ARCHIVED - Fisheries and Oceans Canada - Quarterly Financial Report for the quarter ended December 31, 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, Supplementary Estimates (A) 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, Supplementary Estimates (A), Budget 2019 Measures, and the Operating and Capital Budget Carry Forwards. 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 December 31, 2019 as compared to the same period last year.
| 2018-19 Authorities as at December 31, 2018 | 2019-20 Authorities as at December 31, 2019 | Variance in Authorities | Expenditures during the quarter ended December 31, 2018 | Expenditures during the quarter ended December 31, 2019 | Variance in Expenditures | |
|---|---|---|---|---|---|---|
| Vote 1 – Net Operating expenditures | 1,649,656 | 2,021,216 | 371,560 | 408,152 | 487,170 | 79,018 |
| Vote 5 – Capital expenditures | 1,641,325 | 1,136,166 | (505,159) | 156,312 | 190,390 | 34,078 |
| Vote 10 – Grants and Contributions | 267,933 | 376,070 | 108,137 | 31,349 | 37,724 | 6,375 |
| Statutory Authorities | 142,187 | 165,713 | 23,526 | 34,229 | 38,995 | 4,766 |
| Total | 3,701,101 | 3,699,165 | (1,936) | 630,042 | 754,279 | 124,237 |
Statement of Voted and Statutory Authorities
Total budgetary authorities available for use decreased in 2019-20 from those in 2018-19 by $1.9 million or (0.1%). Although this represents a minimal overall variance, there were increases to Vote 1, Vote 10 and Statutory Authorities totaling $503.2 million, offset by a material decrease to Vote 5 ($505.2 million).
Amounts displayed in this table represent the achievement of project milestones, planned changes to funding profiles, as well as variances due to the timing the authorities are 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 for the Canadian Coast Guard's fleet renewal and recapitalization projects | 84,742 |
| Funding to advance reconciliation on Indigenous rights and fisheries issues | 81,165 |
| Funding profile change to implement an amended Fisheries Act | 37,723 |
| 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 for the 2018 Budget measure "Renewing Canada's Network of Small Craft Harbours" | 29,546 |
| Funding for newly signed collective agreements | 23,496 |
| Funding for the Trans Mountain Expansion Project | 20,367 |
| Incremental change in the Operating Budget Carry Forward | 16,554 |
| Other Departmental Adjustments | 46,650 |
| Sub-total Net Operating expenditures | 371,560 |
| Vote 5 – Capital expenditures | |
| Incremental change in the Capital Budget Carry Forward | 151,287 |
| Funding for the Canadian Coast Guard's fleet renewal and recapitalization projects | 131,662 |
| 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 2018 Budget measure "Renewing Canada's Network of Small Craft Harbours" | 25,156 |
| Funding profile change for the Oceans Protection Plan to improve marine safety and protect Canadaʼs marine environment | (38,010) |
| Funding profile change for the Canadian Coast Guard fleet acquisitions | (782,953) |
| Other Departmental Adjustments | (23,860) |
| Sub-total Capital expenditures | (505,159) |
| Vote 10 – Grants and Contributions | |
| Funding for the establishment of Fisheries Fund Programs | 30,833 |
| Funding for the Trans Mountain Expansion Project | 22,187 |
| Funding profile change for various 2018 Budget measures | 17,615 |
| Funding profile change to advance reconciliation on Indigenous and treaty rights issues | 16,066 |
| Other Departmental Adjustments | 21,436 |
| Sub-total Grants and Contributions | 108,137 |
| Statutory | |
| Sub-total Statutory Authorities | 23,526 |
| Total Authorities | (1,936) |
Authorities Used Analysis
In the third quarter of 2019-20, total budgetary expenditures amounted to $754.3 million compared to $630.1 million reported in the same quarter of 2018-19, which represents an increase of $124.2 million or 19.7%.
Authorities used in Vote 1, Net Operating expenditures, increased by $79.0 million compared to the same quarter last year representing an increase of approximately 19.4% between the two years. This increase is primarily due to costs for the ongoing construction of the Offshore Fisheries Science Vessels and a growth in spending in personnel to support the Department’s efforts to maintain mission critical services to Canadians. These increases are offset by costs related to the remediation for derelict vessels.
Authorities used in Vote 5, Capital expenditures, increased by $34.1 million compared to the same quarter last year representing an increase of approximately 21.8% between the two years. This increase is primarily due to the improvement and retrofitting of two vessels as part of the Medium Icebreakers Project and spending for architectural services related to the Offshore Fisheries Science Vessels Project. This is offset by a decrease in general consultant costs.
Authorities used in Vote 10, Grants and Contributions expenditures, increased by $6.4 million compared to the same quarter last year representing a 20.3% increase between the two years. This increase is mainly associated with the Department’s commitment to support the Nature Legacy for Canada through the Canada Nature Fund for Aquatic Species and Aquatic Habitat as well as support for Atlantic Canada’s fish and seafood sector.
Statutory authorities increased by $4.8 million compared to the same quarter last year representing an increase of approximately 13.9%. The increase for 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 $124.2 million in total net budgetary expenditures in the third 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 $11.7 million in the third quarter of 2019-20 when compared to the same quarter of 2018-19. The increase is in line with additional funding provided to the Department to maintain mission-critical services to Canadians, along with an increase in contributions to employee benefit plans.
Expenditures related to Professional and Special Services increased by a total of $34.9 million in the third quarter of 2019-20 when compared to the same quarter of 2018-19. The increase is mainly associated with costs for the ongoing construction and architectural services for the Offshore Fisheries Science Vessels Project. These costs should have been reflected under Acquisition of Machinery and Equipment and will be re-coded to properly reflect the nature of the expenditures in future reporting periods.
Expenditures related to Utilities, Materials, and Supplies increased by a total of $3.3 million in the third quarter of 2019-20 when compared to the same quarter of 2018-19. The increase is mainly due to increased diesel fuel purchases by the Canadian Coast Guard as part of the Leasing Towing Vessels project, and the onboarding of a new icebreaker.
Expenditures related to Acquisition of Machinery and Equipment increased by a total of $24.9 million in the third quarter of 2019-20 when compared to the same quarter of 2018-19. This increase is mainly due to improvements and retrofitting of two vessels as part of the Medium Icebreakers Project, and costs related to the Light Lift Helicopters Project.
Expenditures related to Transfer Payments increased by a total of $6.4 million in the third quarter of 2019-20 when compared to the same quarter of 2018-19. This increase is mainly associated with the Department commitment to support the Nature Legacy for Canada through the Canada Nature Fund for Aquatic Species and Aquatic Habitat as well as support for Atlantic Canada’s fish and seafood sector.
Expenditures related to Other Subsidies and Payments increased by a total of $37.3 million in the third quarter of 2019-20 when compared to the same quarter of 2018-19. This increase is mainly due to the reallocation of payments and transfers received from other Departments.
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 in 2016. Given the complexity of our workforce coupled with the nature of our organization, the Department continues to experience a significant number of pay related issues. To mitigate the impact on its employees, Fisheries and Oceans Canada created a pay support team to help employees whose pay has been impacted and to accelerate urgent matters to the Pay Centre. The Department continues to work 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 third quarter:
- The appointment of the Honourable Bernadette Jordan as Minister of Fisheries, Oceans and the Canadian Coast Guard, effective November 21, 2019.
- The appointment of Mario Pelletier as Commissioner of the Canadian Coast Guard, effective December 9, 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
February 26, 2020
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 December 31, 2018 | Year to date used at quarter-end | Total available for use for the year ending March 31, 2020* | Used during the quarter ended December 31, 2019 | Year to date used at quarter-end | |
| Vote 1 – Net Operating expenditures | 1,649,656 | 408,152 | 1,139,282 | 2,021,216 | 487,170 | 1,323,241 |
| Vote 5 – Capital expenditures | 1,641,325 | 156,312 | 848,692 | 1,136,166 | 190,390 | 411,118 |
| Vote 10 – Grants and Contributions | 267,933 | 31,349 | 73,458 | 376,070 | 37,724 | 109,079 |
| Statutory Authorities | ||||||
| Statutory - Contributions to employee benefit plans | 142,101 | 33,948 | 101,843 | 165,625 | 38,888 | 116,663 |
| Statutory - Minister of Fisheries and Oceans – Salary and motor car allowance | 86 | 21 | 65 | 88 | 22 | 66 |
| Statutory - Spending of proceeds from the disposal of surplus Crown assets | 0 | 260 | 315 | 0 | 85 | 95 |
| Statutory – Refunds of amounts credited to revenues in previous years | 0 | 0 | 11 | 0 | 0 | 2 |
| Total Statutory Authorities | 142,187 | 34,229 | 102,234 | 165,713 | 38,995 | 116,826 |
| Total Authorities | 3,701,101 | 630,042 | 2,163,666 | 3,699,165 | 754,279 | 1,960,264 |
* 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 December 31, 2018 | Year to date used at quarter-end | Planned expenditures for the year ending March 31, 2020* | Expended during the quarter ended December 31, 2019 | Year to date used at quarter-end | |
| Expenditures: | ||||||
| Personnel | 1,071,042 | 318,083 | 857,449 | 1,259,912 | 329,825 | 917,055 |
| Transportation and communications | 65,829 | 26,136 | 65,447 | 72,557 | 26,037 | 68,255 |
| Information | 2,663 | 943 | 1,973 | 2,992 | 820 | 1,712 |
| Professional and special services** | 324,747 | 117,039 | 232,759 | 467,994 | 151,979 | 301,467 |
| Rentals | 19,437 | 8,493 | 21,532 | 21,043 | 9,526 | 23,006 |
| Repair and maintenance | 224,157 | 31,602 | 75,559 | 214,543 | 33,556 | 96,199 |
| Utilities, materials and supplies | 118,154 | 26,436 | 74,171 | 110,468 | 29,776 | 80,951 |
| Acquisition of land, buildings and works | 219,687 | 39,290 | 73,337 | 301,769 | 40,818 | 95,329 |
| Acquisition of machinery and equipment | 1,403,553 | 73,202 | 689,397 | 803,782 | 98,085 | 191,258 |
| Transfer payments | 267,932 | 31,349 | 73,457 | 376,070 | 37,724 | 108,579 |
| Other subsidies and payments | 22,901 | (31,105) | 29,628 | 108,046 | 6,188 | 108,258 |
| Public Debt Charges | 0 | 1 | 1 | 0 | 0 | 0 |
| Total gross budgetary expenditures | 3,740,102 | 641,469 | 2,194,710 | 3,739,176 | 764,334 | 1,992,069 |
| Less Revenues netted against expenditures: | ||||||
| Sales of goods and services | 39,001 | 11,427 | 31,044 | 40,011 | 10,055 | 31,805 |
| Total Revenues netted against expenditures | 39,001 | 11,427 | 31,044 | 40,011 | 10,055 | 31,805 |
| Total net budgetary expenditures | 3,701,101 | 630,042 | 2,163,666 | 3,699,165 | 754,279 | 1,960,264 |
* Includes only Authorities available for use and granted by Parliament at quarter-end.
** $39.8M in expenditures incurred during the third quarter of 2019-20 for costs related to the construction of the Offshore Fisheries Science Vessels will be re-allocated in order to properly reflect the nature of the expenditures. This adjustment will be completed in time for year-end reporting.
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