironment &anada?s accounts
recei!able are managed fairly, efficiently and effecti!ely to reco!er suc" recei!ables
and minimi>e t"e risk of loss, '"e audit ob+ecti!es were to assessB
w"et"er t"e framework of controls for t"e management of accounts recei!able
is appropriateH and
t"e degree of t"e Department?s compliance wit" t"e applicable accounting
regulations, policies and standards,
'"e audit dealt wit" internal accounts recei!able Cwit" ot"er federal departments and
organi>ationsD and e%ternal accounts recei!able created during t"e 200<@2008 fiscal
year and wit" accounts recei!able as at April 5, 2008, -t"er analyses were carried out
on subseAuent dates for specific reAuirements, as certain reports could not be
produced retroacti!ely,
1.' Methodolo!y
1n order to meet its ob+ecti!es, t"is audit combined data analysis wit" a re!iew of
rele!ant documentation and inter!iews wit" !arious accounts recei!able specialists,

Review of the +ocumentation

Alt"oug" t"e management of accounts recei!able is largely go!erned by t"e 'reasury
)oard of &anada 3ecretariat Policy on #ecei!ables anagement, ot"er regulations
and policies are also directly in!ol!ed, '"e list of documents t"at were consulted during
t"e audit is attac"ed in Anne% 2,

"nterviews

1nter!iews wit" specialists from Departmental Accounting, t"e regional accounting
offices, and financial systems were conducted in order to identify and e!aluate current
practices, t"e controls t"at are in place, and t"e difficulties t"at are being encountered,

+ata Analysis

'"e conclusions of t"e audit are also based on an analysis of data contained in t"e
Department?s financial system, 6o re!iew of files was conducted at t"e accounting
offices, All of t"e transactions concerning accounts recei!able for t"e 200<@2008 fiscal
year were downloaded from t"e financial system so t"at an analysis using computer(
assisted tec"niAues and tools could be completed,
1.( %tateent of Assurance
$n!ironment &anada 8
Audit of Accounts #ecei!able
'"is audit "as been conducted in accordance wit" t"e International Standards for the
Professional Practice of Internal Auditing and t"e Policy on Internal Audit of t"e
'reasury )oard of &anada,
1n our professional +udgement, sufficient and appropriate audit procedures were
completed and e!idence gat"ered to support t"e accuracy of t"e conclusions reac"ed
and contained in t"is report, '"e conclusions are based on a comparison of t"e
situations as t"ey e%isted at t"e time of t"e audit wit" t"e establis"ed criteria,
0 '")+")BS A)+ RE*$$E)+AT"*)S
2.1 Reco"ery of )ebts
08(8( ollection actions
'"e 'reasury )oard of &anada 3ecretariat Policy on #ecei!ables anagement
stipulates t"at departments must !igorously pursue t"e collection of recei!ables, '"ese
measures must be appropriate, timely and cost(effecti!e, '"e results of t"e audit re!eal
t"at t"e Department does not seem to be fully compliant wit" t"is reAuirement,
ont"ly account statements are generated and are sent to all clients w"o "a!e unpaid
balances wit" t"e Department, '"ese account statements are generated during t"e first
t"ree mont"s following t"e original in!oice,
="en t"e balance is still outstanding after 90 days, t"e procedure t"at is followed
!aries from one accounting office to anot"er, For e%ample, some offices do a direct
follow(up wit" t"e debtor, w"ile ot"er offices contact t"e managers to inform t"em of t"e
delay in payment, -t"er offices "a!e not de!eloped any clear procedures for follow(up,
'"e accounting offices mentioned t"at t"ey would like to recei!e more information
about t"e met"ods of collection a!ailable to t"em, especially for debts outstanding for
more t"an 90 days, For e%ample, at w"at point s"ould t"e ser!ices of a collection
agency be used, and beginning at w"at amountJ 3ome accounting offices would also
like to "a!e better definition of t"e roles and responsibilities of accounting office
employees and t"ose of t"e managersKin particular of w"o is responsible for collecting
sums recei!ablesKin order to ensure t"at effecti!e follow(up is done,
'"ere is a significant lack of follow(up bot" wit"in t"e regional accounting offices and in
Departmental Accounting, '"e lack of !igorous action on collections increases t"e risk
t"at recei!ables owed to t"e Department will not be reco!ered, Alt"oug" some of t"ese
debts are relati!ely small, t"ey are recei!ables due to t"e Department and s"ould be
collected, failing w"ic" t"ey s"ould be written off,
$n!ironment &anada :
Audit of Accounts #ecei!able
08(80 #alue of Sums to be Recovered
At t"e time of writing, t"e balance of e%ternal accounts recei!able
7
was E2,2 million, -f
t"at amount, accounts recei!able totalling E:25,000 were more t"an 7;: days past
due, &lose to 8;F of accounts t"at "a!e been o!erdue for more t"an a year are for
less t"an E:00, 1n addition, in ;2F of cases, t"e amount in suspense accounts
consisted solely of accumulated interest, 3teps s"ould "a!e been taken earlier to
collect t"ese debts or to write t"em off,
Table '. *reakdown of accounts recei"able by due date
)umber of
days past due
)umber of
accounts
)umber of
accounts 354
Amounts due
3thousands of
dollars4
Amounts due
354
0 @ 29 505 8,8 5 8:< ;8,<
70 @ :9 ;: :,< 507 8,;
;0 @ 89 8< 8,5 7: 5,;
90 @ 559 89 <,< ;; 2,9
520 @ 5<9 50; 9,2 58 0,;
580 @ 7;8 727 28,5 :7 2,8
7;: and o!er 859 7;,8 :25 27,2
Totals ( (71 (1181 0 0;: (1181
Source: Data etracted from the Departmental financial system on !e"ruary #$ %&&'.
Recommendation
5, '"e Assistant Deputy inister, Finance and &orporate )ranc", s"ouldB
take t"e actions necessary to reco!er or write off t"e amounts o!er 7;: days
past dueH and
ensure t"at guidelines are sent to t"e Department?s accounting offices
concerning t"e management of amounts to be collected, '"ose guidelines
s"ould set out items suc" asB
- t"e roles and responsibilities of t"e personnel responsible for collections
Cmanagers, accounting offices, Departmental AccountingDH and
- t"e met"ods of collection t"at are a!ailable and w"en to use t"em
Cstandardi>e t"e processD,
$anagementCs Response
3
1nternal accounts recei!able are normally closed wit"in a s"ort timeframe, since transfers of funds between departments are
done automatically,
$n!ironment &anada ;
Audit of Accounts #ecei!able
Management agreed with the recommendation and provided a detailed action plan to
address it.
2.2 Adinistrati"e Char!es and +nterest
0808( Administrative harges
'"e 'reasury )oard of &anada Interest and Administrative Charges Regulations
stipulate t"at if a payment is recei!ed in t"e form of a c"eAue t"at is not "onoured by
t"e bank because of insufficient funds C63F c"eAueD, an administrati!e c"arge of E5:
applies,
8
'"e results of t"e audit re!eal t"at only one accounting office applied t"e
administrati!e c"arge for 63F c"eAues between 200; and 2009, '"e ot"er accounting
offices stated t"at t"ey did not reAuire suc" a c"arge, because t"ey were not reAuired
to pay t"eir banking institution any penalties,
$!en t"oug" t"e number of 63F c"eAues recei!ed by t"e accounting offices seems to
be small, t"e Department "as not been following 'reasury )oard?s Interest and
Administrative Charges Regulations, #eAuiring only some customers to pay
administrati!e c"arges could also be interpreted as unfair practice,
'"e inconsistency and t"e non(compliance are t"e result of a lack of communication
and of common procedures, '"e de!elopment and implementation of a department(
wide procedure or guideline would "elp resol!e t"is problem.
Recommendation
2, 1n order to recoup t"e costs arising from t"e processing of 63F c"eAues, t"e
Assistant Deputy inister, Finance and &orporate )ranc", s"ould ensure t"at all of
t"e Department?s accounting offices in!oice t"e administrati!e c"arges stipulated in
t"e 'reasury )oard of &anada Interest and Administrative Charges Regulations,
$anagementCs Response
Management agreed with the recommendation and provided a detailed action plan to
address it.
4
Additional c"arges of E50 apply if a department is reAuired to pay administrati!e c"arges to its banking institution for t"e
processing of 63F c"eAues, $n!ironment &anada does not currently "a!e to pay any suc" c"arges,
$n!ironment &anada <
Audit of Accounts #ecei!able
08080 "nterest
1n addition to administrati!e c"arges, t"e Department is reAuired to c"arge interest on
accounts t"at are more t"an 70 days past due, '"e rate of interest set out by t"e
'reasury )oard of &anada 3ecretariat is eAui!alent to t"e bank rate plus 7F, '"is rate
is calculated on a mont"ly basis and t"e financial system is updated by Departmental
Accounting before t"e account statements are generated by t"e accounting offices and
sent to t"eir customers,
'"e interest c"arges apply only to e%ternal accounts, 1nternal accounts are paid !ia t"e
automated 1nterdepartmental 3ettlement 3ystem and are paid immediately,
Alt"oug" t"e analysis of t"e accounts s"ows t"at, in general, all of t"e accounting
offices c"arge interest, we noted t"at a large part of t"at interest is subseAuently
cancelled, For e%ample, during t"e 200<@2008 fiscal year, 7;F of t"e interest
calculated by t"e system was subseAuently cancelledH t"is represents almost E59,000,
'"e amounts of interest cancelled were e!en "ig"er during pre!ious fiscal years, '"e
reduction in t"e amount of interest t"at is cancelled could in part be e%plained by t"e
new signing aut"orities instrument, w"ic" now gi!es t"e Director of Financial Policy and
-perations t"e sole aut"ority to appro!e write(offs of interest Csee section 2,7,2 for
more detailsD,
'"ere is not"ing to indicate t"at t"ese reductions in interest were not +ustified, 1n some
cases, for e%ample, reductions or cancellations were applied because t"e amounts in
t"e suspense accounts were minimal Ca few centsD or because t"ere "ad been a delay
between t"e receipt of payment and t"e deposit, delay for w"ic" t"e customer was not
responsible, 6e!ert"eless, impro!ing t"e process by putting a minimum amount on
w"ic" interest is calculated in t"e system, for e%ample, could significantly reduce t"e
number of cancellations t"at are needed and t"e e%tra work t"at t"ey entail, '"at would
"elp to increase t"e efficiency of t"e processes,
Recommendation
7, '"e Assistant Deputy inister, Finance and &orporate )ranc", s"ould ensure t"at
guidelines concerning t"e management of interest Cc"arging and writing offD are sent
to t"e Department?s accounting offices,
$anagementCs Response
Management agreed with the recommendation and provided a detailed action plan to
address it.
$n!ironment &anada 8
Audit of Accounts #ecei!able
2.3 ,ritin! off Accounts Recei"able
08.8( Approval and $onitoring of Drite,offs
1f an accounting office determines t"at, after consultation wit" t"e manager of t"e
program in Auestion, a debt is uncollectible, t"at debt s"ould be written off from t"e
Department?s accounts recei!able immediately, All write(offs must be appro!ed in
accordance wit" t"e le!els of aut"ority reAuired by t"e $n!ironment &anada Delegation
of Financial 3igning Aut"orities,
'o record a write(off in t"e financial system, t"e accounting offices must use t"e
Lad+ustmentM function in t"e account to be written off and t"en c"oose Lwrite(offM as t"e
ad+ustment type, '"is is t"e correct way to write off an account, but t"ere are ot"er
ways t"at an account recei!able can be reduced or written off in t"e financial system,
eit"er by means of anot"er type of ad+ustment or a credit note,
'"is audit was t"erefore interested in t"e controls t"at "a!e been put into place to
pre!ent t"e use of t"ese ad+ustments to write off an account wit"out t"e reAuired le!el
of appro!al,
Drite,*ff by $eans of an Ad?ustment
1n t"e case of ad+ustments, t"e financial system pro!ides a certain amount of control,
inasmuc" as t"ere are limits on t"e amount of t"e ad+ustment allowed, '"ese limits are
set according to t"e type of user Csales, clerk or officerD, '"e types of users are
categori>ed according to t"e role and le!el of t"e employees in!ol!ed in t"e
management of accounts recei!able, Access is aut"ori>ed by t"e employee?s
super!isor, t"e regional coordinator, t"e system administrator and t"e "ead of t"e
module,
Table (. Ty&es of access to the accounts recei"able odule
Type of access Employees Ad?ustment limit
L3alesM $mployees in t"e programs Cto generate
in!oicesD
6NA
L&lerkM &lerks in accounting offices E:00
L-fficerM 3uper!isors in accounting offices E2,000
1t is, "owe!er, possible to bypass t"ese limits by recording a series of ad+ustments in
t"e same accountB eac" indi!idual ad+ustment would be below t"e limit but t"e total of
t"e ad+ustments would e%ceed t"e allowed limit, '"is met"od would make it possible to
bypass t"e aut"ori>ations t"at would ot"erwise be reAuired, During an e%amination of
all ad+ustments entered between 200: and 2009, t"e auditors found appro%imately 5:
accounts for w"ic" a series of ad+ustments totalling more t"an E:00 per account were
entered, '"e total of t"ese ad+ustments was appro%imately E20,000 and t"ey were all
entered in t"e 200:@200; fiscal year,
$n!ironment &anada 9
Audit of Accounts #ecei!able
Drite,off !sing a redit )ote
&redit notes are generally used to cancel an in!oice completely and recreate it, '"ey
are used w"en errors on in!oices are identified after t"ey "a!e been generated, -nly
t"ose users wit" LclerkM le!el access can generate credit notes, 0nlike ad+ustments,
credit notes do not reAuire any particular appro!al wit"in t"e financial system,
regardless of t"e amount, '"e total amount of credit notes entered during t"e 200<@
2008 fiscal year Ce%ternal customers onlyD was E2,; million,
$mployees in t"e accounting offices mentioned t"at w"en a credit note is created, all
t"e supporting documentation must be included in t"e file, -n t"e ot"er "and, t"ey also
indicated t"at no periodic monitoring of credit notes is done, Departmental Accounting
stated t"at it does not conduct any periodic c"ecks of credit notes eit"er,
3ince t"e controls in t"e financial system are limited in scope and t"ere is no
monitoring of t"e reductions and cancellations t"at are entered, t"e audit concluded
t"at t"ere is limited control o!er t"e writing off of debts at $n!ironment &anada, '"e
Department?s accounting offices are reAuired to respect t"e le!els of appro!al as
stipulated in t"e Delegation of Financial 3igning Aut"orities, but no one ensures t"at
t"e offices do so, 1f a reAuest for appro!al is submitted, it will be e%amined and duly
appro!ed if substantiated, but amounts can be written off wit"out any reAuest for
appro!al being submitted, 1n addition, t"e limits set in t"e financial system do not
correspond to t"e limits set by t"e $n!ironment &anada Delegation of Financial 3igning
Aut"orities,
'"e results of t"is audit do not make it possible to confirm t"at t"e reAuired le!el of
aut"ori>ations were obtained for all t"e write(offs before t"ey were entered into t"e
financial system, '"e lack of monitoring in t"is regard increases t"e risk of non(
compliance,
08.80 Authori@ation for Driting off of "nterest
'"e inter!iews wit" t"e staff in t"e accounting offices and t"e e%amination of t"e
$n!ironment &anada Delegation of Financial 3igning Aut"orities re!ealed t"at t"e le!el
of aut"ority reAuired to write off interest on debts is in some cases "ig"er t"an t"e le!el
of aut"ority reAuired to write off t"e debt itself, '"e appro!al of t"e Director of Financial
Policy and -perations at "eadAuarters is reAuired to write off interest, -n t"e ot"er
"and, a director or eAui!alent Cle!el 8 operational aut"orityD can appro!e a write(off of
up to E200,
3ometimes, by t"e time appro!al is recei!ed to write off interest on an account
recei!able, t"e financial system "as generated additional interest, '"is results in certain
accounting offices allowing interest to accumulate Cw"en t"e amount of interest is
smallD rat"er t"an attempting to "a!e it written off,
08.8. 'inancial oding !sed for Drite,offs
As stated by Departmental Accounting, cancellations of interest must be recorded along
wit" write(offs of debts in t"e departmental financial statements, '"e analysis of t"e
accounts and t"e inter!iews wit" t"e staff in t"e accounting offices s"ow t"at t"e
regional accounting offices do not all use t"e same financial coding to record interest
t"at "as been written off, For e%ample, all of t"e accounting offices use t"e line ob+ect
$n!ironment &anada 50
Audit of Accounts #ecei!able
for interest on o!erdue accounts recei!able Crecorded as decrease of incomeD, e%cept
for one office, w"ic" instead uses t"e line ob+ect for allowance for bad debts, as s"ould
be done, '"e c"arges for write(offs presented in t"e financial statements t"erefore
represent only t"ose from a single accounting office, As a result, t"e amount of write(
offs reported in t"e 200<@2008 financial statements was only E<05, 1f all of t"e write(
offs "ad been correctly reported, t"at amount would "a!e been appro%imately E20,000,
'"is situation "as arisen because of t"e absence of department(wide procedures and
t"e lack of communication concerning t"e writing off of debts, including t"e coding to be
used, '"e only accounting office t"at uses t"e correct financial coding for t"e writing off
of interest is t"e one t"at soug"t clarification from Departmental Accounting, '"at
information was not sent to t"e ot"er accounting offices,
Recommendation
8, '"e Assistant Deputy inister, Finance and &orporate )ranc", s"ouldB
ensure t"at t"e guidelines concerning t"e writing off of debts, including t"e
writing off of interest, are sent to t"e Department?s accounting officesH
ensure t"at regular monitoring of t"e many ad+ustments and of credit notes is
carried out to ensure t"at t"e write(offs are appro!ed in accordance wit" t"e
$n!ironment &anada delegation instrumentH and
suggest a modification to t"e $n!ironment &anada Delegation of Financial
3igning Aut"orities in order to c"ange t"e le!el of aut"ori>ation reAuired for t"e
writing off of interest so t"at t"e efficiency of t"e process may be impro!ed,
$anagementCs Response

Management agreed with the recommendation and provided a detailed action plan to
address it.
2.' -inancial %yste
08;8( Accessibility to the Accounts Receivable $odule
3pecialists in t"e financial system accounts recei!able module were inter!iewed to find
out more about t"e !arious types of access to t"e module and t"e controls in place to
limit access to t"e system to t"ose employees w"o use t"e system as a normal part of
t"eir duties,
1n 2008, 5<; users "ad access to t"e accounts recei!able moduleH 9:0 users "ad
access to t"e financial system in general,
:
Alt"oug" access to t"e accounts recei!able module is restricted, t"ere seems to be a
lack of follow(up w"en employees lea!eB access does not seem to be wit"drawn as
indi!iduals lea!e t"e unit, '"us, w"en t"e systems group carries out its annual re!iew
:
1nformation taken from data pro!ided by t"e Accounting -perations, Financial Policy and 3ystems Directorate,
$n!ironment &anada 55
Audit of Accounts #ecei!able
of acti!e user accounts by sending a list of users to t"e accounting offices, se!eral
accounts need to be closed, Access s"ould be wit"drawn as soon as t"e employee
separation clearance form, w"ic" employees must fill out and submit w"en t"ey lea!e,
is recei!ed, Gowe!er, t"e systems group does not recei!e t"e employee separation
clearance forms, eit"er because t"e forms are not sent or because t"e ot"er sections
of t"e Finance Directorate t"at recei!e t"e forms "a!e not been notified t"at t"ey must
s"are t"e information wit" t"e systems group, 3teps s"ould be taken to ensure t"at t"e
information is sent to t"e systems group w"en t"e form "as been recei!ed at Finance,
or a bo% s"ould be added to t"e form indicating t"at a copy s"ould be sent directly to
t"e systems group,
Recommendation
:, '"e Assistant Deputy inister, Finance and &orporate )ranc", s"ould ensure t"at
access to t"e accounts recei!able module is limited to employees w"o reAuire
access to it during t"e normal course of t"eir duties, Access s"ould be re!iewed
regularly, '"e managers of t"e financial system s"ould be promptly notified of t"e
departure of any employee so t"at accounts can be deacti!ated in a timely manner,
$anagementCs Response
Management agreed with the recommendation and provided a detailed action plan to
address it.
08;80 Reconciliation of the Accounts Receivable $odule with the
Beneral =edger
'"e reconciliation of t"e accounts recei!able module wit" t"e general ledger is an
important control t"at ensures t"at all of t"e module?s transactions Crecei!ables,
re!enue, bad debts, interest, etc,D "a!e been recorded in t"e general ledger accounts,
'"e general ledger accounts, not t"e module?s accounts, are used to generate t"e
Department?s financial statements,
1nter!iews wit" specialists in Departmental Accounting re!ealed t"at t"e reconciliation
of t"e accounts recei!able module wit" t"e general ledger is not done on a regular
basis, #econciliation was done by Departmental Accounting in December 200;,
A +ournal entry of appro%imately E5,; million was made during t"e 200;@200< fiscal
year to cancel t"e discrepancies t"at e%isted as at December 200;, Departmental
Accounting pro!ided a copy of t"e +ournal entry !ouc"er, accompanied by details of t"e
reconciliation t"at was done, '"e auditors compared t"at information wit" t"e
information entered into t"e financial system,
1f reconciliations "ad been done on a regular basis, t"e ad+ustments would "a!e been
entered during t"e fiscal years to w"ic" t"ey applied, '"e financial statements of t"e
fiscal years in Auestion were t"erefore not complete,
$n!ironment &anada 52
Audit of Accounts #ecei!able
At t"e time of writing, t"e auditors were informed t"at a new reconciliation was being
done for t"e 200<@2008 fiscal year,
embers of Departmental Accounting "a!e indicated t"at t"eir s"ort( and medium(term
ob+ecti!e is to reconcile all t"e modules wit" t"e general ledger on a more regular basisH
t"ey also pointed out t"at t"is would "a!e an impact on t"eir workload, '"e accounting
offices are currently not reAuired to complete t"is reconciliation for t"eir regions,
'"e regular and ongoing reconciliation of t"e module wit" t"e general ledger would
make it possible to identify errors at t"eir source and to make corrections as soon as
t"ey "a!e been detected, i,e,, during t"e accounting periods and fiscal years in
Auestion,
Discrepancies between t"e accounts recei!able module and t"e general ledger "a!e
an impact not only on t"e re!enues t"at appear in t"e financial statements but also on
t"e budgets of t"e managers concerned,
Recommendation
;, 1n order to ensure t"at all t"e information contained in t"e accounts recei!able
module is posted correctly to t"e general ledger accounts, t"e Assistant Deputy
inister, Finance and &orporate )ranc", s"ould ensure t"at t"e information from t"e
accounts recei!able module is reconciled wit" t"e general ledger regularly and t"at
all differences are documented, e%plained and corrected,
$anagementCs Response

Management agreed with the recommendation and provided a detailed action plan to
address it.
2.( %e!re!ation of )uties
'"e Policy on #ecei!ables anagement stipulates t"at departments must set up a
framework of internal controls for t"e administration of accounts recei!ables, including
t"e appropriate di!ision of duties relating to credit granting, collections, maintenance of
accounting records, and "andling and reconciling of money, '"e segregation of duties
is a key control mec"anism wit"in organi>ations for t"e purpose of, among ot"er t"ings,
reducing t"e risk of fraud,
'"e results of t"e audit s"ow t"at t"e segregation of duties wit"in t"e Department
!aries greatly from one accounting office to anot"er, For e%ample, in one office, t"e
same employee is responsible for bot" entering deposits into t"e financial system and
for t"e bank reconciliation, 1n anot"er regional office, t"e same employee performs all
t"e tasks related to recei!ables, from t"e creation of accounts to t"e deposits and bank
reconciliation, including follow(up on amounts owing,
'"ese breac"es can be attributed bot" to a lack of departmental procedures and
communication and to a lack of resources in some accounting offices, $rrors or
omissions could result, and t"ey would not be detected, 1n t"ose cases w"ere
$n!ironment &anada 57
Audit of Accounts #ecei!able
resources are insufficient to ensure an adeAuate segregation of duties, alternati!e
control measures could be put in place,
Recommendation
<, '"e Assistant Deputy inister, Finance and &orporate )ranc", s"ould address t"e
deficiencies in t"e segregation of duties in t"e accounting offices as soon as
possible and ensure t"at all t"e managers responsible for accounts recei!able are
informed of t"is,
$anagementCs Response
Management agreed with the recommendation and provided a detailed action plan to
address it.
2.. Recordin! Re"enue in the A&&ro&riate -iscal /eriod
-ne of t"e generally accepted accounting principles is t"at income must be accounted
for in t"e fiscal period to w"ic" it pertains, i,e,, at t"e time t"at it is earned, not w"en it is
recei!ed,
During t"e audit, it was noted t"at re!enue t"at is generated wit" an important
customer of t"e Department is recorded only w"en t"e funds are deposited, '"e
employees responsible for in!oicing indicated t"at t"ey "a!e used t"is process for a
long time and t"at it reduces t"e time spent modifying in!oices w"en corrections are
reAuired,
'"is met"od implies t"at two mont"s of re!enue at t"e beginning and at t"e end of t"e
fiscal period are not accounted for in accordance wit" generally accepted accounting
principles,
'"is met"od "as an impact on t"e amount of recei!ables and t"e amount of re!enue
entered in t"e Department?s financial statements and an impact on t"e Department?s
appropriations,
$n!ironment &anada 58
Audit of Accounts #ecei!able
Recommendation
8, 1n order to comply wit" generally accepted accounting principles, t"e Assistant
Deputy inister, Finance and &orporate )ranc", s"ould ensure t"at all re!enues are
accounted for during t"e period in w"ic" t"ey are earned,
$anagementCs Response
Management agreed with the recommendation and provided a detailed action plan to
address it.
2.0 )e&artental /olicies and /rocedures
'"e Policy on #ecei!ables anagement reAuires departments to "a!e a departmental
credit policy for t"e management of accounts recei!able, t"ereby making it possible to
specify "ow 'reasury )oard 3ecretariat policy will be applied wit"in t"e department,
'"ere is currently no departmental policy on t"e management of accounts recei!able or
a full set of procedures, '"e de!elopment of suc" a policy, or at least of internal
guidelines, is an important element in ensuring t"e proper management of accounts
recei!able wit"in t"e Department,
6e!ert"eless, certain types of information are a!ailable, '"e $n!ironment &anada
Accounting Gandbook Cw"ic" is not up to dateD deals wit" certain aspects of accounts
recei!able Cdeposits, interdepartmental settlements, 63F c"eAues, etc,D but does not
define t"e roles and responsibilities of t"e personnel in!ol!ed, 1n addition, because t"e
information is dispersed t"roug"out !arious sections of t"e "andbook, t"e "andbook is
difficult to use,
'"ere is also t"e $#*16 Accounts #ecei!able 'raining 9uide, '"is guide is used by
t"e accounting offices to train new employees and as a reference tool in t"eir daily
duties, Gowe!er, t"e guide is limited to t"e processing of accounts recei!able in t"e
financial system, '"e concept of t"e management of accounts recei!able s"ould be
considered in a wider conte%t,
1n addition, internal procedures "a!e been de!eloped by t"e accounting offices to
respond to certain needs in terms of t"e management of accounts recei!able, '"e le!el
of detail and t"e e%tent of t"ese internal procedures !aries, "owe!er, from one
accounting office to anot"er,
1n addition to clarifying and standardi>ing t"e practices to be followed in t"e
management of accounts recei!able, departmental procedures would facilitate t"e
training of new employees in t"e accounting offices,
. *)=!S"*)
$n!ironment &anada 5:
Audit of Accounts #ecei!able
'"e main purpose of t"is audit was to ensure t"at accounts recei!able are being
managed fairly, efficiently and effecti!ely, 1n particular, it !erified t"e control framework
for t"e management of accounts recei!able and t"e degree to w"ic" t"e Department is
in compliance wit" applicable accounting regulations, policies and standards,
Audit criteria and tec"niAues were de!eloped in order to gat"er sufficient information
on t"ese sub+ects, '"e met"odology used consisted primarily of inter!iews, data
analysis, and a re!iew of t"e rele!ant documentation,
'"e main obser!ations s"ow t"at, in general, t"e Department?s accounts recei!able
are managed in accordance wit" t"e principal policies, regulations and standards t"at
go!ern t"em, Gowe!er, t"e management framework for accounts recei!able "as
certain gaps, and steps s"ould be taken by management in order to impro!e its
efficiency, Departmental Accounting s"ould play a more acti!e role in t"is regard,
'"e following measures could be put in place to impro!e t"e effecti!eness and
efficiency of t"e management of accounts recei!ableB
de!elop and distribute guidelines on t"e processes t"at are currently in
place, suc" as t"e collection and writing off of recei!ables and t"e in!oicing
of administrati!e c"arges and interestH
re!iew key controls, suc" as t"e segregation of duties, access to t"e
accounts recei!able module, t"e section on t"e writing off of interest in t"e
departmental delegation instrument, and monitoring and reconciliationsH and
take t"e necessary steps to reco!er sums t"at are more t"an 7;: days past
due or write t"em off, as appropriate,
'"e Department could address most of t"e identified gaps wit" a reasonable amount of
effort commensurate wit" t"e anticipated benefits, '"e re!iew of t"e accounts
recei!able management process s"ould, "owe!er, be integrated into ot"er initiati!es
wit"in t"e Department, suc" as t"e initiati!e on t"e state of preparedness of audit(ready
departmental financial statements,
1t would also be appropriate to re(establis" acti!e communications wit" t"e accounting
offices, A few years ago, an annual national works"op was organi>ed, and !arious
financial topics were discussed at t"is works"op, 1t would be ad!antageous to organi>e
suc" an initiati!e again in order to promote t"e s"aring of best practices between
Departmental Accounting and t"e accounting offices,
$n!ironment &anada 5;
Anne& (
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*b?ective (E +etermine whether the framework of controls is appropriate
/rocedures
'"e Department "as a departmental credit policy in
place,
X
'"e roles and responsibilities of stake"olders are
well defined,
X X
'"e Department "as put in place a recei!ables
management plan,
X X
A framework of internal controls for accounts
recei!ables is in place,
Financial system
3egregation of duties
Audit trails
onitoring mec"anisms
X X X X
'"e procedures are communicated to t"e
employees responsible for t"e administration of
accounts recei!able,
X X X
1uan resources
'"e le!el of e%perience and training of t"ose w"o
administer accounts recei!able are appropriate,
X X
Re&ortin! and follow2u&
Accounts recei!able transactions are classified,
recorded and reported accurately and promptly, in
accordance wit" go!ernment accounting and financial
reporting standards,
X X X
#econciliation of accounts is done regularly and
errors t"at are identified are followed up,
X X X
Periodic management reports are prepared and
presented to senior management,
X X
Audit of Accounts #ecei!able
*b?ective 0E +etermine the degree to which the +epartment is in compliance with
applicable accounting regulations/ policies and standards8
Creation of accounts recei"able
'"e Department recogni>es recei!ables promptly, X
A process is in place to allow recei!ables to be
identified promptly and customers to be in!oiced,
X
)e&osits
Deposits are made promptly and assets are
protected,
X
'"e Department c"arges interest and applies
administrati!e c"arges w"en appropriate,
X X X
Collections
'"e Department pursues collections !igorously, X X X
*ad debts
Actions wit" respect to any write(off, remission,
forig!eness, or wai!er of debts are taken on a timely
basis in accordance wit" rele!ant regulations,
'reasury )oard policies and guidelines,
X X X
Allowances for doubtful accounts are estimated in
accordance wit" t"e Policy on Allowances for
2aluation of Assets and *iabilities,
X X
3ear2end /rocedures
4ear(end procedures are followed, X X
$n!ironment &anada 58
Audit of Accounts #ecei!able
Anne& 0
Authority +escription
Receipt and Deposit of Pu"lic Money Regulations$ ('')$ ')3
Interest and Administrative Charges Regulations$ ')3
De"t *rite+off Regulations$ ('',$ ')3
Policy on Allowances for 2aluation of Assets and *iabilities, ')3
1nterdepartmental 3ettlements Policy, ')3
Financial 1nformation 3trategy Accounting anual, ')3
#ecei!er 9eneral anual
$n!ironment &anada Accounting Gandbook,
$n!ironment &anada 59