Why do we need to obtain money in advance for third party agreements with Non-governmental Organizations?
The Specified Purpose Account policy requirement 6-J states that ” SPA accounts cannot be allowed to go into a debit balance and disbursements must not be made from the account if there are insufficient funds at the time payment is made”. There is always a risk when dealing with third party organizations. If a payment is made before funds are received, departments encounter the risk that these organizations may not be in a position to pay the amounts owed. Also there is a cost for the government in supporting these payments up front (cost of funds, i.e. lost in potential interest on the money that is used from the Consolidated Revenue Fund to assume these payments). The advance amounts can ultimately be considered interest free loans for these third party organizations.
