ARCHIVED - Fisheries and Oceans Canada - Quarterly Financial Report for the Quarter Ended June 30, 2019
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 2018 and Budget 2019.
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 2019-20 Main Estimates and Budget 2019 Measures. 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 June 30, 2019 as compared to the same period last year.
Highlights of the Fiscal Quarter and the Fiscal Year-to-Date (YTD) results (thousands of dollars)
| 2018-19 Authorities as at June 30, 2018 | 2019-20 Authorities as at June 30, 2019 | Variance in Authorities | Expenditures during the quarter ended June 30, 2018 | Expenditures during the quarter ended June 30, 2019 | Variance in Expenditures | |
|---|---|---|---|---|---|---|
| Vote 1 – Net Operating expenditures | 1,549,032 | 1,736,757 | 187,725 | 323,686 | 347,320 | 23,634 |
| Vote 5 – Capital expenditures | 587,211 | 801,787 | 214,576 | 47,117 | 84,625 | 37,508 |
| Vote 10 – Grants and Contributions | 206,011 | 297,446 | 91,435 | 14,619 | 16,597 | 1,978 |
| Statutory Authorities | 138,514 | 157,201 | 18,687 | 33,980 | 38,911 | 4,931 |
| Total | 2,480,768 | 2,993,191 | 512,423 | 419,402 | 487,453 | 68,051 |
Statement of Voted and Statutory Authorities
Total budgetary authorities available for use increased in 2019-20 from those in 2018-19 by $512.4 million (20.7%). This is the result of an increase in Vote 1 authorities of $187.7 million, an increase in Vote 5 authorities of $214.6 million, an increase in Vote 10 authorities of $91.4 million, and an increase in spending authority for statutory payments of $18.7 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. Some variances are also due to the timing of the authorities granted by Parliament. As such, the negative amounts do not represent cuts to program spending.
| Explanation of Changes (2019-20 compared to 2018-19) |
Change (thousands of dollars) |
|---|---|
| Vote 1 – Net Operating expenditures | |
| Funding profile change for the 2018 Budget measure "Renewing Canada's Network of Small Craft Harbours" | 57,674 |
| Funding profile change to implement an amended Fisheries Act | 42,944 |
| Funding profile change 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) | 31,317 |
| Funding profile change to operate the newly procured icebreakers for the Canadian Coast Guard | 29,423 |
| Funding profile change for fisheries aerial surveillance and enforcement (FASE) program to deliver core aerial surveillance monitoring activities | 13,060 |
| Other Departmental Adjustments | 13,307 |
| Sub-total Net Operating expenditures | 187,725 |
| Vote 5 – Capital expenditures | |
| Funding profile change for the Canadian Coast Guard Fleet | 177,203 |
| Funding profile change for the 2018 Budget measure "Renewing Canada's Network of Small Craft Harbours" | 81,220 |
| Funding profile change 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) | 31,559 |
| Funding profile change for the upgrade of federal infrastructure assets | (24,821) |
| Funding profile change for the Oceans Protection Plan to improve marine safety and protect Canadaʼs marine environment | (38,010) |
| Other Departmental Adjustments | (12,575) |
| Sub-total Capital expenditures | 214,576 |
| Vote 10 – Grants and Contributions | |
| Funding for the establishment of Fisheries Fund Programs | 30,833 |
| Funding profile change for 2018 Budget measures | 20,590 |
| Funding profile change to advance reconciliation on Indigenous and treaty rights issues | 14,223 |
| Funding profile change to implement an amended Fisheries Act | 11,549 |
| Funding profile change for the enhancement and expansion of the Indigenous fisheries program suite | 6,791 |
| Other Departmental Adjustments | 7,449 |
| Sub-total Grants and Contributions | 91,435 |
| Statutory | |
| Sub-total Statutory Authorities | 18,687 |
| Total Authorities | 512,423 |
Authorities Used Analysis
In the first quarter of 2019-20, total budgetary expenditures amounted to $487.5 million compared to $419.4 million reported in the same quarter of 2018-19, which represents an increase of $68.1 million or 16.2%.
Authorities used in Vote 1, Net Operating expenditures, increased by $23.6 million compared to the same quarter last year representing an increase of approximately 7.3% between the two years. The increase is primarily attributable to the Department’s efforts to implement an amended Fisheries Act and to maintain mission-critical services to Canadians, combined with new salary rates, which took effect in late 2018-19. In addition, the increase relates to Professional and Special Services as well as Repair and Maintenance for the renewal of small craft harbours.
Authorities used in Vote 5, Capital expenditures, increased by $37.5 million compared to the same quarter last year representing an increase of approximately 79.6% between the two years. The increase in capital spending is mainly due to capital improvements related to the Canadian Coast Guard fleet. Of this amount, the increase is primarily attributable to higher Professional and Special Services for the Offshore Oceanographic Science Vessel as well as a rate adjustment applied at the end of the 2018-19 fiscal year for Professional and Special Services for the Offshore Fisheries Science Vessel.
Authorities used in Vote 10, Grants and Contributions expenditures, increased by $2.0 million compared to the same quarter last year representing an increase of approximately 13.5% between the two years. As some of the contribution agreements are multi-year, processes are now in place to make payments earlier in the fiscal year, thus resulting in year-over-year increase in payments in the first quarter. Some examples are the British Columbia Salmon Restoration and Innovation Fund, Atlantic Fisheries Fund and the Canadian Coast Guard Auxiliary.
Statutory authorities increased by $4.9 million compared to the same quarter last year representing an increase of approximately 14.5%. The increase to contributions to employee benefit plans is directly aligned with the growth in salary expenditures.
Statement of Departmental Budgetary Expenditures by Standard Object
The increase of $68.1 million in total net budgetary expenditures in the first quarter of 2019-20 as compared to the same quarter in 2018-19 is primarily due to the following:
Personnel expenditures increased by a total of $22.0 million in the first quarter of 2019-20 when compared to the same quarter of 2018-19. The increase is primarily related to the Department’s efforts to maintain mission-critical services to Canadians, to increases in contributions to employee benefit plans and to new salary rates which took effect in late 2018-19.
Expenditures related to Professional and Special Services increased by a total of $17.9 million in the first quarter of 2019-20 when compared to the same quarter of 2018-19. The increase is mainly associated with construction engineering consultants for Canadian Coast Guard fleet projects and a rate adjustment applied at the end of 2018-19 relating to architectural services for the Offshore Fisheries Science Vessels. The increase is also attributable to a timing difference in reporting legal expenditures year-over-year.
Expenditures related to Rentals increased by a total of $2.1 million in the first quarter of 2019-20 when compared to the same quarter of 2018-19. This increase is primarily related to the rental of high performance computer equipment from Shared Services Canada (SSC), along with additional spending for ship chartering.
Expenditures related to Repair and Maintenance increased by a total of $2.6 million in the first quarter of 2019-20 when compared to the same quarter of 2018-19. This is primarily attributable to an increased number of projects undertaken as part of the renewal of small craft harbours network stemming from Budget 2018 funding, partially offset by a decrease in Canadian Coast Guard’s National Vessel refit.
Expenditures related to the Acquisition of Land, Buildings and Works increased by a total of $6.1 million in the first quarter of 2019-20 when compared to the same quarter of 2018-19. The increase is primarily for capital projects undertaken as part of the renewal of small craft harbours.
Expenditures related to Acquisition of Machinery and Equipment increased by a total of $15.9 million in the first quarter of 2019-20 when compared to the same quarter of 2018-19. This is in large part related to capital improvements to the ships for the Medium Icebreakers Project and the CCGS Louis St. Laurent.
Expenditures related to Transfer Payments increased by a total of $2.0 million in the first quarter of 2019-20 when compared to the same quarter of 2018-19. As some of the contribution agreements are multi-year, processes are now in place to make payments earlier in the fiscal year, thus resulting in year-over-year increase in payments in the first quarter. Some examples are the British Columbia Salmon Restoration and Innovation Fund, Atlantic Fisheries Fund and the Canadian Coast Guard Auxiliary.
Sales of goods and services increased by $2.2 million in the first quarter of 2019-20 when compared to the same quarter of 2018-19. This increase is primarily attributable to an increase in invoices issued in the first quarter of 2019-20 for Marine Service Fees, Icebreaking Fees and Dredging Fees as compared to 2018-19. The increase is also attributable to an increased rate for Dredging Fees that took effect in April 2019.
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 2019-20 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 its workforce coupled with the nature of the 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 first quarter:
- The appointment of Jacqueline Perry as Regional Director General, Newfoundland and Labrador Region, as of April 1st, 2019 (as announced on March 15, 2019).
- The appointment of Jean-Guy Forgeron as Senior Assistant Deputy Minister, Strategic Policy, as of April 17, 2019.
5. Approval by Senior Officials
Approved by:
Original signed by
_________________________
Tim Sargent, Deputy Minister
Original signed by
_________________________
Jen O’Donoughue,
Chief Financial Officer
Ottawa, Canada
August 29th, 2019
Statement of Authorities (unaudited)
(in thousands of dollars)
| Fiscal year 2018-19 | Fiscal year 2019-20 | |||||
|---|---|---|---|---|---|---|
| Total available for use for the year ending March 31, 2019* | Used during the quarter ended June 30, 2018 | Year to date used at quarter-end | Total available for use for the year ending March 31, 2020* | Used during the quarter ended June 30, 2019 | Year to date used at quarter-end | |
| Vote 1 – Net Operating expenditures | 1,549,032 | 323,686 | 323,686 | 1,736,757 | 347,320 | 347,320 |
| Vote 5 – Capital expenditures | 587,211 | 47,117 | 47,117 | 801,787 | 84,625 | 84,625 |
| Vote 10 – Grants and Contributions | 206,011 | 14,619 | 14,619 | 297,446 | 16,597 | 16,597 |
| Statutory Authorities | ||||||
| Statutory - Contributions to employee benefit plans | 138,428 | 33,948 | 33,948 | 157,113 | 38,888 | 38,888 |
| Statutory - Minister of Fisheries and Oceans – Salary and motor car allowance | 86 | 21 | 21 | 88 | 22 | 22 |
| Statutory - Spending of proceeds from the disposal of surplus Crown assets | 0 | 0 | 0 | 0 | 0 | 0 |
| Statutory – Refunds of amounts credited to revenues in previous years | 0 | 11 | 11 | 0 | 1 | 1 |
| Total Statutory Authorities | 138,514 | 33,980 | 33,980 | 157,201 | 38,911 | 38,911 |
| Total Authorities | 2,480,768 | 419,402 | 419,402 | 2,993,191 | 487,453 | 487,453 |
* 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 2018-19 | Fiscal year 2019-20 | |||||
|---|---|---|---|---|---|---|
| Planned expenditures for the year ending March 31, 2019* | Expended during the quarter ended June 30, 2018 | Year to date used at quarter-end | Planned expenditures for the year ending March 31, 2020* | Expended during the quarter ended June 30, 2019 | Year to date used at quarter-end | |
| Expenditures: | ||||||
| Personnel | 1,045,060 | 267,100 | 267,100 | 1,179,660 | 289,130 | 289,130 |
| Transportation and communications | 58,123 | 18,068 | 18,068 | 64,759 | 18,173 | 18,173 |
| Information | 2,086 | 497 | 497 | 2,307 | 489 | 489 |
| Professional and special services | 289,567 | 39,849 | 39,849 | 356,809 | 57,708 | 57,708 |
| Rentals | 16,369 | 4,428 | 4,428 | 18,926 | 6,489 | 6,489 |
| Repair and maintenance | 203,553 | 21,248 | 21,248 | 203,763 | 23,846 | 23,846 |
| Utilities, materials and supplies | 105,769 | 18,030 | 18,030 | 104,391 | 18,902 | 18,902 |
| Acquisition of land, buildings and works | 169,519 | 10,459 | 10,459 | 197,991 | 16,533 | 16,533 |
| Acquisition of machinery and equipment | 403,163 | 21,846 | 21,846 | 575,607 | 37,729 | 37,729 |
| Transfer payments | 206,011 | 14,619 | 14,619 | 297,446 | 16,597 | 16,597 |
| Other subsidies and payments | 20,549 | 13,144 | 13,144 | 31,543 | 13,922 | 13,922 |
| Public Debt Charges | 0 | 0 | 0 | 0 | 0 | 0 |
| Total gross budgetary expenditures | 2,519,769 | 429,288 | 429,288 | 3,033,202 | 499,518 | 499,518 |
| Less Revenues netted against expenditures: | ||||||
| Sales of goods and services | 39,001 | 9,886 | 9,886 | 40,011 | 12,065 | 12,065 |
| Total Revenues netted against expenditures | 39,001 | 9,886 | 9,886 | 40,011 | 12,065 | 12,065 |
| Total net budgetary expenditures | 2,480,768 | 419,402 | 419,402 | 2,993,191 | 487,453 | 487,453 |
* Includes only Authorities available for use and granted by Parliament at quarter-end.
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