Recipient Guide: Reporting and Financial Management
Table of Contents
- 1. Introduction
- 2. Result of the Project and Recipient Risk Assessment
- 3. Requests for Payment and Financial Reporting
- 4. Budgeting and Allocation of Contribution
- 5. Submission of Milestone Deliverables
- 6. Project Changes
- 7. Progess Reporting
- Annex A – Examples of Appropriate Supporting Documentation
A contribution is a conditional transfer of funds to a recipient to be used to support a set of activities specified in a Contribution Agreement (CA). Contribution payments are subject to review and approval by Innovation, Science and Economic Development Canada. As a Recipient of contribution funds, you must be familiar with your responsibilities, as well as with the procedures and rules that stipulate how you may spend the approved funds.
This guide is intended to provide you with key information to request payments under your CA and to comply with the reporting requirements set out within it.
Two separate documents are also available on the Recipient Toolkit site including:
- Recipient Guide, Process for Requesting a Claim for Reimbursement and/or an Advance
- Recipient Guide, Process for Submitting Required Milestone Deliverables
As a recipient, you are also required to identify a Responsible Officer(s) for certifying requests for payments and other reports. It is recommended that more than one person be identified in this capacity, in the event that one of them is unavailable when needed. Please contact the Program Officer responsible for your file in a timely manner to provide them with the contact information of your Responsible Officer(s).
Shortly after your CA is signed, your Program Officer may contact you to organize a start-up meeting to discuss and review your CA, and to outline and clarify the Connecting Canadians Program's expectations that are specific to the project for which you are receiving funding.
2. Result of the Project and Recipient Risk Assessment
Prior to the execution of the CA, Innovation, Science and Economic Development Canada conducted a Project and Recipient Risk Assessment to determine the risk management framework associated with your project. Contact your Program Officer to learn more about your current risk management framework.
A risk assessment of your project will be conducted at a minimum of once a year, or at the discretion of the Program Officer as the project is being implemented. In the event that the risk reassessment impacts the project risk management framework, you will be formally informed of the changes made to the framework elements indicated above.
* Note: A rationale is required to justify an advance. The length of the advance period is the maximum period allowed for and is based on the recipient's then-current Assessment of Risk. The amount of the advance shall be determined by the Program Officer based on the submitted Financial Update, certified and submitted by the recipient identifying forecasted expenditures of eligible costs during the Fiscal Year. An advance period cannot span two Fiscal Years.
3. Requests for Payment and Financial Reporting
The information provided in this section is organized sequentially, reflecting the order in which a recipient would carry out activities related to payment and financial reporting.While planning payment and reporting activities, remember that your annual fiscal year cycle may be different from the fiscal year cycle used by the Government of Canada. The Government of Canada's fiscal year cycle is from April 1st to March 31st, and it is important to align your payment and reporting activities accordingly.
Set up your accounting systems and procedures
- Set up and maintain appropriate accounting systems and procedures to record and track all project costs and funds received for the project from all sources, and to produce financial reports required by the Program pursuant to your CA.
- Keep project accounting separate from your organization's regular operations. It is imperative that you are able to easily identify project expenditures. You will be asked to provide forecasts and regular financial reports.
- Ensure that your accounting systems and procedures comply with Generally Accepted Accounting Principles. You will also need to ensure that you are able to provide appropriate supporting documentation for your claims when requested (see Annex A for some examples of what would typically be appropriate).
- Your project accounting procedures should include strong internal controls and provide for a proper segregation of duties. For example, no individual should be able to approve his/her expenses or sign his/her cheque for reimbursement.
- To receive payment from the Government of Canada electronically, please complete the Electronic Data Interchange form (sent separately) and return it to your Program Officer. Cheques are no longer issued except in exceptional circumstances.
Enter into agreements with suppliers and contractors
- Keep proof on file of the competitive or reasonable business process that took place to ensure that a fair and transparent process resulted in competent and qualified contractors and/or personnel working on the project.
- Keep appropriate records and contracts with other parties to carry out specific activities related to your project. You may be required to demonstrate that the funds allocated to these contracts are eligible, spent in accordance with the provisions of the CA, and in keeping with the purpose of your approved project. You are ultimately responsible for the management of project funds and for compliance with all the terms and conditions in your CA.
- Ask suppliers and contractors to include detailed information on their invoices/receipts (e.g., clear descriptions of goods and services provided, dollar value, delivery dates, etc.), to allow for verification of expense eligibility and reasonableness. These details are required when transactions are sampled by the Program, or in the event of a recipient audit. Your Program Officer may ask you for a copy of any signed contract with a supplier or contractor.
Verify eligibility of expenses
- Check the earliest and latest approved dates (specified in your CA) for incurring project costs. Costs incurred before and after these dates will not be eligible.
- Down payments for goods or services made because of a contractual obligation may be considered an incurred expense where, in the opinion of the Program, expenses are reasonable and respect normal business practices for the types of goods or services being provided. In such cases, the down payments may be claimed for reimbursement for the period in which the payment is made by the recipient. Ensure that the down payment is deducted from the final invoice from the supplier.
Document all project costs and payments
- Retain originals of all supporting documentation of project costs for review by Program staff or for audit purposes. Supporting documentation must indicate the costs incurred, how they are related to the approved project, and that they are eligible.
Submit claims for reimbursement
Below are key things to consider in submitting a claim. The Recipient Guide, Claims and Advance Requests provides instructions on how to complete a claim form to request reimbursement of expenses.
- Ensure that the eligible costs for which you submit a claim for reimbursement were incurred by your organization.
- Amounts claimed for reimbursement of eligible costs may be adjusted by the Program Officer without acceptable, requested supporting documentation.
- Submit a complete Financial Update and a Claim Summary Form, signed by the Responsible Officer.
- Prepare a listing of the project costs incurred by your organization, to submit with each claim for reimbursement.
- Account for all spent and unspent portions of an advance payment when submitting a claim for reimbursement.
- To avoid delay in paying your claims, please ensure that all the required documents are properly identified with the activity or cost category and that they are included with your claims for reimbursement. Program administrators will randomly select a sample of your claim expenditures in order to verify eligibility and whether expenditures were incurred within the claim period.
- Submit scanned or copies of the requested documents and keep your original documentation on file. The amount of documentation that you are requested to submit in support of each claim will be based on the then-current risk management framework for the project.
- Submit any other documentation as may be requested by your Program Officer related to the Project and/or in support of the claim.
Submit a request for an advance payment
- If you are allowed to receive advance payments and would like to request one to cover projects costs, complete and submit a Financial Update and a Claim Summary Form. The advance period approved for your project is determined based on your immediate cash flow requirements and the result of the risk assessment conducted on your project. You will be asked to provide a justification for the advance.
Submit a fiscal year-end accounting
- Submit a Financial Update by March 31st, to report on all project costs incurred in the Fiscal Year. Innovation, Science and Economic Development Canada will set-up a payable at year-end (PAYE) account which is intended to allow for an expense claim to be submitted after the accounting period for a given Fiscal Year. PAYE accounts represent costs incurred as a result of past transactions and events on or before March 31st that have not yet been reimbursed by the Program. Any portion of the contribution that is not claimed and paid before the end of 180 days following the end of a Fiscal Year may no longer be available for payment to you.
- Submit the final claim for the project and/or account for any advance payment within 180 days following the date you completed your project.
4. Budgeting and Allocation of Contribution
As you work to complete your project, you may encounter issues that despite your best efforts to mitigate their potential impact will ultimately lead to project delays and in turn result in less eligible project costs being incurred in any fiscal year. Less eligible costs incurred could result in a portion of the contribution becoming unavailable to you. The contribution agreement stipulates that contribution amounts allocated by fiscal year are not to be treated as estimates and that any portion of the contribution that is not disbursed in any fiscal year (i.e. "lapsed" funding) shall not be available to complete your project.
It is important therefore to inform your Program Officer of any delays that could result in less eligible costs being incurred than originally forecasted for a fiscal year. If there are changes forecasted to occur after August 1st the Program Officer should be informed as early as possible. By August 1st of each fiscal year, you will be required to provide a forecast of eligible costs to be incurred for the remainder of the current fiscal year and if applicable subsequent fiscal years covering the project. You and your Program Officer will discuss the updated forecast to assess the financial implications, if any, with respect to the allocation of your contribution. There is an approved process by which to reprofile funds and if it is determined that a portion of the contribution should be re-allocated, the amount will be considered a request to re-allocate the contribution amounts. Please note that any such requests are subject to approval of the Minister and in some cases the Minister of Finance.
5. Submission of Milestone Deliverables
In your contribution agreement, Schedule A identifies milestone deliverables that you have committed to submit to the Program as per the schedule identified in the agreement. The Program Officer and Engineer assigned to your project will review the milestones, assess whether the implementation of the project is progressing as planned, and provide feedback on these milestones. In some cases, they will follow up to ask questions and may request additional information. See the Recipient Guide, Process for Submitting Required Milestone Deliverables to learn what is expected to be included each milestone deliverable.
6. Project Changes
As your project progresses, you should identify as soon as possible to the Program Officer any changes you are considering or that may have occurred unexpectedly to the specifics of the project and/or and the project schedule. This will help avoid the risk that project changes are counter to the terms and conditions of your contribution agreement, which could result in a claim being delayed or even denied. In order to assist you with documenting such changes, a Project Change Form is available for you on the Recipient Toolkit Site. A rationale must be provided to assist the Program in assessing the impact these changes may have on the project. If the changes are significant, they may require your contribution agreement to be formally amended.
7. Progess Reporting
You are expected to report periodically on the progress of your project, indicate whether any delays have been experienced and why, and identify any impacts (positive or negative) resulting from the project.
Below is key information you should note regarding reporting on your project's progress.
Check your reporting requirements
- Ensure that you are aware of the frequency with which you must report on the progress made on key deliverables for your project.
- Communicate with your Program Officer to confirm the dates that your progress and final reports are due.
- Note that the frequency for your reporting could change following any re-assessment of the risks related to your project.
- Use the standard template that your Program Officer will provide to you to report on progress made with respect to the project activities set out in Schedule A of the CA.
Annex A - Examples of Appropriate Supporting Documentation
The following provides examples of appropriate supporting documents typically required to support claim submissions (if requested by program staff) or an audit.
|Expense Category||Examples of Appropriate Supporting Documentation|
|Travel for Personnel, Contractors and sub-contractors||
Public Transportation (e.g., Airplane and Train)
Car rental or use of personal vehicle:
|Other Direct Project Costs||
Other project costs not otherwise specified in other categories:
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