ARCHIVED - Fisheries and Oceans Canada - Quarterly Financial Report for the quarter ended September 30, 2018
1. Introduction
This quarterly financial report has been prepared by management as required by section 65.1 of the Financial Administration Act and in the form and manner prescribed by the Treasury Board. The quarterly report should be read in conjunction with the Main Estimates as well as Budget 2017 and Budget 2018.
This quarterly report has not been subject to an external audit or review.
Further details on Fisheries and Oceans Canada's authority, mandate and programs may be found in the Departmental Plan and the Main Estimates (Part II).
1.1 Basis of Presentation
This quarterly report has been prepared by management using an expenditure basis of accounting. The accompanying Statement of Authorities includes Fisheries and Oceans Canada's spending authorities granted by Parliament and those used by the Department consistent with the 2018-19 Main Estimates, Budget 2018 Measures and the Operating and Capital Budget Carry Forward. This quarterly report has been prepared using a special purpose financial reporting framework designed to meet financial information needs with respect to the use of spending authorities.
The authority of Parliament is required before moneys can be spent by the Government. Approvals are given in the form of annually approved limits through appropriation acts or through legislation in the form of statutory spending authority for specific purposes.
The Department uses the full accrual method of accounting to prepare and present its annual departmental financial statements that are part of the departmental results reporting process. However, the spending authorities voted by Parliament remain on an expenditure basis.
2. Highlights of the Fiscal Quarter and the Fiscal Year-to-Date (YTD) results
The following section highlights the financial results and provides explanations for the fiscal quarter ended September 30, 2018 as compared to the same period last year.
Highlights of the Fiscal Quarter and the Fiscal Year-to-Date (YTD) results (thousands of dollars)
| 2017-18 Authorities as at September 30, 2017 | 2018-19 Authorities as at September 30, 2018 | Variance in Authorities | Expenditures during the quarter ended September 30, 2017 | Expenditures during the quarter ended September 30, 2018 | Variance in Expenditures | |
|---|---|---|---|---|---|---|
| Vote 1 – Net Operating expenditures | 1,525,242 | 1,607,896 | 82,654 | 372,538 | 407,444 | 34,906 |
| Vote 5 – Capital expenditures | 944,403 | 758,087 | (186,316) | 184,339 | 645,263 | 460,924 |
| Vote 10 – Grants and Contributions | 136,736 | 208,986 | 72,250 | 18,901 | 27,490 | 8,589 |
| Statutory Authorities | 135,742 | 139,039 | 3,297 | 29,894 | 34,025 | 4,131 |
| Total | 2,742,123 | 2,714,008 | (28,115) | 605,672 | 1,114,222 | 508,550 |
Statement of Voted and Statutory Authorities
Total budgetary authorities available for use decreased in 2018-19 from those in 2017-18 by $28.1 million (1.0%). This is the result of an increase in Vote 1 authorities of $82.7 million, a decrease in Vote 5 authorities of $186.3 million, an increase in Vote 10 authorities of $72.2 million, and an increase in spending authority for statutory payments of $3.3 million.
Some of the amounts presented in this table represent the achievement of milestone projects as well as planned changes in the funding profile of initiatives. As well, some variances are due to timing of the authorities granted by Parliament. As such, the negative amounts do not represent cuts to program spending.
| Explanation of Changes (2018-19 compared to 2017-18) |
Change (thousands of dollars) |
|---|---|
| Vote 1 – Net Operating expenditures | |
| Funding for the Oceans Protection Plan to improve marine safety and protect Canadaʼs marine environment | 57,611 |
| Funding to maintain mission-critical services to Canadians (e.g. fisheries management activities and maintenance of the fleet for continued safety and security of Canadian waters) | 30,003 |
| Funding for the 2018 Budget measure "Renewing Canada's Network of Small Craft Harbours" | 28,128 |
| Funding for signing the collective agreements | 26,207 |
| Funding for the 2018 Budget measure "Protecting Canada's Nature, Parks and Wild Spaces" | 15,420 |
| Funding to expand the Aquatic Invasive Species Program | 6,219 |
| Funding for the 2018 Budget measure, Protecting Marine Life, to implement a comprehensive initiative for the protection and recovery of endangered whale populations | 5,497 |
| Other Departmental Requirements | 2,600 |
| Operating Budget Carry Forward | (20,857) |
| Funding profile change for the upgrade of federal infrastructure assets | (20,799) |
| Sunsetting funding for the removal of the Kathryn Spirit vessel | (20,000) |
| Transfer between votes | (14,868) |
| Sunsetting funding for Species at Risk | (7,486) |
| Funding profile change for the implementation of a World-Class Tanker Safety System South of 60° North Latitude (Phase II) | (5,021) |
| Sub-total Net Operating expenditures | 82,654 |
| Vote 5 – Capital expenditures | |
| Funding for the 2018 Budget measure "Renewing Canada's Network of Small Craft Harbours" | 56,064 |
| Funding for the Oceans Protection Plan to improve marine safety and protect Canadaʼs marine environment | 43,632 |
| Funding to maintain mission-critical services to Canadians (e.g. fisheries management activities and maintenance of the fleet for continued safety and security of Canadian waters) | 36,943 |
| Transfer between votes | 10,802 |
| Transfer from Transport Canada to Fisheries and Oceans for the Port de Carleton | 10,500 |
| Capital Budget Carry Forward | 2,102 |
| Funding profile change for the upgrade of federal infrastructure assets | (207,278) |
| Funding profile change for the Canadian Coast Guard Vessels, Lifeboats and Helicopters | (138,152) |
| Other Departmental Requirements | (929) |
| Sub-total Capital expenditures | (186,316) |
| Vote 10 – Grants and Contributions | |
| Funding to support the implementation of the Atlantic Fisheries Fund Program | 52,333 |
| Funding for the Oceans Protection Plan to improve marine safety and protect Canadaʼs marine environment | 16,705 |
| Funding for the enhancement and expansion of the Indigenous fisheries program suite | 7,325 |
| Funding for the Fisheries and Aquaculture Clean Technology Adoption Program | 4,136 |
| Transfer between votes | 4,066 |
| Other Departmental Requirements | 2,685 |
| Funding to support negotiations on fisheries and marine matters | (15,000) |
| Sub-total Grants and Contributions | 72,250 |
| Statutory | |
| Sub-total Statutory Authorities | 3,297 |
| Total Authorities | (28,115) |
In the second quarter of 2018-19, total budgetary authorities available for use amounted to $2,714.0 million compared to $2,480.8 million reported in the first quarter of 2018-19, which represents an increase of $233.2 million. This is primarily the result of the receipt of the Operating and Capital Budget Carry-Forwards as well as the funding for the 2018 Budget measure “Renewing Canada’s Network of Small Craft Harbours”.
Authorities Used Analysis
In the second quarter of 2018-19, total budgetary expenditures amounted to $1,114.2 million compared to $605.7 million reported in the same quarter of 2017-18, which represents an increase of $508.5 million or 84.0%.
Authorities used in Vote 1, Net Operating expenditures, increased by $34.9 million compared to the same quarter last year representing an increase of approximately 9.4% between the two years. The increase is mostly due to the hiring of staff and transportation and communication costs in support of the Oceans Protection Plan and the Departments’ efforts to maintain mission-critical services to Canadians.
Authorities used in Vote 5, Capital expenditures, increased by $460.9 million compared to the same quarter last year representing an increase of approximately 250.0% between the two years. The increase in capital expenditures is mainly due to the purchase of three medium icebreakers offset by the funding profile change to our Federal Infrastructure investments as the majority of these initiatives have been successfully completed and the winding down of initiatives such as the Offshore Fisheries Science Vessels.
Authorities used in Vote 10, Grants and Contributions expenditures, increased by $8.6 million compared to the same quarter last year representing an increase of approximately 45.4% between the two years. The increase is mostly aligned with the incremental investments in transfer payment programs in 2017-18. Some examples are the Coastal Restoration Fund which support the implementation of the Oceans Protection Plan and the Aboriginal Fisheries Strategy which supports aboriginal communities and organizations to more effectively collaborate with each other in the management of sustainable fisheries, aquatic and oceans resources.
Statutory authorities increased by $4.1 million compared to the same quarter last year representing an increase of approximately 13.8%. The increase to contributions to employee benefit plans is directly aligned with the hiring of new incremental staff.
Statement of Departmental Budgetary Expenditures by Standard Object
The increase of $508.5 million in total net budgetary expenditures in the second quarter of 2018-19 as compared to the same quarter in 2017-18 is reflected primarily in the net effect of the following standard objects of expenditures:
Expenditures related to Professional and Special Services decreased by a total of $72.2 million in the second quarter of 2018-19 when compared to the same quarter of 2017-18. The decrease is mainly due to the funding profile change to our Federal Infrastructure investments as the majority of these initiatives have been successfully completed and the winding down of initiatives such as the Offshore Fisheries Science Vessels.
Expenditures related to Rentals increased by a total of $3.4 million in the second quarter of 2018-19 when compared to the same quarter of 2017-18. The increase is mainly due accommodations costs, equipment rentals and vessel charter services.
Expenditures related to Repair and Maintenance decreased by a total of $15.9 million in the second quarter of 2018-19 when compared to the same quarter of 2017-18. This is primarily attributable to fluctuations in the Canadian Coast Guard vessel maintenance schedule. In addition, this decrease is partially due to some Vessel Life Extension work that now appears under Acquisition of Machinery and Equipment, as the Department has aligned and adjusted its approach to categorizing capitalizable extension projects.
Expenditures related to Utilities, Materials, and Supplies increased by a total of $3.8 million in the second quarter of 2018-19 when compared to the same quarter of 2017-18. The increase is mainly due to increased diesel fuel purchases by the Canadian Coast Guard.
Expenditures related to the Acquisition of Land, Buildings and Works decreased by a total of $17.8 million in the second quarter of 2018-19 when compared to the same quarter of 2017-18. The decrease is mainly due to the funding profile change to our Federal Infrastructure investments as the majority of these initiatives have been successfully completed.
Expenditures related to Acquisition of Machinery and Equipment increased by a total of $572.0 million in the second quarter of 2018-19 when compared to the same quarter of 2017-18. The increase is mainly due to the acquisition of three medium icebreakers.
Expenditures related to Transfer Payments increased by a total of $8.6 million in the second quarter of 2018-19 when compared to the same quarter of 2017-18. The increase is aligned with the incremental investments in transfer payment programs in 2017-18. Some examples are the Coastal Restoration Fund which support the implementation of the Oceans Protection Plan and the Aboriginal Fisheries Strategy which supports aboriginal communities and organizations to more effectively collaborate with each other in the management of sustainable fisheries, aquatic and oceans resources.
Other Subsidies and Payments increased by $36.8 million in the second quarter of 2018-19 when compared to the same quarter of 2017-18. The majority of the increase is due to timing of the reallocation of the Interdepartmental Settlement (IS) in our department’s financial system. The variance is also attributed to a foreign exchange rate loss on ice breaker payments issued in U.S. dollars and an increase in expenditures related to timing of payments with regards to International Fisheries Commissions Agreements.
3. Risks and Uncertainties
Fisheries and Oceans Canada operates in a dynamic environment that is affected by a number of factors, including: increased northern development; expansion of navigable waters; environmental changes; climate change; severe weather events; demographics; technological advances; changing maritime safety and security demands; and global geopolitical and economic conditions. The Department continues to assess how it conducts its business, provides services and delivers its programs to meet client and stakeholder needs. The Department maintains a Corporate Risk Profile which identifies and assesses high-level risks that could affect the achievement of its objectives and priorities. Additional information regarding the Department’s key risk areas is presented in the 2018-19 Departmental Plan.
Certain risks would have financial impacts should they materialize, for example many factors affecting the timing of transfer payments lie outside the control of the Department and could require funds to be reprofiled to future years. To minimize these impacts, the Department continuously monitors its program funding and expenditures throughout the year.
The Government of Canada implemented a new pay system as part of the Transformation of Pay Administration Initiative. There are known and ongoing issues associated with the implementation of this system that have resulted in salary over/underpayments to employees. Given the complexity of our workforce coupled with the nature of our organization, the Department has experienced a significant number of pay related issues. To mitigate the impact on its employees, Fisheries and Oceans Canada has created a pay support team to help employees whose pay has been impacted and to accelerate urgent matters to the Pay Centre. The Department has been working with employees to recover salary overpayments through repayment plans to ensure no undue hardship on the employee. The Department will continue to work internally and with external stakeholders to resolve these issues.
4. Significant changes in relation to operations, personnel and programs
The following changes in personnel were made during the second quarter:
- The appointment of the Honourable Jonathan Wilkinson as Minister of Fisheries, Oceans and the Canadian Coast Guard, effective July 18, 2018.
- The appointment of Mr. Tom Roberts as the Director General, Budgeting, Planning and Financial Management, Chief Financial Officer, effective September 4, 2018.
- The appointment of Ms. Arran McPherson as Assistant Deputy Minister, Ecosystems and Oceans Science, effective September 28, 2018.
5. Approval by Senior Officials
Approved by:
Original signed by
_________________________
Catherine Blewett, Deputy Minister
Original signed by
_________________________
Jen O’Donoughue,
Chief Financial Officer
Ottawa, Canada
November 23, 2018
Statement of Authorities (unaudited)
(in thousands of dollars)
| Fiscal year 2017-18 | Fiscal year 2018-19 | |||||
|---|---|---|---|---|---|---|
| Total available for use for the year ending March 31, 2018* | Used during the quarter ended September 30, 2017 | Year to date used at quarter-end | Total available for use for the year ending March 31, 2019* | Used during the quarter ended September 30, 2018 | Year to date used at quarter-end | |
| Vote 1 – Net Operating expenditures | 1,525,242 | 372,538 | 663,428 | 1,607,896 | 407,444 | 731,131 |
| Vote 5 – Capital expenditures | 944,403 | 184,339 | 281,215 | 758,087 | 645,263 | 692,379 |
| Vote 10 – Grants and Contributions | 136,736 | 18,901 | 30,310 | 208,986 | 27,490 | 42,109 |
| Statutory Authorities | ||||||
| Statutory - Contributions to employee benefit plans | 135,658 | 29,931 | 59,861 | 138,953 | 33,948 | 67,895 |
| Statutory - Minister of Fisheries and Oceans – Salary and motor car allowance | 84 | 21 | 42 | 86 | 22 | 43 |
| Statutory - Spending of proceeds from the disposal of surplus Crown assets | 0 | (59) | 241 | 0 | 55 | 55 |
| Statutory – Refunds of amounts credited to revenues in previous years | 0 | 1 | 1 | 0 | 0 | 11 |
| Total Statutory Authorities | 135,742 | 29,894 | 60,145 | 139,039 | 34,025 | 68,004 |
| Total Authorities | 2,742,123 | 605,672 | 1,035,098 | 2,714,008 | 1,114,222 | 1,533,623 |
* Includes only Authorities available for use and granted by Parliament at quarter-end.
Departmental Budgetary Expenditures by Standard Object (unaudited)
(in thousands of dollars)
| Fiscal year 2017-18 | Fiscal year 2018-19 | |||||
|---|---|---|---|---|---|---|
| Planned expenditures for the year ending March 31, 2018* | Expended during the quarter ended September 30, 2017 | Year to date used at quarter-end | Planned expenditures for the year ending March 31, 2019* | Expended during the quarter ended September 30, 2018 | Year to date used at quarter-end | |
| Expenditures: | ||||||
| Personnel | 993,381 | 282,023 | 516,079 | 1,048,209 | 272,266 | 539,366 |
| Transportation and communications | 64,172 | 20,682 | 35,097 | 62,880 | 21,242 | 39,310 |
| Information | 3,355 | 518 | 874 | 2,253 | 533 | 1,030 |
| Professional and special services | 291,963 | 148,077 | 236,895 | 313,523 | 75,870 | 115,719 |
| Rentals | 20,372 | 5,245 | 9,753 | 17,726 | 8,612 | 13,039 |
| Repair and maintenance | 213,051 | 38,623 | 65,865 | 220,496 | 22,709 | 43,957 |
| Utilities, materials and supplies | 120,987 | 25,915 | 41,371 | 114,511 | 29,705 | 47,735 |
| Acquisition of land, buildings and works | 165,992 | 41,360 | 57,591 | 219,948 | 23,588 | 34,047 |
| Acquisition of machinery and equipment | 760,147 | 22,353 | 35,546 | 522,254 | 594,349 | 616,195 |
| Transfer payments | 136,736 | 18,901 | 30,310 | 208,986 | 27,490 | 42,109 |
| Other subsidies and payments | 19,882 | 10,742 | 27,053 | 22,223 | 47,589 | 60,733 |
| Total gross budgetary expenditures | 2,790,038 | 614,439 | 1,056,434 | 2,753,009 | 1,123,953 | 1,553,240 |
| Less Revenues netted against expenditures: | ||||||
| Sales of goods and services | 47,915 | 8,767 | 21,336 | 39,001 | 9,731 | 19,617 |
| Total Revenues netted against expenditures | 47,915 | 8,767 | 21,336 | 39,001 | 9,731 | 19,617 |
| Total net budgetary expenditures | 2,742,123 | 605,672 | 1,035,098 | 2,714,008 | 1,114,222 | 1,533,623 |
* Includes only Authorities available for use and granted by Parliament at quarter-end.
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