Chapter 3 Organization

CHAPTER 3 ORGANIZATION AND RESPONSIBILITIES

FINANCIAL AND ACCOUNTING RESPONSIBILITIES GENERAL 1. The overall financial responsibility for NPF operations is vested in the CDS through Sections 38 to 41 of the NDA. The CDS shall exercise executive authority through the NPF Board of Directors which shall delegate specific financial responsibilities to NDHQ, Command HQ, and Base authorities. 2. Operational financial responsibility shall be exercised at three levels: through DGPS and ADM(Fin)/CFS at NDHQ; through the Commander of the Command; and through the BComds. 3. The Canadian Forces Exchange System (CANEX) is organized as a field unit of the CF, embodied in the Regular Force and assigned to ADM(Per). This unit is comprised of a unit headquarters and two operational groupings which are divided into 12 detachments (11 regions in Canada and NATEX). Functional control of CANEX is exercised by ADM(Per) through CPS who is the Chairman of the CANEX Board of Directors. The CANEX Board of Directors is accountable to the Non-Public Fund Board of Directors and is responsible for ensuring that the mandate of CANEX is effectively discharged.

RESPONSIBILITY AT NDHQ 4. The NPF Board of Directors shall be responsible: a. for financial functions and authorities as outlined in CFAO 2-12; b. for approving the consolidated program for all NPF capital expenditures which will be incurred during the fiscal year; and c. for approving consolidated annual financial statements. 5. The CANEX Board of Directors is responsible to the NPF Board of Directors for ensuring that the mandate of CANEX is discharged effectively. 6. ADM (Fin)/CFS shall be responsible to review and concur with all financial policy and procedures. 7. The Director General Personnel Services (DGPS) shall be responsible: a. for reporting to the NPF Board of Directors on the financial position of NPF operations; b. for advising the NPF Board of Directors on policy governing the growth and direction of NPF operations; and c. upon recommendation of the Commanders of Commands, approval of capital expenditures within authorities as detailed by Annex A to CFAO 2-12. 8. The President of CANEX is responsible to the CANEX Board of Directors for directing CANEX strategy, policies and operations. 9. The Director Physical Education, Recreation and Amenities (DPERA) is responsible for recommending appropriate policies and procedures governing the operation of Base Funds, messes, and recreation activities. 10. The Director Non-Public Funds Services (DNPFS) is responsible for: a. the management and administration of CFCF and CANEX HQ accounting records; b. the operation of the NPF consolidated banking, insurance, and personnel benefits programmes of the CF; c. the operation of the loan programmes of the CFCF; d. the development, in conjunction with CANEX and DPERA, of financial policies and procedures relating to NPF operations; and e. the administration and accounting for the Canadian Forces Personnel Assistance Fund (CFPAF).

RESPONSIBILITY AT COMMAND 11. The Commander of the Command shall control the overall financial position of NPF operations within his Command. In exercising this authority he shall: a. recommend capital expenditures which require approval by DGPS and/or the NPF Board of Directors; and b. authorize closure of the annual audit. 12. The Command Comptroller shall monitor and review the financial statements submitted in accordance with Chapter 14, and advise the Commander on the financial position of NPF operations within the Command. This shall include recommendations pertaining to write-offs. In the review and closure of annual audit, he shall provide advice and assistance to Bases. As a result of this review he shall perform inspections as required. Additional assistance may be requested from NDHQ/DGPS.

RESPONSIBILITY AT BASE 13. The BComd is the directing authority for all NPF activities on the Base. He shall be responsible for the overall financial position of Base NPF operations. He shall approve capital expenditures and unit write-offs within his authority and forward capital and annual operating budgets to CHQ. 14. The BCompt shall provide the BComd with analysis and advice on all NPF financial matters and in particular shall be responsible for: a. the administration of NPF accounting activities in compliance with financial policies and regulations; b. the review of NPF operations; and c. advising the BComd on the cash position of individual NPF operations in relation to overall Base NPF activities. 15. The NPFAO shall be responsible to the BCompt for the accurate and prompt recording of all NPF financial transactions. He shall provide accounting control over all assets, liabilities and in particular shall be responsible for: a. the receipt, safeguarding, and disbursement of non-public funds; b. the production of timely financial reports as required; c. monitoring all approved capital expenditures; d. preparing and monitoring cash flow with particular emphasis on the use of supplier credit and the collection of Accounts Receivable; e. providing to the BCompt, analyses on the financial position of NPF activities; f. retaining current retail accountability records for those operations required to keep their inventory under the retail system and to reconcile and report all inventory differences to the appropriate authority; h. demanding, controlling, and ensuring that adequate stocks are maintained of the accountable forms listed in Chapter 6; and j. establishing the policy and procedures for the processing and authorization of all journal vouchers (JV). 16. The CANEX Regional Managers shall be responsible to the President through their appropriate Vice-President of Operations for: a. the effective and efficient management of all CANEX operations within the region; b. the preparation of operating budgets; c. the preparation of annual capital budgets; d. the safeguarding of the assets and funds under his control; and e. providing monthly performance information as required.

FINANCIAL AUTHORITIES CAPITAL EXPENDITURES 17. The circumstances that govern the capital expenditure of NPF are detailed at CFAO 2-12, Annex A, and at Chapter 3 of A-PS-110-001/AG-003.

WRITE-OFF 18. Write-off is defined as the authority to adjust accounting records to reflect the deletion or changed monetary value of an asset or liability arising from an extraordinary occurrence(s) and not supported by a normal market transaction. Examples of situations in which write-off action is appropriate are fraud, arson, damage, destruction, theft, fire, disappearance and deletion of bad debts.

AUTHORITIES FOR WRITE-OFF 19. Write-off authority for Base Fund and Messes in any single occurrence is: a. Station Commander - $ 500; b. Base Commander - $ 1000; and c. Commander of a Command - no limit.

CANEX 20. Write-off authorities for CANEX are contained in Administration 002 of the CANEX Policy and Procedures Manual. NOTES 1. Write-off authority granted at paragraph 19 may, at the discretion of the CHQ, be retained at CHQ level. 2. Shrinkage is the normal loss of merchandise which has automatically been expensed as part of the Cost of Goods Sold. Inventory Shortage is the loss revealed from a supervised stocktaking (this amount automatically exceeds any shrinkage). 3. Approval for write-off does not prejudice disciplinary action or subsequent financial recovery from persons responsible.

DETERMINATION OF WRITE-OFF AMOUNT 21. The aggregate value of the loss at cost price (for merchandise inventory) or at net book value (for fixed assets) will be used as the basis for determining the appropriate write-off authority notwithstanding that the loss occurred over a period of time or is the result of more than one undetected misappropriation of property. Stock shortages/overages occurring in separately controlled outlets shall not be netted together to avoid the reporting of the shortage to higher authority. 22. Where losses and/or stock shortages are recovered, in whole or in part, the gross amount shall determine the authority level required to approve closure of the incident. While recovery may offset any loss, the situation which contributed to the shortage must be made known and, if necessary investigated. All requests for write-off shall be supported by an investigation appropriate to the magnitude of the write-off sought. 23. Investigation of a loss or damage to NPF property or of stock shortages shall be in accordance with QR&O Articles 21.72 and 21.73. Accounting action to recognize the loss shall be in the month in which the loss or shortage was discovered and shall not be delayed pending the outcome of any investigation. 24. Write-offs shall be actioned by a Request for Write-off in memorandum form. Full particulars of the circumstances and reasons for write-off shall be outlined in the memorandum. Guidelines concerning the reporting and processing of write-offs for Base Fund and Messes are presented at Annex A.

DISPOSAL 25. Except on disbandment of a unit, or a unit in altered circumstance, in which case CFAO 27-9 shall apply, authority is required to dispose of an asset or liability at less than net book value. Net book value is defined as acquisition cost less accumulated depreciation charges, if any. Situations in which disposal authority is appropriate are trade-in, sale, auction, barter, deletion from records as a result of fair wear and tear, and consumption of an asset by the NPF activity for its own use.

AUTHORITIES FOR DISPOSAL 26. Disposal authorities are prescribed in CFAO 27-6, paragraphs 20 and AUDIT AND INSPECTION 27. The audit of Base NPF operations, except for external audits, is the responsibility of the BComd and involves two types of audit: a. Base Internal Audit; and b. Annual Audit. 28. The policy and procedures for internal and annual audits are contained in Chapter 4.

COMMAND INSPECTIONS 29. Both the Command Comptroller and the Staff Officer Personnel Services must carry out periodic inspections of base NPF activities. These inspections constitute a review of the efficiency and the effectiveness of Base NPF operations. Reporting to the Commander of the Command, the inspection teams are responsible to evaluate: a. the effectiveness of operational procedures; b. the standard of NPF services provided in relation to Command and CF objectives; c. security of assets; d. verification of funds; e. management effectiveness of NPF organizations; and f. compliance with regulations.

NPF SPECIALIST SERVICES 30. At the request of a Command, DGPS may provide NPF operational and financial specialists to augment Command Inspection Teams. Additionally, BComds may request through the Commander of the Command, assistance from DGPS to review selected areas of NPF operations. EXTERNAL AUDITS 31. Since NPF activities are subject to certain provincial and federal regulations (eg. PST, GST) government authorities may visit bases to ensure compliance with applicable governmental regulations. 32. As directed by the VCDS, CANEX financial statements are subject to annual external audits. The purpose of the audits is to provide reasonable assurance that the CANEX Consolidated Financial Statements are fairly presented in accordance with generally accepted accounting principles. The audit process involves a visit to certain bases and the submission of specific information by the others.

ORGANIZATION OF THE NPF ACCOUNTING SECTION ORGANIZATION 33. Every NPF Accounting Section shall be organized in the most effective manner dependent on the circumstances of Base NPF operations. A sample organization chart is attached at Annex B.