Marine Advisory Board
Subcommittee on Costing Methods Terms of Reference

May 30, 1997

Background

The sources and uses of the Coast Guard's financial information are attracting more client focus because of Coast Guard's strategic plans for cost reduction and cost recovery. It is essential that the appropriate financial information is used for the decisions being made, that there is consistency in the data used by and for each region In discussions with clients, and that clients understand the financial information being provided.

Mandate

The subcommittee will investigate and analyse current Coast Guard costing methods, identify which costs should be included under a direct cost approach and recommend a framework for the direct cost approach that would be implemented for cost recovery from commercial shipping. The subcommittee will make the necessary recommendations for:

• the development and the implementation of the necessary tools that will help to monitor cost allocation and cost reduction over the long term; and,
• ensuring proper linkage with other subcommittees.

Terms of Reference

Phase I

Review current financial information, costing methodologies and government policies through briefings, presentations, working sessions, on-site visits, etc. Information would include:

• Government fiscal framework for budgeting and expenditure management;
• Treasury Board Cost Recovery and Charging Policy;
• Treasury Board Guide to the Costing of Outputs; and,
• Cost methodology used for Marine Services Fees

Phase II

Identify issues to be considered for review. e.g.:

• What role does the full cost of a service (Treasury Board User Fee Policy basis for user charges) have in establishing Marine Services Fees?
• How should the full cost be calculated?
• What is the definition of direct cost and which costs should be included?
• Should fees be based on actual costs or forecast costs?
• Which base of comparison should be used to guarantee that costing elements represent the lowest cost possible to provide services?
• Which reference time period should be used?
• How should the costs be allocated to the different client groups?

Phase III

Assess the Issues and provide advice where improvements can be made.

Phase IV

Final report to MAB

Membership

• Chairman: Marc Duluds, Sodas

Members:

• Donald Downing - The Coal Association of Canada
• Wade Elliot - Halifax-Dartmouth Port Development

Development:

• Paul Gourdeau - Fednav Ltd.
• Glen Mifflin - North Atlantic Petroleum
• Robert Lemirs - Great Lakes Pilotage Authority
• Kevin Hamilton - Coast Guard Resource Management
• Glen Condran - DFO Management Accounting

Timing:

• Initial meeting and briefing: June 10, 1997
• Review current financial information: to be defined
• Identify issues to be examined: to be defined
• Assess issues: to be defined
• Final report to MAB: July 1997.

Next meeting: June 10, 1997: Phase I and part of Phase II: Definition of direct costs.