CANADIAN FORCES NON-PUBLIC PROPERTY BIENS NON PUBLICS DES FORCES CANADIENNES

NPP – “Back to Basics from a Base/Wing perspective”

Comptroller Forum 23-24 Oct 12 Shirley Tang-Jassemi, DGPFSS CFO Michel Landry, Director of Accounting

Agenda

• CFPFSS/DGPFSS and Finance Division Organization Charts • Scale of Operations • CFPFSS/DGPFSS Delivery Model • Defence Team • National Defence Act (NDA) • NPP Governance • NPP at the Base/Wing Level • NPP Accountability Framework • NPP Financial Authorities • Compliance and Assurance Common Observations • NPP Contracting • Current Issues and Projects • Questions?

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CFPFSS/DGPFSS Organization Chart

Chief of the Defence Staff Chief Military Personnel CEO NPF Managing Director DGPFSS NPP NPF HR (VP HR) Pers Fin Svcs (Pres SISIP Financial Services) NPP IM/IT(CIO) NPP Fin (CFO) Retail Svcs (Pres CANEX/ NATEX) Pers Support Prog (C PSP) Family Services Program CANADIAN FORCES NON-PUBLIC PROPERTY BIENS NON PUBLICS DES FORCES CANADIENNES Casualty Support Management (DCSM) 3

Finance Division Organizational Chart

Special Advisor to CFO Sarah Myrer Acctg Pol & Proc Analyst Greg MacKenzie Effective 1 Sep 2012 Snr Mgr Bus. Pl. & Budget Jim Clarke PSP Mgmt Acct Anthea Abaloo Financial Analyst Anne Barton Deanna Ois Travel Services Mgr Christina Legault Travel Coordinator Director of Finance Alain Doucet Corporate Mgmt Acct Juanita Maillet Corporate Acctg Asst Rachel Deault Corporate Acctg Asst Nicole Richard CANEX Mgmt Acct Mohamed Laroussi SISIP FS Mgmt Acct Guylaine Deck CIP Manager Janice Bisko

Chief Financial Officer

Shirley Tang-Jassemi Executive Assistant Carol Parnell Director of Accounting Michel Landry National Acctg Mgr Rob Polem NFRO Mgr Selina Zhu NFATO Mgr Line Robitaille NARO Mgr Wendy Britnell NAPO Mgr Lisa Frye Deployed Ops Acctg Analyst Fernand Déry Senior Manager, Projects Trevor Cloney Senior Project Mgr DOL André Brière Regional Acctg. Mgr (Eastern) René D'Amours - 9 Bases Regional Acctg Mgr (Central) Linda Roorda - 8 Bases Regional Acctg Mgr (Western) Ashley Morrison - 7 Bases Regional Acctg Mgr (Europe) Peg Proctor ABACIS Db Apps Support Mgr Tony Levesque Snr Mgr Compliance Assurance René D'Amours Compliance Assurance Analyst John Davison Compliance Assurance Analyst Jerry Pond Compliance Assurance Analyst Lynn Gutoskie Jr Compliance Assurance Analyst Dave Roberts Jr. Compliance Assurance Analyst PO1 Alain Paré

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Scale of Operations

• Managing Director of NPP • CEO of Staff of the NPF, CF • As a CMP Level 2

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CFPFSS/DGPFSS Delivery Model

Staff of the NPF, Canadian Forces Employee Benefits And Pension Funds, Human Res.

Non-Public Property NPP M&W Programs Publicly Funded Programs ( Public Delivery) Casualty Support + Military Family Services (C108) Personnel Support Programs (C109) (NPP Delivery) CANADIAN FORCES NON-PUBLIC PROPERTY BIENS NON PUBLICS DES FORCES CANADIENNES Defence Services Program 6

The Defence Team

5,600 NPF Civil Servants 60,000 Regular CF Personnel 20,000 Reservists 20,000 Ministry Civil Servants CANADIAN FORCES NON-PUBLIC PROPERTY BIENS NON PUBLICS DES FORCES CANADIENNES 7

Back to Basics - NDA

Section 2 of NDA “non-public property” « biens non publics »

–

“non-public property”

means (

a

) all money and property, other than issues of materiel, received for or administered by or through messes, institutes or canteens of the Canadian Forces, (

b

) all money and property contributed to or by officers, non commissioned members, units or other elements of the Canadian Forces for the collective benefit and welfare of those officers, non commissioned members, units or other elements, (

c

) by-products and refuse and the proceeds of the sale thereof to the extent prescribed under subsection 39(2), and (

d

) all money and property derived from, purchased out of the proceeds of the sale of, or received in exchange for, money and property described in paragraphs (

a

) to (

c

);

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Back to Basics – NDA

• NPP is a separate type of Crown Property • The money component is referred as NPF • NPP can only be used for the benefit of CF personnel and their families, former members and families or for any other purpose designated by the CDS • The FAA does not apply to NPP • Access to Information Act, the Privacy Act and the Official Language Act apply to NPP • The Federal Real Property and Federal Immovable Act does not apply to NPP owned real property • NPP of each unit or other element of the CF (other than disbanded Units or Units in altered circumstances) is vested in the Commanding Officer of that unit or other element of the CF and may only be used for the purposes set out in the NDA

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Back to Basics NPP Governance

National Governance

• NDA prescribes that the CDS is responsible for the governance of NPP • National governance is through the NPP Board • The board meets at least twice a year • Other committees in support: NPP Audit Committee, NPP Investment Committee, NPF Pension Board and the MFF Committee

Base and Wing Governance

• CFAO 27-6 outlines that Base and Wing Commanders are required to establish a Base/Wing Fund with specific membership and duties • Base/Wing Commanders are also responsible and accountable for the governance of messes and museums located at their unit

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Back to Basics NPP at the Base/Wing Level

• Base/Wing Fund – Source of Fund – Use of Fund • Base & Wing Fund Subsidiaries – Golf Courses – Marina • Messes – Obligation to belong – Cannot subsidize sale of alcohol • Museums – Self financed and operates independently, not MW Program • Units Funds, Kit Shops • MFRCs – not NPP – 3 rd Party • CANEX and SISIP – managed centrally

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Back to Basics NPP at the Base/Wing Level

• Unregulated activities – at the Base/Wing level activities are either Public or NPP • CANEX First Right of Refusal • Transfer of NPP Goods from CANEX to the Public • Security of NPP is the same as Public – see QR&O 21.72 and 21.73 for reporting • Representational Expenses • Restriction on use of NPP – Alienation and misuse

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Back to Basics NPP at the Base/Wing Level

• Role of Public Comptrollers, Regional Accounting Managers (RAMs), Non-Public Accounting Manager (NPAM) and CFO HQ Staff • A-PS-110-001/AG-002 Morale and Welfare Programs in the CF – Volume 1 Public Support for Morale and Welfare Programs and NPP – identifies maximum public support. For shared Public/NPP programs NPP is not to be used to make up for a the lack of Public support, in these cases program needs to be adjusted. NPP is not to be used to fulfill a public responsibility • Annual requirement to complete a “Report of Public Support to Morale and Welfare and NPP”

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Back to Basics NPP Accountability Framework

• National and local governance • CDS Delegation of Authorities for the Financial Administration of NPP supported by a requirement to pass a NPP Certification Course • NPP Letter of Financial Management Attestation • NPP Contracting Policy • NPP Travel and Relocation Policy • HR Policy, Accounting Policy, Sponsorship and Donation Policy, etc….

• National entities are externally audited

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Back to Basics NPP Accountability Framework

• CRS is responsible for the audit of NPP within the CF • Compliance and Assurance Team • Consolidated Insurance Program • NPP Fraud Prevention Handbook and Questionnaire

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Back to Basics NPP Financial Authorities

Three main Components

Authority to Make Financial Commitments and Enter into Contracts Authority to Approve Invoices and Other Obligations for Payments Authority to Requisition Payment

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Back to Basics NPP Financial Authorities

Base Commanders – Table 5 of the CDS Delegation of Authorities for Financial Administration of NPP applies

•

Key points

Full PO&M authority • PO&M for Single Event/Activity is limited to $250K if indebted to CFCF only $50K • Capital – no authority if CFCF financed, $250K if self financed, $50K if indebted to CFCF • Travel outside Canada and Continental USA limited to CFSU(E) only • Representational Expenses up to authorized level • Write-off - $250K, $50K if indebted to CFCF • Sponsorship and Donations

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Back to Basics NPP Financial Authorities

Key points:

• No authority for IM/IT procurement • Sub-delegation • Withdrawal and Restrictions • Incumbent acceptance form • Mandatory NPP Course Certification • Unencumbered –current cash balance less current liabilities – Base/Wing Fund and subsidiaries as an aggregate – Messes (individually) – Museums/Other Unit Funds (individually)

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Back to Basics NPP Compliance and Assurance Common Observations

• Segregation of Duties & Cash Controls • CANEX First right of refusal for ATMs • Contracting Policy – lack of contract, management of contracts • CDS Delegation of Financial Authorities for the Administration of NPP – processing of transaction without proper authority • Fixed assets verification not carried out • Compliance with Sponsorships and Donation Policy • Inadequate financial planning over large single event • CBA Overdraft • Little or poor review over financial statements by stakeholders Note that NPP is not immune to theft and fraud so we need to be vigilant

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Back to Basics NPP Contracting

Policies and Principles • Reflect the values and ethics of the GoC and, wherever feasible consistent with the public; • Responsive to the unique nature and requirements of NPP organizations; • Based on a set of principles rather than detailed regulations and procedures; • Contracts are to be awarded on a competitive basis; • Primary importance – operational requirements of NPP Programs and activities; • Activities are to be conducted with care, fairness and honesty; • Reflect best business practices; • Contracts are to provide value for money; and • No direct or indirect personal benefit.

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Back to Basics NPP Contracting

Sole Sourcing • NPP contracts are to be competitively tendered. However, competitive tendering may not be required when one or more of the following circumstances apply: – Pressing emergency/urgency and delay would prevent the contracting authority from meeting operational requirements of NPP programs and activities; – The nature of the work is such that the solicitation of bids would not reflect best business practice; – There is only one supplier capable of providing the required goods or services or capable of performing the work; and – The competitive tendering process would not result in obtaining the best value for money.

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Back to Basics NPP Contracting

• Prior written approval of DGPFSS is required to enter into any contract that does not meet one or more of the above noted criteria or exceeds the limitations imposed by the CDS Delegation of Authorities for Financial Administration of NPP for directed or non competitive contracts which have been set as follows: – B/W Commanders and DGPFSS Division Heads $50K – Others: Up to delegated authorities not to exceed $10K • CANEX has first right of refusal for any new NPP re-sale and consumer service activities contemplated at any CF base/station location • NPP Programs and activities shall, whenever practical, obtain their goods for re-sale by messes and other NPP organizations, from/through CANEX

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Current Issues

• • • • • • Staff of the NPF, CF – no longer have access to Public acquisition cards Staff of the NPF, CF – public financial delegated authorities limited to FAA Sec 32 and 34 Staff of the NPF, CF – access to Claims-X is now being reconsidered Staff of the NPF, CF – access to AMEX ITC is now being reconsidered Use by NPP of the DND PST Tax exemption under the RTA Accounts payable and accounts receivable between Public and NPP

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Current Projects

• Reserve Accounting Project • Accounting Information System Project (ABACIS Replacement) • BMO Details on Line (DOL) for corporate purchase card

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Reserve Accounting Project

• Focus on Army Reserve units • Currently 64 Army reserve units are accounted by the Finance division and approx 286 units are not • Project concept approved by DGPFSS and Comd CA • The project will be completed in five distinct phases • Soon will be working with NAVRES HQ for Naval units

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Reserve Accounting Project

• Phase 1: Survey the reserve units NPP operation scope and requirements – 90% response rate • Phase 2: Based on the survey result, formulating service delivery models – work in progress, target completion by Oct 2012. The goal is to ensure that the NPP model will support the Reserve Force NPP operations. The approved service delivery models will be presented to Comd CA for endorsement • Phase 3: Initial trial – FY 2013/14 • Phased 4: Full implementation – FY 2014/15 • Phased 5: Post implementation review – FY 15/16

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Accounting Information System Replacement

• Why replacement: – ABACIS was developed over 30 years ago and is expensive for software developments – Costly to interface with other software systems – The software owners will be retiring within next 5 years, thus poses significant continuity risks – The hardware will become unserviceable within 10 years – Limited reporting capabilities

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Accounting Information System Replacement

• Solution is to find a replacement system • Target date for a replacement system is FY 13-14

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BMO Details on Line (DOL) for Corporate Purchase Card

• Leverage BMO DOL software to allow managers and cardholders to review transactions, enter financial coding and manage approval on line • Increase efficiency on accounting process and move toward paperless • Issue a policy to NPP entities to use the Corporate Credit Card for all purchases when accepted by supplier • Entities receive rebate of 1.46% on purchases • Since Oct 2012 – account statement on line • Dec 2012 to March 2013 – Training roll out • BMO DOL will be implemented by April 2013

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QUESTIONS?

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