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

1. 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

2. 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?

3. CFPFSS/DGPFSS Organization Chart Chief of the Defence Staff Chief Military Personnel Managing DirectorNPP CEO NPF DGPFSS NPP Fin (CFO) NPP IM/IT(CIO) NPF HR (VP HR) Pers Fin Svcs (Pres SISIP Financial Services) Retail Svcs (Pres CANEX/ NATEX) MilitaryFamily Services Program Casualty Support Management (DCSM) Quality of Life Family Services (DQoL) Pers Support Prog (C PSP)

4. Finance Division Organizational Chart

5. Scale of Operations Managing Director of NPP CEO of Staff of the NPF, CF As a CMP Level 2

6. CFPFSS/DGPFSS Delivery Model Defence Services Program Non-Public Property Publicly FundedPrograms (Public Delivery) NPP M&WPrograms CasualtySupport + Military FamilyServices (C108) Staff of the NPF, Canadian Forces Employee Benefits And Pension Funds,Human Res. Personnel Support Programs (C109) (NPP Delivery)

7. The Defence Team 5,600 NPFCivil Servants 60,000 RegularCF Personnel 20,000 Reservists 20,000 MinistryCivil Servants

8. 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);

9. 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

10. Back to BasicsNPP 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

11. Back to BasicsNPP 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 – 3rd Party CANEX and SISIP – managed centrally

12. 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

13. Back to BasicsNPP 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”

14. Back to BasicsNPP 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

15. 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

16. 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

17. Back to BasicsNPP 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

18. 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)

19. 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

20. Back to BasicsNPP 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.

21. Back to BasicsNPP 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.

22. Back to BasicsNPP 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

23. 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

24. Current Projects Reserve Accounting Project Accounting Information System Project (ABACIS Replacement) BMO Details on Line (DOL) for corporate purchase card

25. 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

26. Reserve AccountingProject 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

27. 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

28. Accounting Information System Replacement Solution is to find a replacement system Target date for a replacement system is FY 13-14

29. 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

30. Questions?