A-FN-105

Home > Corporate > Finance and Informatics > Chapter 10 - Canadian Forces Central Fund Contributions - Loans and Grants (Revised 11 Aug 08)

CHAPTER 10

 

CHAPTER 10

CANADIAN FORCES CENTRAL FUND
CONTRIBUTIONS - LOANS AND GRANTS

INTRODUCTION

1. This chapter deals with contributions and with the accounting procedures to be followed when CFCF loans and grants have been received.  Administration and accounting procedures for Public Grants are contained in Chapter 32.

CONTRIBUTIONS

REQUIREMENT AND RESPONSIBILITY

2. Units are required to contribute Levies at the rates approved by the NPP BOD Meeting of 22 January 2004 as follows:

a. Base Fund, subsidiaries, messes, clubs and ships’ retail activities and unit, branch, regimental and group fund retail activities (e.g. kitshops) - 0.25 % of all bar, food and retail sales. The rate is composed of Welfare contributions only;

b. CANEX– 1.15 % of total sales. This rate is composed of 0.15% Welfare and 1.0% CANEX contributions;

c. NATEX - 5.15 % of all consumer sales. This rate is composed of 0.15% Welfare and 5.0% CANEX contributions;

d. AMSTO - 20 % of gross commissions on automotive revenue.


3. For Bases within Canada, ABACIS will automatically calculate contributions in the month of the sale.  The NPF Accounting Manager – Europe (NPFAM) (E) is responsible for the calculation and timely remittance of contributions for their unit using the Transfer Voucher at Annex A. Ships Supply Officers are responsible for the preparation and submission of contributions using the transfer voucher at Appendix 1  to Annex A.

LOANS

POLICY

4. Loans are categorized as follows:

a. Working Capital;

b. Furniture and Equipment (F&E); and

c. Project (Renovation or Construction).

5. Although one loan may be extended to include all three types of undertaking, base accounting records shall reflect the amounts applicable for each category in accordance with the provisions of this chapter.

6. All loans shall be accounted for in the records of the entity to which the loan was extended.  Principal and interest payments shall also be recorded in the entity to which the loan was extended.

7. Commencement of loan repayment shall begin when the asset is put into use.  Therefore, management will use their discretion to inform the local NPF accounting office when a project is over 80% completed or the asset is put into use.  In this situation, the loan repayment will commence based on the amount approved in the Capital Expenditure Request.  When the final loan cost is known, the National Fixed Asset Office (NFAO) will adjust the loan amount and revise the remaining monthly payment.  The loan repayment term is based on the original amount of the CFCF Loan approved as follows: less than $100K 4 to 5 years, $100K to $250K 10 years, $250K to $1M 10 to 15 years, and over $1M 20 years.  The maximum loan repayment term will not exceed twenty years for any project.

DGPFSS – CANEX HQ CONTROLLED PROJECT

8. In order to manage capital projects more efficiently and provide better services to CANEX stores, CANEX capital projects will be centrally administered.  In addition, for projects requiring CFCF loans, supplier invoices will be paid centrally. The followings are the procedures for centralized capital projects:

a. A CER must be prepared by a CANEX National Manager for each new project.

b.  CANEXHQ will forward the CANEX-approved CER to the Central Office who will request a CFCF loan be approved.  Central Office will provide funding for invoices paid centrally, and once the project is fully completed, the final project amount, along with the CFCF loan, will be transferred to the CANEX books of account via the NFAO.

c. Upon receiving CFCF loan notification, NFAO will create a fixed asset record and commence depreciation for the asset. CANEXHQ will provide the NFAO a set of project invoices together with a copy of the CER. The final project amount to be recorded on CANEX books of account will be net of GST, as the GST will be also administered centrally.

d. For projects requiring a CFCF loan, the Base NPF Accounting Manager (NPFAM) will not process payment to the supplier. However, when the project is below the CFCF loan requirement, such project invoices may be paid centrally and the outlet will be charged through Central Billing or be paid directly by the local NPFAM. A CER is required for any asset which will be capitalized, and

e. Capitalization of building and renovations shall begin when the asset is put into use. Therefore, CANEXHQ will use their discretion to inform the Central Office in writing, when a project is over 80% completed or the asset is put into use. In this situation, CANEXHQ will inform the NFAO an estimate amount for depreciation purposes and Central Office will provide CFCF loan information. When the final project amount is known, NFAO will adjust the fixed asset amount and depreciation. CANEXHQ will notify the NFAO of the final loan amount and the revised monthly payment. 

9. The capitalization threshold is $1,000 or more for the purchase of furniture and equipment, and $2,000 or more for the cost of repairs and renovations.  The CFCF loan requirement threshold is $15,000 or more for the purchase of furniture and equipment, and $20,000 or more for the cost of a building and renovations. CANEX projects are also governed under the CANEX Policy and Procedures Manual  - Section 3 – Operations, Ops 412.

Note: An example is given at Annex B.  The interest charged for the period is based on the number of days in the accounting period divided by 365 days.

BASE CONTROLLED PROJECT

10. In those instances where the project is controlled by the base and funds are transferred to the base as the project progresses, slightly different procedures must be adopted.

11. Upon receipt of the loan (in full or partial amounts) the NFAO shall record the following entry in the accounting records of the applicable entity:

DR Entity Share of CBA
CR Loans Payable CFCF (for the amount of the principal)

12. As the expenditures are incurred, they shall be recorded in the Entity's accounts by debiting Work in Progress and crediting Accounts Payable (or Entity Share of CBA).  Upon completion of the project, the Work in Progress account will be closed out to a suitably titled Fixed Asset Account.  These entries and details of repayment are shown in Annex C.

13. Once the F&E has been acquired and/or the project completed, the Work in Progress account will equal the Loan Payable Account less any portion thereof provided as a Working Capital Loan.

14. Repayment action will be recorded in the manner shown in Annex C  para 6 and 7.


GRANTS

15. The following grants are provided to assist units in providing Personnel Support Programs and activities.

CANEX/SISIP MORALE & WELFARE GRANT (MWG)

16. Prior to the creation of this Grant, national NPF support to the local program level was achieved through the Grants to Small Units, Minor Program High Standard and the CANEX Royalty Program.

17. The CANEX/SISIP MWG is designed to distribute funds in an equitable manner while providing meaningful support to the quality of life at the local level.  Any legitimate local program or initiative, at the discretion of the local PSP management, may be eligible for CANEX/SISIP MWG support, providing that there is no alienation of NPF.  Some examples of eligible expenditures of the CANEX/SISIP MWG funds include:

a. PSP facility construction, renovation, or maintenance;

b. PSP equipment purchases;

c. implementation, re-engineering or renewal of PSP programs;

d. support to existing or new sporting, recreational or community programs;

e. augmentation of existing authorized PSP staff; and

f. partial or full repayment of existing CFCF loans.

18. The grant is not intended to be substitute funding for the Public portion of shared Public/NPF projects or programs.

19. Normal accounting treatment is applicable to the expenditure of grant funds (i.e. expensed or capitalized accordingly).

20. There are three components of the CANEX/SISIP MWG:

a. Per Capita;

b. CANEX Royalty; and

c. Training Locations Allocations

21. Per Capita.  This component is based on departmental personnel statistics (PeopleSoft), with smaller units having a greater per capita amount. 

22. As of 01 March 2004, the rates are as follows:


Regular Force Strength

Allocation


1 – 50
$100.00 per person


51 – 200
$5,000 plus $80.00 per person over 50


201 – 1,000
$17,000 plus $50.00 per person over 200


1,001 – 3,000
$57,000 plus $30.00 per person over 1,000


3,001 and over
$117,000 plus $20.00 per person over 3,000

 

Note: The transition grant previously provided to some units has been reduced to zero.


23. For units outside Canada, funds are provided by transfer to the NPFAM (E) for CFSU (E) and by foreign currency money orders to the appropriate CO/AO of other units in April and October of each year.

24. For the Canada Base grants, the grant funds will be deposited monthly to the Base General Revenue (GL 5100 – Contribution from CANEX/SISIP MWG).

25. For small units in Canada, the funds will be deposited in a separate trust fund (type TFSUBVO4) for each unit semi-annually.  Reimbursement of expenditures shall be requisitioned by submitting a Cheque Request to the designated local NPF Accounting Office.

26. CANEX Royalty.  For units having CANEX operations, the monthly distribution of the CANEX/SISIP MWG component to Base Fund GL 5100 is calculated as follows;

a. sales royalties of 1.5% (5% for CFB Suffield and CFB Wainwright) of total sales (i.e. consumer plus wholesale sales), and

b. concession royalties of 30% of YTD net concession revenue less any concession royalties paid in the previous months of the fiscal year.  Should YTD net concession revenue be negative, this royalty component will not apply.

27. Training Locations Allocations.  This component is an annual allocation, not exceeding $150,000, distributed on a proportional basis to CMS, CLS, CAS, and Comd CFTSG who will determine the subsequent distribution of this funding to Base Funds.

PHYSICAL FITNESS MAINTENANCE GRANT (PFMG)

28. The entitlement to public funds for the maintenance of physical fitness equipment, Regular Force, is on a per capita basis, utilizing departmental personnel statistics (PeopleSoft).  The grant will be paid in two instalments: one at the end of April and the other at the end of October.

29. The amount claimable will be based on the rates pursuant to QR&O 210.37 and adjusted annually to the Consumer Price Index. Funds will be transferred electronically, through the NPF accounting system, directly to the appropriate Base.  For units outside Canada, funds are provided by transfer to the NPFAM(E) for CFSU (E) and by foreign currency cheque to the CO/AO of CFSU (C) and CDLS (W).

30.  The National Financial Reporting Office will deposit the semi-annual grants in a separate trust fund. i.e.: TFSUBV06.  Payment of expenditures shall be by submission of a Request for Payment to the designated local NPF Accounting Office.

31. The amount of the annual grant shall be reduced by the unexpended balance in the trust fund at the previous year-end.

32. When a base or other unit or element is deactivated or disbanded, the unexpended portion of an initial or supplementary grant shall be refunded to the CFCF.

PSP GRANT

33. The purpose of the Personnel Support Program (PSP) Grant Program is to assist senior appointments that have command responsibilities in discharging their responsibility for the morale and well being of the members of the CF and the military community.

34.       Local Commanders have access to NPF resources through their own Base funds for PSP purposes.  The PSP Grant Program provides the senior appointments (who have no other access to NPF funds) with modest NPF resources to meet similar requirements.


35.        The overarching criterion for the use of PSP Grants is that all expenditures must enhance the morale and well being of the members of the CF and/or of the military community.  All expenditures must pass the test of prudence and probity.


36. Examples of allowable expenditures could include (but are not limited to):

a. Support to special occasions such as Armed Forces Day, Canada Day, New Year’s levy, and change of command ceremonies, where there is wide participation by members of the CF and the military community;

b. To offset some or all of the costs associated with the acquisition and display of artefacts which would have significance to the CF and the military community;

c. Provision of a plaque or trophy commemorating a specific event or competition;

d. Stand-up or close-out of a unit; and

e. Opening or closing ceremonies for a building. 


37. In certain circumstances, expenditures may be made that are related to obligations to represent the department or command, provided that:

a. The overarching criterion of enhancing the morale and well-being of the members of the CF and/or the military community is met;

b. The expenditure is such that it does not qualify for reimbursement from public funds; and

c. It is not an expenditure listed in paragraph 38, except that ‘in memoriam’ remembrances (e.g. flowers) or a nominal donation to a charitable organization may be made in cases where the grant recipient has established a policy that would treat all members of the CF or military community for which the grant recipient is responsible in the same manner, or to pay tribute to someone outside the CF or military community who has made a significant contribution to the morale and well being of CF members or the military community during their lifetime.


38. PSP Grants shall not be used for the following (or similar) purposes:

a. To acquire (purchase or rent) items of civilian or military clothing, decorations or accoutrements; items of household furniture or decorations; personal memberships; and items and services related to personal grooming;

b. To relieve an officer or non-commissioned member of his personal responsibility for loss or damage to Non-Public Property;


c. To purchase gifts or testimonials, except that items of a symbolic or commemorative nature may be presented on occasions of special significance.  Examples - purchasing a gift on the retirement of a CF member would not be an appropriate use of the grant; purchasing a plaque, a book about Canada or framed print for presentation to a visiting foreign military delegation or while being hosted by a foreign military organization would be acceptable providing that the purpose of the visit or event surrounding the presentation makes a contribution to the morale or well-being of the members of the CF and/or the military community and is not eligible for reimbursement from public funds; or

d. To make grants or donations to any charitable, religious, or other organizations or fund-raising appeals other than as provided for in paragraph 37c. 

Note

If a grant recipient is unsure whether an expenditure is in keeping with the spirit of the grant, it is recommended that prior advice be obtained from the Chief Financial Officer (CFO)/DGPFSS.

39. PSP Grants shall be allocated to senior appointments as approved annually by the Non-Public Property Board of Directors.

40. The DGPFSS may authorize the establishment of a temporary PSP Grant, consistent with the schedule of grants established in this policy when a senior military officer is appointed to a foreign/international position.  The DGPFSS must report such authorizations to the NPP Board of Directors at its next meeting, to be recorded in the minutes.


41. Grant recipients may allocate a portion of their grant allocation to subordinate appointments, as they deem appropriate.  In effecting such sub-allocations, instructions must be issued to ensure compliance with the policy contained herein.  The CFO/DGPFSS is to be advised of such sub-allocations so that the appropriate NPF trust account action can be taken in accordance with paragraphs 44 and 45.

42. Grant recipients may delegate authority to expend funds to another position within their organization.  The local NPF accounting office must be notified in writing of the delegation.


43. Each senior appointment designated in paragraph 39 shall provide an annual written report summarizing the uses of the grant.  When part or all of a grant was sub-allocated, details of the sub-allocation and how sub-allocations were used shall be included in the annual report.  The annual report should not exceed one page and shall be forwarded to the CFO/DGPFSS NLT one month following the end of the fiscal year (i.e. prior to 30 Apr), annually.  The CFO/DGPFSS shall not issue the subsequent year’s grant until the annual report is received and shall retain the annual report as part of the auditable record.


44. CFO/DGPFSS shall establish an NPF trust account (account type TFSUBV05) for each of the PSP grants and deposit the annual grant directly to the trust account.  A petty cash advance of up to 25% of the value of the grant may be provided to the grant recipients.  This petty cash advance shall be requested from the CFO/DGPFSS by means of an NPF cheque requisition.  Reimbursements for expenses shall also be requisitioned from the CFO/DGPFSS.  These reimbursements shall be accompanied by supporting receipts.  CFO/DGPFSS shall review all receipts to ensure compliance with the grant criteria.  In those rare instances where the admissibility of an item cannot be agreed upon, CFO/DGPFSS shall forward the details to the Chair of the NPP Advisory Committee for resolution.

 

45. Up to 25% of each grant allocation, if unused, may be carried forward to the subsequent NPF fiscal year (including any sub-allocations).  CFO/DGPFSS shall take the necessary accounting action to manage carry forward and recover any unused portion of the grant that exceeds the 25% carry forward provision.

MILITARY SPORTS WAGES GRANT


46. The Military Sports Wages Grant (MSWG) is provided to unit Fitness and Sports Directors by DGPFSS/CPSP to provide funding for hiring additional staff in support of the military physical fitness and sports program.

47. MSWG for the military physical fitness and sports program shall be charged to a Base Fund Trust Account “Military Sports Wages”.  A separate Payroll Entity Number (PEN) is assigned in order to capture sports wage expenditures. The MSWG is authorized for hiring NPF employees in direct support of military physical fitness and sports programs such as physical fitness instruction, physical fitness evaluation, lifeguard services for military training, officials and referees for the military sports program, and gymnasium, arena and sports field labour in support of the military fitness and sports program.  Funds are to be spent for the purposes indicated above.

48. The quarterly MSWG transfers from the Central Office shall be credited to a trust fund account type “TFSUBV03”. Wages, as per para 47 above, will be charged directly to the trust fund account type “TFSUBV03”. Expenditures in excess of the trust account balance are to be charged against the appropriate unit fund sports expense accounts.


49. The amount of the annual grant shall be reduced by the unexpended balance in the trust fund at the previous year-end.

FITNESS AND SPORTS INSTRUCTOR CLOTHING GRANT

50. The Fitness and Sports Instructor Clothing Grant (FSICG) is provided to unit Fitness and Sports Directors by the DGPFSS/Exec VP PSP to provide funding for environmental clothing for fitness and sports instructing staff.

51. FSICG transfers from Central Office are to be credited to trust fund account type “TFSUBV07” and FSICG expenditures, as approved by the Fitness and Sports Director, are charged to this account.  Expenditures in excess of the balance in the trust account are to be charged to an appropriate Base Fund sports expense account and will not be reimbursed by future grants.

52. The amount of the annual grant shall be reduced by the unexpended balance in the trust fund at the previous year-end.

RECREATION MANAGEMENT GRANT

53. The Recreation Management Grant (RMG) is provided to Recreation Directors by DGPFSS/Exec VP PSP to provide funding in support of local recreation programs. Annual grants from DGPFSS will be credited to a trust fund account type “TFSUBV08” and expenditures charged to this account. Expenditures in excess of the balance in the trust fund are to be charged to an appropriate Base fund expense and will not be reimbursed by future grants.

54. The amount of the annual grant shall be reduced by the unexpended balance in the trust fund at the previous year-end.