Appendix M Template Transfer Agreement

Government Transfers - Template Draft Agreement

Instructions have been included throughout this template agreement in blue bold font. These instructions should be removed when drafting your agreements.

Government transfers is an accounting term used to describe the transfer of assets by a government to another partywhere the government does not receive anything directly in return. Government transfers can be in the form ofgrants, shared cost arrangements or entitlements. Government transfers are to be expensed when they are authorized by the transferring government and any eligibility criteria have been met by the Recipient.

The term ‘financial assistance’ has been used throughout this template agreement in place of, or as a reference to,government transfers. The term ‘financial assistance’ should not be confused with the cash payments of that assistance. In some cases, a transfer expense may need to be recorded before the cash payment is made. It is important to differentiate transfers expense (accounting perspective) from cash payments throughout this agreement.

The template agreement acknowledges that a Ministry may intend to give up its discretion and fully authorizethe transfer in the first year of an agreement (whether the agreement spans one year or multiple years), or a Ministry may choose to retain its discretion and incorporate further authorization steps over the term of a multiyear agreement. This template identifies a possible further authorization step to be the Legislative Assembly’s approval of an Appropriation Act in each future year.

Eligibility criteria could also result in recording transfers expense over the term of a multi-year agreement, as transfers are not recorded as an expense until they are authorized and eligibility criteria are met.

In all cases, a transfers expense must be recorded when the transfer has been authorized and any eligibility criteriahave beenmet, regardless of whether there is sufficient appropriation. However, an appropriation must be charged when a transfers expense is recorded. Therefore, sufficient appropriation must be obtained through special warrant, virements or other means available. As per The Financial Administration Act, 1993,if sufficient appropriation is not obtained, any amounts expensed in excess of the appropriation for the fiscal year is a first charge against a suitable appropriation in the following fiscal year.

“The Program” has been used throughout this template agreement and can be replaced with different wording to describe the purposes for which the financial assistance (transfer) is to be provided as outlined in Appendix “A” (e.g. delivery of the Program, the provision of Services, the construction of an asset, the purchase of an asset, conduct normal operations).

THIS AGREEMENT MADE this______day of ______, 20xx.

BETWEEN:

HER MAJESTY THE QUEEN in right of the Province of Saskatchewan, as represented by the Minister of ***** (hereinafter referred to as the "Minister”)

OF THE FIRST PART

-and-

********

(hereinafter referred to as the "Recipient")

Insert proper full legal name of the Recipient and address

(if a corporation - confirm status and name with Corporation’s Branch 787-2962)

OF THE SECOND PART

AUTHORIZATION

Authorization under accounting rules requires two actions by the transferring government: the legislative authority (noted in this section)must be in place; and the transferring government must exercisethe authority, whichindicates the government has made a decision to provide financial assistance andleaves the government with no discretion to avoid it.Often that evidence would be an agreement like this – as long as the agreement does not leave room for the government to avoid providing the financial assistance.

Whereas the Minister desires to support(the Program);

And Whereas the Minister is authorized to enter into an Agreement to providefinancial assistanceto the Recipientfor this purpose under the authority granted by sections xx of (insert legislation that authorizes the Agreement);

NOW Therefore, the Parties agree as follows:

1.0DEFINITIONS

For the purposes of this Agreement:

a)“Agreement” means this Agreement and includes all Appendices attached to this Agreement;

b)“fiscal year” means April 1st of one year up to and including March 31st of the next year.

c)“Program” means the xxxx(Program). (The program) purpose, objectives, outcomes and components are in Appendix “A”.

d)“Minister” includes a lawful delegate of the Minister.

2.0TERM(This contract may be for multiple fiscal years)

2.1The term of this Agreement is from April 1, 20xx to March 31, 20xx subject to extension or termination pursuant to section 8.0.

An issue with multi-year agreements is whether the full amount of the financial assistance (transfer) should be recorded as an expense in the first year of the agreement or whether an annual amount should be recorded as an expense in each year of the agreement.

When a multi-year transfer is fully authorized by the transferring Government upon signing an agreement that spans more than one year, the Government has lost its discretion to avoid proceeding with the transfer and a transfer expense for the full amount of the agreement would be required in the first year, if eligibility criteria have been met.
Alternatively, when the agreement contains a clause that indicates the government still has discretion because authorization has yet to occur in each of the future years, a transfer expense would be recorded in those future years when authorization has been granted, if eligibility criteria have been met.

Note that the eligibility criteria outlined in section 4.0 could also result in recording transfers expense over the term of a multi-year agreement, as transfers are not recorded as an expense until they are authorized and eligibility criteria are met.

Choose one of the following section 3.0’s:

3.0BINDING AND ENFORCEABLE OBLIGATION (applicable for one-year or multi-year agreements)

The following wording can be used for one-year agreements or where the full amount of a multi-year transfer is to be expensed in the first year, as long as eligibility criteria, if any, are met.

3.1The parties acknowledge that this Agreement creates binding and enforceable obligations including the obligation to provide financial assistance unless the obligation is suspended in accordance with this Agreement or this Agreement is terminated in accordance with its terms.

3.0FUTURE YEARS’ AUTHORIZATION(applicable for multi-year agreements only)

The following wording allows the government to retain its discretion until somepoint in futureyears when the Legislative Assembly appropriates the transfer funds. The transfer is expensed in future fiscal years, rather than expensing the full amount of the transfer in the first year.

3.1The parties acknowledge that this Agreement does not create a binding and enforceable obligation to provide financial assistance until:

a) the Legislative Assembly of Saskatchewan has appropriated funds out of which the financial assistance may be paid in the fiscal year in which the payment is to be made pursuant to this Agreement; and

b) theRecipient has met the eligibility criteria with respect to the financial assistance as set out in section 4.0.

4.0ELIGIBILITY CRITERIA(To be met by the Recipient)

Eligibility criteria are what the Recipient must do to qualify forthe financial assistance (transfer).Government transfers are not expensed until the eligibility criteria are met, except as noted in * below.

Eligibility criteria should be specific enough so that the termscan be assessed or measured for purposes of determining when transfer expenses should be recorded.

Examples of eligibility criteria include incurring eligible costs, providing certain services (e.g. hire X number of individuals), delivering a program, purchasing or constructing an asset or providing a report that evidences the Recipient has done something.

Sample wording (the examples provided below are not a complete list as there could be a number of other examples):

Example A - eligible after doing something

4.1In order to be eligible for financial assistance, the Recipient must have first (delivered the Program, providedthe services, performed research, constructed an asset, purchased an asset, incurred costs, been in operation, etc.) for the purposes described in “Appendix A”.

OR Example B - eligible after providing a report

4.1In order to be eligible for financial assistance, the Recipient must have first provided a report that provides evidence of the Recipient(doing something e.g. deliver the Program, provide the services, perform research, construct an asset, purchase an asset, incur costs, etc.) for the purposes described in “Appendix A”.

OR Example C - shared cost arrangements

Shared cost arrangements are between two parties that jointly share the financial responsibility for specific costs related to a project. Typically, authorization occurs at the point that the agreement is signed. In these arrangements, the eligibility criteria include the incurring of eligible costs by the Recipient. The transferring Government is required to record the expense at the point that costs are incurred by the Recipient.

4.1In order to be eligible for financial assistance, the Recipient must have first incurred eligible expenditures for the purposes described in “Appendix A”.

4.2For the purposes of paragraph 4.1, eligible expenditures include:

a) (list all eligible expenditures - e.g. funding to applicants, direct costs, indirect administration costs, capital asset purchases, etc.)

* Note that in the event a payment is made prior to the Recipient meeting the eligibility criteria in any of the examples above, the payment would be expensed on the basis that the transferring Government has made a decision to change the terms of the financial assistance (transfer). That is, eligibility criteria become stipulations that are expected to be met after receiving the financial assistance.

5.0 STIPULATIONS(Obligations of the Recipient)

Stipulations are what the Recipientis expected todo under the Agreement after being eligible for the financial assistance (transfer). Where a transferring Government has paid in advance of the Recipient meeting eligibility criteria, those eligibility criteria become stipulations that are expected to be met after receiving the financial assistance.

Conditions that are included as eligibility criteria in section 4.0, should not also be included as stipulations in this section. It should be clear whether a condition is an eligibility criterion or a stipulation.

Examples of stipulations that may be used (not intended to be a complete list):

5.xThe Recipient will (deliver the Program, provide the services, perform research, construct an asset, purchase an asset, incur costs, etc.) in accordance with the terms of this Agreement.

5.xThe Recipient agrees that it will practice good governance including (e.g. management of staff and fiduciary responsibility for the Program).

5.xAll payments made pursuant to this Agreement shall be used only for the purpose of providing (the Program) for which the payment was made and the Recipient shall promptly:

a)notify the Minister of the amount of any payments not used for the purpose of providing (the Program); and

b)unless otherwise directed by the Minister, refund such amounts in accordance with the Minister’s directions.

5.xThe Recipient will submit accountability reports as set out in section 7.0.

5.xThe Recipient will immediately notify the Minister if the requirements of this Agreement cannot be met by it or if the Recipient is unable to maintain adequate staff to provide (the Program).

6.0PAYMENT SCHEDULE

Government policy requires that the payment schedulebe based on the cash flow needs of the recipient. The timing of recording a transfer expense does not necessarily coincide with the timing of cash payments. A transfer expense arises for the transferring Government once a transfer is authorized and eligibility criteria have been met by the Recipient.

Any requirements included within this section of the agreement would be payment requirements and not eligibility criteria, unless specifically referred to as such, and therefore, would not affectthe recording of government transfers expense.

Note that in the event a payment is made prior to the Recipient meeting the eligibility criteria, the payment would be expensed on the basis that the transferring Government has made a decision to change the terms of the financial assistance (transfer). That is, eligibility criteria become stipulations that are expected to be met after receiving the financial assistance.

Sample Wording (the examples provided below are not a complete list as there could be a number of other examples):

6.1The Minister shall pay the Recipient, for the purposes described in Appendix “A”, in the amount of:

$xxxxx upon signing of this Agreement; and
$xxxxx upon the receipt of a progress and financial report, in the form and content acceptable to the Minister.

6.2Where, in the opinion of the Minister, the Recipient fails to comply with the provisions of this Agreement, the Minister may withhold any payment due to the Recipient until such time as the Recipient complies with this Agreement to the satisfaction of the Minister.

6.1The Minister shall pay the Recipient,for the purposes described in Appendix “A”, in the amount of $xxxxx per month (or quarter). The first payment shall be paid on the execution of the Agreement.

6.1The Minister shall pay the Recipient, for the purposes described in Appendix “A”, in the amount of $xxxxx upon meeting all of the eligibility criteria set out in section 4.0 of this Agreement.

6.1The Minister shall pay the Recipient,for the purposes described in Appendix “A”, in the amount of:

$xxxxx for fiscal year April 1, 20xx to March 31, 20xx
$xxxxxfor fiscal year April 1, 20xx to March 31, 20xx
$xxxxxfor fiscal year April 1, 20xx to March 31, 20xx

6.2The payments shall be made monthly (or quarterly). The first payment shall be paid on the execution of the Agreement.

6.3Where, in the opinion of the Minister, the Recipient fails to comply with the provisions of this Agreement, the Minister may withhold any payment due to the Recipient until such time as the Recipient complies with this Agreement to the satisfaction of the Minister.

6.1 The Minister shall pay the Recipient,for the purposes described in Appendix “A”, up to a maximum amount of:

$xxxxx for fiscal year April 1, 20xx to March 31, 20xx
$xxxxx for fiscal year April 1, 20xx to March 31, 20xx
$xxxxx for fiscal year April 1, 20xx to March 31, 20xx

6.2a) Thepayments shall be made based on the receipt of xxxx(e.g. monthly, quarterly) progress and financial reports, in the form and content acceptable to the Minister.

b) Payments are due xx days following the receipt of the reports referred to in clause (a).

7.0ACCOUNTABILITY REPORTS

Include details on the requirements to provide accountability reports not already identified elsewhere within the agreement.

8.0EXTENSION, EXPIRATION, TERMINATION

8.1In the event the parties to this Agreement wish to extend this Agreement, the parties may, in writing no later than xxxx(date), extend the term of this Agreement for an additional term of up to one year. All of the terms and conditions applicable to the Agreement on the date that it would have expired apply to the extended Agreement.

8.2The Ministry recognizes the importance of providing adequate notice to the Recipient in regards to the extension of this Agreement in order to allow for proper planning.

8.3Either party may terminate this Agreement, without cause, by giving the other party at least xx days written notice.

8.4The Minister may terminate this Agreement upon written notice to the Recipient in the event that:

(a) theRecipient has ceased to meet the eligibility criteria referred to in section 4.0;

(b) theRecipient has failed to comply with any of its obligations under section 5.0 or 7.0 and has failed to remedy such non-compliance within the period specified by the Minister in writing; or

(c) the Recipient becomes insolvent, makes an assignment or is petitioned into bankruptcy, or makes an assignment for the benefit of creditors, or a receiver or liquidator is appointed with respect to all or a portion of the Recipient’s business or property.

8.5 Upon termination of this Agreement, the Recipient will immediately repay to the Minister any amount already paid to the Recipient other than amounts which have been expended on (the Program) in accordance with this Agreement up to the effective date of the termination. Any amount owing under this paragraph shall be a debt due and owing by the Recipient to Her Majesty in right of Saskatchewan.

9.0 NON-LIABILITY OF THE MINISTER

9.1The Minister’s responsibility and liability with respect to (the Program) to be provided by the Recipient pursuant to this Agreement is limited solely to the payments to be made by the Minister in accordance with the terms of this Agreement.

10.0INDEMNIFICATION

10.1The Recipient will indemnify and save harmless the Minister and any officer or employee of the Ministry fromall actions, claims, demands, costs, and liabilities, including injury to persons (including death) or loss of or damage to property occasioned wholly, or in part, by any act or omission of the Recipient, its subcontractors, employees, or agents arising out of or relating to the performance of its obligations or duties under this Agreement, including any and all expenses, legal and otherwise, incurred in the defense of any claim or suit.

11.0GENERAL

11.1This Agreement is effective as of ______, 20xx, notwithstanding its date of execution.

11.2This Agreement will be governed by and construed in accordance with the laws of the Province of Saskatchewan, and the courts of Saskatchewan shall have exclusive jurisdiction with respect to all matters relating to or arising out of this Agreement.

11.3Any notice pursuant to this Agreement shall be given by registered mail, courier, facsimile or electronic transmission addressed to the relevant party as follows:

If to the Minister:

and

If to the Recipient: