President of the Treasury Board Scott Brison and Minister of Public Service and Procurement Carla Qualtrough will get new DMs. iPolitics/Matthew Usherwood

Treasury Board is asking all departments to sign blanket approvals allowing it to bypass federal financial rules in the event of Phoenix emergencies that could leave large numbers of Canada’s public servants unpaid.

Departments are being asked to seek ministerial permission to surrender or ‘delegate’ their financial authority to approve salary spending to Public Services and Procurement Canada (PSPC) so pay can be rushed through during an emergency.

The government has already had three such emergencies, including what was called a near catastrophe this past Christmas. PSPC sought a rush authorization then to make payroll fixes on time and departments were told it was a one-time request.

Treasury Board is now seeking a standing or open-ended approval that would remain in force until March 2021. The need to extend beyond that date will be re-assessed then.

The approvals at the centre of the request are provisions in the Financial Administration Act (FAA), the government’s bible for financial management and accountability. Under the FAA, only mangers with delegated authorities for sections 33 and 34 – can approve transactions to trigger payments.

Canada’s public service is anchored in a system, in which cabinet ministers are responsible for their departments. A department needs the minister’s approval to turn over its financial authority over to another department.

The request sent to departments said PSPC won’t exercise the approvals without first getting the blessing of Comptroller-General Roch Huppe, the government’s chief financial officer. He would confirm the nature of the emergency and whether using the blanket authorization is appropriate.

With Huppe’s approval, PSPC Associate Deputy Minister Les Linklater, the point man on stabilizing the error-prone Phoenix system, will be able to exercise sections 33 and 34 on behalf of departments if an emergency erupts risks leaving people unpaid.

Departments would immediately be notified of all the emergency transactions approved on their behalf.

According to the request, an emergency is described as any “instance where there is a significant risk that employees will not receive their pay” and there is not enough time to approve transactions through the normal approval route.

“Such situations are characterized by their timing. They occur at, or close to, the end of the pay period and result in operational challenges for departments to validate and authorize pay transactions in the normal manner,” said a memo prepared for ministers.

The big worry is that Phoenix could run into some kind of glitch or failure, which leaves departments without enough time for the normal approvals for outstanding transactions before the bi-weekly pay run.

This situation could be caused by any number of problems: system or power outages; major system failure; bugs or errors in the pay system or the various systems that feed into it.

“This means that outstanding transactions cannot be processed and affected employees would not receive their pay,” said the memo.

Departments have until May 1 to sign the request.

PSPC wouldn’t elaborate on the nature of the previous emergencies other than they related to ‘technical’ problems. The first was a Bell-Aliant server outage; the second resulted from “performance issues” with the pay administration system and the most recent was “critical bugs in the system.”

That one resulted in the possibility of 27,000 people not getting payments. Most would have been paid, but payments usually withdrawn from their pay cheques, such as mortgage and family support payments, would not have been deducted.

The glitch at Christmas created panic when it was realized a backlog of transactions, such as overtime, time sheets and some allowances, hadn’t been approved which would have affected the Dec. 27 pay run for 50,000 employees.

Most would have paid but not received any ‘extra duty payments,’ but for 7,000 people, their regular pay was at stake.

A notice was fired off to all deputy ministers, heads of human resources and chief financial officers asking for rush and blanket approvals of all their departments’ pay transactions as required under sections 33 and 34 of the Financial Administration Act. By all accounts, most of the approvals were issued in less than an hour.

Some say the need for a standing approval drives home just how fickle and unfixable Phoenix is when problems that risk disaster keep cropping up — and PSPC clearly worries that could continue for a few more years.

Paying employees is a top priority for the government and the bureaucracy is under incredible pressure to stabilize Phoenix. The crisis has damaged its reputation, demoralized employees and unions are ramping up demands for damages.

The Treasury Board proposal raises alarms for Dany Richard, the president of Association of Canadian Financial Officers, which represents federal accountants. He said the plan is risky and the government has clearly decided in managing Phoenix that paying people is more important than rules and oversight.

“I’m assuming the government did a risk assessment and determined that the consequences of many employees not being paid is greater than having a few isolated pay issues that can be corrected at a later time,” he said.

“Who will be accountable? When there is an issue, and it will happen, people will be asking who authorized this especially if it’s a large amount. The government may be willing to take that risk versus people not getting paid, which is more important.

Richard said the risk is delegating section 34, the central internal control that ensures whatever goods, service or pay for work the government is being charged for was, in fact, done.

For example, an employee enters an overtime claim into Phoenix. The manager with section 34 authority must approve the time worked and employee with section 33 issues the payment.

Richard said only the departmental manager with section 34 authority will know if an employee is entitled to the $5,000 being claimed or catch a mistaken overtime claim for 200 hours which should have been two hours. PSPC won’t know.

“These blanket approvals can be very dangerous. There needs to be some type of oversight to attest to these transactions which they might have in the background.

The departments have been told they must conduct a “post payment verification,” to later validate the payments.

“The department will ensure that appropriate reconciliation takes place and that post payment verification will occur on a timely basis to certify the accuracy of salary payments made under such circumstances. Any payment inaccuracies will be addressed through the normal salary reconciliation process,” said the memo.

Richard warned that can create problems too.

“I want my members to be paid on time, but we can’t bypass internal controls as that might create bigger problems.”