Standard operating procedure
SOP 9.1 Debt management – carbon price
shortfall charge
Published date:
Availability:
Internal only
Purpose:
To detail the procedure for the Regulator’s
management of debt recovery in relation to a carbon
price shortfall charge under the Clean Energy
Act 2011.
Owner:
Executive General Manager of Corporate Services
Category:
Debt management
Sub-category:
Contact:
Manager of Finance and Procurement Section
The electronic version published on the intranet is the current standard operating
procedure.
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Contents
Standard operating procedure .............................................................................................. 1
SOP 9.1 Debt management – carbon price shortfall charge................................................. 1
Contents ............................................................................................................................... 2
Introduction ........................................................................................................................... 3
Scope ................................................................................................................................ 3
Standard operating procedure .............................................................................................. 4
Legislative framework ....................................................................................................... 8
Related policies and references ........................................................................................ 8
Chief Executive Instructions .......................................................................................... 8
Policies .......................................................................................................................... 8
Standard operating procedures ..................................................................................... 8
Other references ........................................................................................................... 8
Consultation.......................................................................................................................... 9
Endorsement ........................................................................................................................ 9
Approval ............................................................................................................................... 9
Version control.................................................................................................................... 10
Appendix A: BPM 9.1 Carbon price shortfall charge ........................................................... 11
Appendix B: Letter of demand template ............................................................................. 12
Appendix C: Costing template ............................................................................................ 14
Appendix D: Minute template.............................................................................................. 15
Minute ................................................................................................................................. 15
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Summary of main points
This standard operating procedure details the process used by the Regulator to
manage debt recovery of the carbon price shortfall charge under the Clean Energy
Act 2011.
This standard operating procedure applies to Central Debt Management (CDM),
Finance and Procurement Section, Legal Services Section (Legal) and business
areas.
Introduction
This standard operating procedure (SOP) branches out from SOP 9.0 Debt management.
SOP 9.0 is an overarching SOP for debt management and provides a starting point for
officials who manage the debt recovery process, from raising an invoice to escalating a
debt matter to Legal.
Scope
The scope of this SOP is limited to the debt management of the carbon price shortfall
charge under the Clean Energy Act 2011.
The circumstances surrounding each carbon price shortfall charge debt will be different and
a situation may arise which does not fit neatly within this procedure. If you are unsure about
the next step to take, please contact CDM or Legal.
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Standard operating procedure
The management of a debt relating to a carbon price shortfall charge under the Clean
Energy Act 2011, may lead into one of several debt management options at any point
during the debt management process. These options are described in the following SOPs:
•
SOP 9.2 Request for deferral
•
SOP 9.3 Request for instalment arrangement
•
SOP 9.4 Debt waiver, and
•
SOP 9.5 Remitting a debt.
Person/position/team Responsibility
Account holder /
debtor
1. Acquit liability or report estimate to the Regulator.
2. Action payment of shortfall charge debt.
3. Dispute shortfall charge debt.
The debtor can dispute the debt with the business area at any
point during the process if they believe the debt is not valid or
incorrect. Ample opportunity is provided throughout the debt
management process for the debtor to dispute the debt before
penalties are incurred.
Business area
1. Check whether the account holder / debtor has acquitted
their liability or reported an estimate when the unit
shortfall charge becomes due and payable.
The shortfall charge becomes due and payable five business
days after 15 June or five days after 1 February.
If the account holder / debtor has acquitted their liability or
reported without error, the process ends. If they have not, the
account holder is liable to pay a shortfall charge.
2. Discuss the situation with the debtor by phone.
Document the key points from each phone call with the debtor
in a file note.
3. Review and validate the debt, then notify Finance, Legal
and the Senior Leadership Team of the outstanding
shortfall charge.
4. Raise and issue a notice of assessment for the
outstanding shortfall charge.
An officer should raise and issue the notice of assessment for
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shortfall charge. The relevant revenue nominals from the
Chart of Accounts are detailed in BPM 9.0 Debt management.
Within 15 days outstanding period
5. Run an aged debtors report and liaise with the debtor via
phone and letter.
An officer should run an aged debtors report every three days
or more frequently if required.
The debtor may dispute a debt at any point. This will require
the preparation of a debt file and handover to Central Debt
Management (CDM).
6. Identify debts that are outstanding and request payment
from the debtor by phone.
Debts that are five business days outstanding should be
followed up immediately if they are deemed to be high value
or high risk to the Regulator (refer to P9 Debt management
policy for the definition of high value and high risk debts).
High value or high risk debts should be referred to CDM and
Legal.
Document the key points from each phone call with the debtor
in a file note. This is important as it will form part of the debt
file which CDM and Legal may require.
7. Liaise with Legal before issuing a letter of demand and
make a file note.
Notify CDM and Legal of the debt at this point. Advise the
debtor via phone that the matter is being passed to CDM and
legal action will be taken if required.
Document the key points from each phone call with the debtor
in a file note.
8. Prepare and send out a 15 day letter of demand using the
template in Appendix B: Letter of demand letter template.
9. Prepare the debt file.
Prepare and escalate the debt file to CDM within the 15 days
outstanding period or by 15 July at the very latest.
The debt file should include evidence of the debt, the invoice,
letters sent to the debtor, details of phone calls, confirmation
of the debtor's contact details and sign-off to pass to CDM.
The project officer should also notify Legal at this point.
Request payment by phone before passing to CDM.
Document a file note of the key points from each phone call
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with the debtor.
Central Debt
Management (CDM)
1. Receive request from the business area to continue debt
recovery management.
Respond to the business area, accepting the handover.
Record the debt case on a CDM debt register.
2. Review the debt file.
The debt manager should oversee and administrate all debt
matters referred to CDM. The handover point from the
business area is the point at which the debt file is passed
over.
Assess whether the debt is economic to recover, ie estimate
whether the value of the debt is likely to exceed the costs of
recovery. Refer to Appendix C: Costing template. If the debt is
not economic to recover, proceed to write-off at step 6.
3. Identify any set-off, third party recovery or remission
options.
There may be applicable set-off provisions to reduce all or
part of a debt. Similarly, remission provisions may be available
to remit all or part of a debt.
The Regulator has a power to demand payment from a third
party which owes or may later owe money to the debtor, but
only in relation to the particular debts under the Renewable
Energy Target scheme.
Refer to Appendix A: BPM 9.1 Debt management – Carbon
price shortfall charge, for legislative references that might
apply to the debt.
4. Prepare recommendation for legal action.
Update the debt file and prepare a minute for the CFO
seeking approval to obtain advice from Legal on litigation
options. Refer to Appendix D: Minute template.
If the CFO approves, provide the updated debt file and signed
CFO minute to Legal. If the CFO declines, continue to the
next step.
5. Continue to follow up the debt.
Continue to request payment from the debtor by phone.
Document the key points from each phone call with the debtor
in a file note.
Reconsider whether the debt is economic to recover.
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6. Obtain CFO approval for write-off.
If the debt appears to be not economic to recover, prepare a
minute for the CFO to seek approval for writing off the debt.
Refer to Appendix D: Minute template.
7. Process the write-off entry in TechOne (FMIS).
Legal
1. Provide Legal assessment of the case and advise on debt
recovery options.
2. Liaise with CDM and external legal providers as
appropriate.
Consider debt recovery litigation options as per the P9 Debt
management policy.
Prepare documentation for any external legal providers who
will be engaged. This documentation should include the
updated debt file received from CDM and a request for advice
on the appropriate legal action.
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Legislative framework
Reference
Section or regulation
Clean Energy Act 2011
Refer to Appendix A
Financial Management and Accountability Act 1997
Refer to Appendix A
Financial Management and Accountability (Finance Minister to
Chief Executives) Delegation 2010.
Refer to Appendix A
Corporations Act 2001
Refer to Appendix A
Related policies and references
Chief Executive Instructions
•
CEI 9.0 Managing debt
•
CEI 9.1 Recovery of debts
•
CEI 9.2 Non-recovery (write-off) of debts
•
CEI 9.3 Waiving debts
•
CEI 9.4 Payment by instalments or deferral of the time for payment
•
P9 Debt management policy
•
CER Records management policy
Policies
Standard operating procedures
•
SOP 9.2 Request for deferral
•
SOP 9.3 Request for instalment arrangement
•
SOP 9.4 Debt waiver
•
SOP 9.5 Remitting a debt
Other references
•
CER Approach to debt recovery (Legal)
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Consultation
Internal stakeholders:
Finance and Procurement Section
Legal Services Section
Renewable Energy Target Liability
Section
Liability Management Operations
Section
Carbon Farming Initiative Section
External stakeholders:
Nil
Endorsement
Endorsed on:
/07/2013
Robert Ford
Financial Accountant
Corporate Services Division
By:
Signature:
Approval
Endorsed on:
/07/2013
Chris Payne
Financial Controller
Corporate Services Division
By:
Signature:
Period of effect:
June 2013–June 2015
Review date:
June 2015
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Version control
Version
1.0
Date
/07/2013
Author
Approver
Scott O’Donnell
Chris Payne
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Appendix A: BPM 9.1 Carbon price shortfall charge
Clean Energy Regulator
BPM 9.1 Debt management – carbon price shortfall charge (LMO)
Account holder
Business area
CDM
Legal
Notified by email of high
value or high risk debt
Start
Acquitting liability or
reporting an estimate
Have they acquitted or is
there an estimation error?
Prepare recommendation for
legal action and/or engage
debt collector
End
Yes
Minute for
CFO
LR1
Consider serving a
‘Creditors statutory
demand for payment’
Notice of
assessment
Investigate & notify
Finance, Legal & SLT
LR4
FMA Del:
LR11
LR12
Part 12 Payment by instalments
Part 13 Deferring the time for payment
LR7
Approval to escalate?
LR3
Send notice of
assessment for shortfall
charge
s.34(1)(a) Waive the Commonwealth’s right to
payment of an amount owing to the
Commonwealth.
s.34(1)(b) postpone any right of the
Commonwealth to be paid a debt in priority to
another debt or debts.
s.34(1)(c) Allow payment by instalments of an
amount owing to the Commonwealth.
s.34(1)(d) Defer the time for payment of an
amount owing to the Commonwealth.
s.47(1) Write off debts to the Commonwealth as
authorised by an Act, or which are deemed not
legally recoverable or considered uneconomical to
pursue.
s.47(3) A waiver may be made either
unconditionally or on the condition that a person
agrees to pay an amount to the Commonwealth in
specified circumstances.
s.35 Set-off
LR6
Yes
Discuss and confirm
situation by phone &
make file note
FMA Act:
LR5
LR16
No
Liable for shortfall
charge
Legislative Recognition Points
Clean Energy Act 2011:
LR1
s.134 When unit shortfall charge becomes due
and payable (5 days after 15 June or 5 days after
1 February).
LR2
s.135(1) Late payment penalty
s.213(1) Late payment penalty (compliance with
relinquishment requirements under s.212)
LR3
s.130 Remission of unit shortfall charge imposed
on estimation error unit shortfall
s.134A Remission of unit shortfall charge –
voluntary disclosure by liable entity of incorrect
emissions number
LR4
s.137 Set-off
s.215 Set-off
Yes
Consider remission of
whole or part of amount
payable – refer BPM 9.5
Have they paid shortfall
charge by 5 business days
after 17 June?
LR8
LR9
Legal assessment &
advice as requested
LR10
Review debt file
No
Note: Late payment penalties may
be applied after payment is made
LR15
End
Identify any recovery
from 3rd party
15 day period
Aged debtors report run
by the Debt manager
weekly
Information provided about
outstanding debts to relevant
officers for follow-up
Request payment by
phone & make file note
No
LR4
Corporations Act 2001:
LR16
s.459E Creditor may serve statutory demand on
company
Identify any set-off
15 day letter
of demand
Liaise with Legal before
issuing letter of demand
& make file note
High value debt or high
risk?
Yes
Request payment by
phone & make file note
Notify Finance and SLT
Prepare debt file
Policy References
P9 Debt Management
Yes
No
Is the debt economic
to recover?
Request payment by
phone & make file note
Finalise debt file
Cut-off date 15 July
Acronyms
LRR – Legislative Revenue Recognition point
CER – Clean Energy Regulator
FMIS – Financial Management Information System
CDM – Central Debt Management
Continue to follow up
Debt file should include:
- evidence of the debt
- invoice
- letter of demand
- details of phone call made to debtor
- confirmed contact details of debtor
- signed off to pass to CDM
No
Prepare minute for CFO
approval
Note 1: At any point during the process
above, the management of a debt may
lead into one of the debt management
options.
Note 2: Debt may be disputed at any
point. This will require the preparation of
a debt file and pass over to CDM.
Note 3: Penalty interest can be applied.
Refer to LR2, LR13 & LR14.
Minute for
write-off
Debt management options
LR12
LR8
BPM 9.2
Request for deferral
LR11
LR7
BPM 9.3
Payment by instalment
arrangement
LR5
BPM 9.4
Debt waiver
LR10
Obtain CFO approval
for write-off
LR9
LR3
BPM 9.5
Remitting a debt
Process write-off entry
End
Process by which the Regulator manages debt recovery
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Appendix B: Letter of demand template
File No: Insert file number
Letter of demand
Mr/Ms/Miss Insert Name
Insert Position
Insert Company
Insert Street Address
Insert Suburb Insert State Insert Postcode
14 March 2014
Dear Insert Name ,
We refer to our correspondence to you on [insert date]. We also note [your response of xxxx date/
that you did not respond].
We note that Debtor Name remains liable to pay [use relevant term from legislation eg unit shortfall
charge] under the Insert relevant Act (the Act). The details of each [unit shortfall charge etc] are set
out in Attachment A.
In accordance with sections Insert relevant sections of the Act, the charges were payable on
.
Further, and in accordance with section Insert section of the Act, interest is payable on the
outstanding amounts. At present, the amounts outstanding and the interest payable by you are:
Charge type
Amount
Charges specified in Tax Invoice xxxxxx
$
Interest specified in Tax Invoice xxxxxx – calculated to 30 June 2013
Interest rate 11.62% p.a. to 30 March 2013; 11.37% p.a. to 30 June 2013
Interest specified in Tax Invoice xxxxxx – calculated to 31 July 2013
Interest rate 10.66 % % p.a.
Interest specified in Tax Invoice xxxxxx – calculated to 31 August 2013
Interest rate 10.66 % % p.a.
Interest specified in Tax Invoice xxxxxx – calculated to 30 September 2013
Interest rate 10.66 % % p.a.
Outstanding liability as at
$
$
$
$
$
GPO 621 Canberra ACT 2601 T 1300 553 542 E [email protected] W www.cleanenergyregulator.gov.au
Interest is accruing on the charges at the current rate of $
apply from Insert date).
per day until
(A new interest rate will
We demand payment of the outstanding liability, being $ Amount + $x per day interest/penalty for each
day from tomorrow onwards within Number of[usually 7 or 14] days from the date of this letter. Note that
you will need to calculate the interest/penalty payable up to and including the day we receive payment. Please
contact us if you need to confirm the amount on the day you make payment.
If you do not comply with this demand, the Clean Energy Regulator may commence legal proceedings to
recover the debt. This letter may be used as evidence or in support of those legal proceedings.
If you wish to discuss the contents of this letter, you must contact Insert business area contact on Phone
number or via [email protected] within 7 days of the date of this letter.
Yours sincerely
Insert name
Executive General Manager
Insert division
Clean Energy Regulator
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Appendix C: Costing template
Assessment of whether recovery of a debt is economical
Business area staff time and resources
$ xxx
Central Debt Management staff time and resources
$ xxx
Legal area staff time and resources
$ xxx
Total cost of recovery of debt
$ xxx
Value of debt
$ xxx
Surplus/(Deficit)
$xxx/($xxx)
Recovery of the debt is economical if the value of debt exceeds the total cost of recovery of
debt, ie surplus.
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Appendix D: Minute template
Minute
Attention:
Insert name
Executive General Manager / Chief Financial Officer
Subject:
Date:
From:
Insert name
Director - Finance and Procurement Section
Background
< xxx >
Recommendations
< xxx >
Sign-off
I agree to the final recommendation above:
____________________________________
Insert name
Executive General Manager / Chief Financial Officer
Corporate Services
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