Contribution Funds for Non-governmental Organizations - a Handbook
5.0 Budget compliance and follow-up
Financial reports required for interim payments (PA-4 forms – Request for Interim Payment – see Appendix B) should show comparative data for budgeted revenues and expenses as outlined in the contribution agreement budget and actual ones. This comparison should be shown for each budget line. These reports should also include figures of forecasted revenues and expenses when there is a request for an advance payment. Please note that the budgeted amounts are expected costs for the full length of the agreement, while actuals are those costs incurred to date. The comparative data allows both the recipient and the Department of Justice Canada to track actual expenses against the original budgeted amounts and can alert the organization to areas where costs might be either overestimated or underestimated.
In some cases, it may become clear that the budgeted amount will not be sufficient to cover expenses incurred for a given budget line (that is, cumulative actual costs plus forecasted expenses exceed the budgeted amount). The recipient should advise the Department of Justice Canada of the situation and propose a reallocation of funds from budget lines where the budgeted amount is likely to exceed the expenses.
The recipient is allowed to reallocate sums between budget lines with the exception of administration costs, as long as this reallocation does not exceed the maximum percentage stated in the contribution agreement. Any amount that exceeds the stated limit noted in the contribution agreement should be brought to the Department of Justice Canada’s attention as soon as possible for its’ acceptance, but no later than the time when the final claim is submitted. This permission, if granted, should be documented and kept on file.
The total budgeted amount can never be exceeded, as it represents the maximum amount of the agreement. Should the recipient realize that the total amount of the budget is not sufficient to cover the total actual costs, the recipient should inform the Department of Justice Canada immediately. It should be noted, however that the maximum budgeted amount detailed in the contribution agreement does not necessarily correspond to the amount the recipient will get, as the payments made by the Department depend on the actual costs incurred and approved by the Department, as well as on the other revenues earned or received by the recipient. For example, if the project costs are less than originally budgeted, then the amount paid by the Department will be less than the maximum amount available.
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