ARCHIVED - The Financial Administration Act: Responding to Non-compliance - Meeting the Expectations of Canadians

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1. Overview of the Financial Administration Act

The Public Service of Canada is governed by a legislative framework that sets out the formal rules for the administration and management of the government. This section illustrates that framework in three key areas: financial administration and management of assets, human resources, and information management.

The Financial Administration Act (FAA) is the cornerstone of the legal framework for general financial management and accountability of public service organizations and Crown corporations. It sets out a series of fundamental principles on the manner in which government spending may be approved, expenditures can be made, revenues obtained, and funds borrowed.

The FAA also provides a procedure for the internal control of funds allocated to departments and agencies by Parliament and for the preparation of the Public Accounts that contain the government's annual statement of expenses and revenues. The financial statements are presented to the Auditor General of Canada, who provides an independent opinion on them to the House of Commons.

The Minister of Finance is given the management of the Consolidated Revenue Fund, into which all revenues must be paid and from which expenditures are paid with parliamentary approval.

The FAA also establishes the Treasury Board, a committee of Cabinet composed of at least six ministers, including its President and the Minister of Finance. The FAA allows the Treasury Board to adopt administrative policies for the Government of Canada and gives it specific authority to issue directions in various areas related to the management and control of funds. Thus, while the FAA does not encompass all of the rules and principles governing public management, it serves as the principal source of management authority for the Public Service. For this reason, it has led to the definition of the parameters for this review. The Treasury Board also carries out other related functions; notably, it acts as the employer of public service employees engaged in core public administration and plays a key role in real property matters. The Treasury Board may act by approving general or specific policies or directives or by issuing non‑binding documents providing guidance and benchmarks.

For the most part, the Treasury Board uses the authorities granted (primarily) under the FAA to issue policies that are binding upon the administration. There are currently about 411 instruments issued by the Treasury Board, including policies, directives, and guidelines.

The FAA also authorizes the passing of regulations. While from the public service perspective the policies are no less binding than the regulations, the breach of regulations is liable to attract sanctions that would not be applicable to the breach of published directives or instruments. Regulations, like legislation, are official, published instruments and, in certain circumstances, they also affect third parties. There are currently 13 regulations of general application adopted pursuant to the provisions of the FAA.

Finally, the FAA also sets specific rules itself, most notably in the areas of collection, management, and spending of public funds.

The FAA imposes rights and duties on ministers and directly on deputy heads in relation to the institutions they manage. These include, notably, the obligation for a deputy head to establish procedures and maintain records respecting the control of financial commitments chargeable to public funds, the fact that only a minister or his or her delegate can request the issuance of a payment, and that before a payment is issued in return for work, goods, or services, the deputy of a minister (or another delegate) must certify that the work has been performed, the goods received, or the services rendered (sections 32, 33, 34).

Departments are primarily responsible and accountable for the following:

• the expenditure of funds and management of assets that they have been allocated;
• delivering the results that they commit to achieving with the resources they have been allocated; and
• meeting the management expectations according to performance indicators in the Management Accountability Framework (MAF) for performance reporting and accountability, which sets out a rigorous regime of managerial expectations.

Departments, as led by their deputy heads, are also responsible for implementing appropriate management processes, systems, and instruments to deliver their management duties and obligations, and monitor their performance.

An appropriation act is the vehicle through which Parliament provides spending authority to the government on an annual basis. It is how Parliament discharges its responsibility through section 26 of the FAA and section 53 of the Constitution Act, 1867. About 33 per cent of spending monies are acquired in this manner. Money is also acquired through statutory appropriation, which means that approval for funds is embedded in legislation and does not have to be sought annually. 

A number of other statutes are instrumental to human resources management in the federal Public Service:

• the Public Service Staff Relations Act (PSSRA);
• the Public Service Employment Act;
• the Public Service Modernization Act;
• the Canada Labour Code;
• the Canadian Human Rights Act; and
• the Employment Equity Act.

The PSSRA establishes a framework for the certification of bargaining agents, a collective bargaining regime, and the provision of essential services in case of strikes. It also provides a right to grieve discipline and any action affecting terms and conditions of employment. Regulations under the PSSRA set out the grievance and adjudication processes. The PSSRA also articulates prohibited conduct that may constitute an unfair labour practice as well as a bargaining agent's duty to fairly represent its members.^[1] Collective agreements concluded pursuant to provisions of the PSSRA are legally binding on the employer and its representatives, the bargaining agent, and the employees subject to it.

The Public Service Employment Act sets out the rules and principles governing the staffing of positions in the Public Service. Built on the merit principle, with a view to ensure and maintain the political neutrality of the Public Service, it strives to ensure fairness and equity in the manner in which positions are being staffed.

Both statutes and their underlying principles were reviewed as part of the Public Service Modernization Initiative. The Public Service Modernization Act reissues both of these acts.

Part II of the Canada Labour Code governs occupational health and safety in the workplace. It affects both public and private sector workers under federal jurisdiction. It further establishes fundamental employee safety rights and sets out the roles of health and safety committees and officers as well as procedures for determining whether a danger in the workplace exists. 

The Canadian Human Rights Act prohibits discrimination and harassment based on a series of enumerated grounds. These include sex, age, disability, ethnic origin, and sexual orientation. The Canadian Human Rights Act mandates the Canadian Human Rights Commission to receive and inquire into complaints and, ultimately, refer them to the Canadian Human Rights Tribunal.

The Employment Equity Act was implemented to achieve equality in the workplace so that no person would be denied employment opportunities or benefits for reasons unrelated to his or her abilities. It also aims to correct the disadvantage in employment experienced by women, Aboriginal peoples, persons with disabilities, and members of visible minority groups by giving effect to the principle that employment equity means not only treating persons in the same way, but also requires special measures and the accommodation of differences. The Employment Equity Act applies to employers in the private and public sector and sets out the employers' obligations in support of employment equity.

Information management is governed by three main pieces of legislation: the Privacy Act, the Access to Information Act, and the Library and Archives of Canada Act.

The Privacy Act obliges managers to protect the privacy of employees and to retain information pertaining to them. Under the Privacy Act, the personal information of an employee can, upon request, be disclosed to that individual, subject to any applicable exemptions. The Access to Information Act requires safekeeping of most information created or obtained by the government (it creates a criminal offence for deliberately destroying information likely to be requested). Subject to some specific exemptions, the Access to Information Act requires officials to produce information upon request by members of the public. The Library and Archives of Canada Act dictates the rules governing retention periods for documents. Each of these statutes is accompanied by regulations. The Secretariat provides supplemental guidelines and policies to assist institutions with interpretation of the Privacy Act and the Access to Information Act.

 

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