6.19 In August 2005, NRCan management learned that CEEA-T was not meeting some of the terms of the contribution agreement. In particular, CEEA-T had not made payments to some of its subcontractors prior to submitting claims to NRCan for payment, in accordance with the contribution agreement. Up to that date, NRCan had paid $1.1 million to CEEA-T as part of the agreement and NRCan had sufficient evidence of CEEA-T`s bankruptcy. NRCan did not monitor or assess CEEA-T`s financial resources and the ability to complete the project on an ongoing basis. Despite the available evidence regarding the bankruptcy of CEEA-T, NRCan paid an additional $1.3 million to CEEA-T between September 2005 and March 2006. The CEEA-T Department considered that there were no more costs to bear after 31 March 2006. NRCan formally denounced the contribution agreement on July 19, 2006. 6.23 Under Section 34 of the Financial Administration Act, a service officer who can confirm the entitled payment must certify that the recipient is eligible or eligible. It is therefore an essential control of public money expenditure. This certification requirement was not met because the payments discussed above did not comply with the terms of the contribution agreements. Without limiting the scope of the compensation fees under the Financial Administration Act, it is considered that the Minister may charge on the contribution all amounts owed by the beneficiary of her Majesty the Queen under Canadian law under the legislation or contribution agreements, and the recipient must provide the Minister with all outstanding amounts if he asserts a right under Schedule 5.

6.6 We reviewed the management of NRCan`s five contribution agreements to determine the procedure by which they were issued and to verify NRCan`s actions based on its internal audit findings. We also considered whether the Department`s changes as a result of internal audits of its control and management practices in the relevant program area would be sufficient to prevent similar problems from recurring. 6.32 NRCan`s changes since then in its practices to manage contribution agreements in the area of the Office of Energy Efficiency`s program do not include adequate independent oversight outside the scope of the program to ensure that contribution agreements are consistent with the Financial Administration Act, the Canada Policy Council for Transfer Payments and NRCan`s transfer policy. The Department has not developed conflict of interest strategies and guidelines for private sector consultants and contribution agreements to avoid a repeat of conflicts of interest. The terms set out in a contribution agreement describe the government`s expectations of the recipient of the resources. It is important that the government defines compliance with these conditions to ensure that it achieves the desired results of the agreement. Similarly, essential control of spending on public funds is included in Section 34 of the Financial Administration Act, which requires that the amounts be paid according to the terms of an agreement. The European Commission and the European Organisation for Armament Cooperation (OCCAR) have signed contribution agreements for the management and implementation of two European Defence Programmes (EDIDP) 6.1. Information and advice and funding payments to individuals, organizations and other levels of government to conduct activities that support their objectives.

Transfers to individuals and organizations are usually made in the form of grants or contributions. “In-child contribution” (contribution in kind) refers to a contribution of material, goods, services or time that can be attributed to a dollar value, which would otherwise be purchased and paid for by the organization to obtain the results of the project.