Fisheries and Oceans Canada - Quarterly Financial Report for the quarter ended December 31, 2021

1. Introduction

This quarterly financial report has been prepared as required by section 65.1 of the Financial Administration Act. The quarterly report should be read in conjunction with the current year’s Main Estimates, Budget 2021 and Supplementary Estimates (B).

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 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 2021-22 Main Estimates, Supplementary Estimates (B) and the Operating and Capital Budget Carry Forwards.

The authority of Parliament is required before money can be spent by the Government. Approval is 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, 2021, as compared to the same period last year.

Highlights of the fiscal quarter and the fiscal year-to-date (YTD) results (thousands of dollars)
	2020-21 Authorities as at December 31, 2020	2021-22 Authorities as at December 31, 2021	Variance in Authorities	Expenditures during the quarter ended December 31, 2020	Expenditures during the quarter ended December 31, 2021	Variance in Expenditures
Vote 1 – Net Operating expenditures	1,909,061	2,069,553	160,492	444,231	491,301	47,070
Vote 5 – Capital expenditures	1,022,423	1,342,281	319,858	190,382	210,777	20,395
Vote 10 – Grants and Contributions	995,164	1,261,757	266,593	48,087	341,501	293,414
Statutory Authorities	632,041	178,136	(453,905)	47,072	42,088	(4,984)
Total	4,558,689	4,851,727	293,038	729,772	1,085,667	355,895

Statement of voted and statutory authorities

Total budgetary authorities available for use increased in 2021-22 from those in 2020-21 by $293.0 million (6.4%). This is the result of an increase in Vote 5 authorities of $319.9 million, an increase in Vote 10 authorities of $266.6 million, an increase in Vote 1 authorities of $160.5 million, offset by a decrease in spending authority for forecasted statutory payments of $453.9 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 that authorities are granted by Parliament. As such, the negative amounts do not represent reductions to program spending.

Explanation of Changes (2021-22 compared to 2020-21)	Change (thousands of dollars)
Vote 1 – Net Operating expenditures
Funding to implement Canada’s new marine conservation targets	71,684
Funding for signed collective agreements	43,226
Funding to conserve Canadaʼs land and freshwater, protect species, advance Indigenous reconciliation and increase access to nature	20,202
Funding for the Big Bar Landslide	19,611
Funding for self-employed Fish Harvesters affected by COVID-19	14,233
Incremental change in the Operating Budget Carry Forward	10,055
Funding for the Canadian Coast Guard's fleet renewal and recapitalization projects	(4,769)
Sunsetting funding for the renewal of Canada's network of small craft harbours (Budget 2018)	(12,000)
Other Departmental Adjustments	(1,750)
Sub-total Net Operating expenditures	160,492
Vote 5 – Capital expenditures
Funding for the Canadian Coast Guard's fleet renewal and recapitalization projects	209,159
Funding profile change for the Oceans Protection Plan	86,562
Funding for the Big Bar Landslide	37,900
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)	11,272
Funding to implement an Inuit Impact and Benefit Agreement	6,990
Incremental change in the Capital Budget Carry Forward	(18,125)
Funding profile change to strengthen environmental protections and address concerns raised by Indigenous groups regarding the Trans Mountain Expansion Project	(19,225)
Other Departmental Adjustments	5,325
Sub-total Capital expenditures	319,858
Vote 10 – Grants and Contributions
Funding for self-employed Fish Harvesters affected by COVID-19	119,805
Funding profile change to strengthen environmental protections and address concerns raised by Indigenous groups regarding the Trans Mountain Expansion Project	89,402
Funding to implement Canada’s new marine conservation targets	22,365
Funding to conserve Canadaʼs land and freshwater, protect species, advance Indigenous reconciliation and increase access to nature	19,237
Funding for the Fisheries Fund Programs	8,678
Funding to prevent and mitigate the impacts of ghost gear on aquatic species at risk	8,049
Funding to advance reconciliation on Indigenous rights and fisheries issues	(8,597)
Other Departmental Adjustments	7,654
Sub-total Grants and Contributions	266,593
Statutory
Payments to support Canada’s fish harvesters pursuant to the Public Health Events of National Concern Payments Act	(468,929)
Other Departmental Adjustments	15,024
Sub-total Statutory Authorities	(453,905)
Total Authorities	293,038

Authorities used analysis

In the third quarter of 2021-22, total budgetary expenditures amounted to $1,085.7 million compared to $729.8 million reported in the same quarter of 2020-21, which represents an increase of $355.9 million or 48.8%.

Authorities used in Vote 1, Net Operating expenditures, increased by $47.1 million compared to the same quarter last year representing an increase of approximately 10.6% between the two years. This is primarily due to an increase in personnel expenditures, corrections due to overstated revenues, higher fuel consumption as well as the timing of invoices related to the Big Bar landslide project. This is partially offset by a timing difference in the reallocation of financial transactions between departments.

Authorities used in Vote 5, Capital expenditures, increased by $20.4 million compared to the same quarter last year representing an increase of approximately 10.7% between the two years. This is primarily due to an increase in engineering consulting costs for various Canadian Coast Guard vessels. This is partially offset by a decrease in costs attributed to the completion of various Budget 2018 Small Craft Harbour projects as well as a decrease in expenditures for the SAP Implementation Project.

Authorities used in Vote 10, Grants and Contributions expenditures, increased by $293.4 million compared to the same quarter last year representing a 610.2% increase between the two years. This increase is primarily due to the signing of new contribution agreements to advance reconciliation on Indigenous rights and fisheries issues.

Statutory authorities used decreased by $5.0 million compared to the same quarter last year, representing a decrease of approximately 10.6%. This decrease is mainly attributed to the Fish Harvesters Benefit program pursuant to the Public Health Events of National Concern Payments Act.

Statement of departmental budgetary expenditures by standard object

The increase of $355.9 million in total net budgetary expenditures in the third quarter of 2021-22, as compared to the same quarter in 2020-21 is primarily due to the following:

Expenditures related to Personnel increased by a total of $28.7 million in the third quarter of 2021-22 when compared to the same quarter of 2020-21. The increase is in line with additional funding provided to the Department which has increased its complement of employees to deliver on the implementation of new programs.

Expenditures related to Transportation and Communications increased by a total of $4.5 million in the third quarter of 2021-22 when compared to the same quarter of 2020-21. This is primarily due to the implementation of network upgrades and increased travel costs due to reduced COVID-19 restrictions in this quarter.

Expenditures related to Professional and Special Services increased by a total of $55.5 million in the third quarter of 2021-22 when compared to the same quarter of 2020-21. This is primarily due to an increase in engineering consulting costs for various Canadian Coast Guard vessels as well as the timing of invoices related to the Big Bar landslide project.

Expenditures related to Repair and Maintenance increased by a total of $55.5 million in the third quarter of 2021-22 when compared to the same quarter of 2020-21. This variance is mainly explained by temporary incorrect coding offset by the decrease in Acquisition of Machinery and Equipment, both of which are expected to be corrected in time for year-end reporting.

Expenditures related to Utilities, Materials and Supplies increased by a total of $16.2 million in the third quarter of 2021-22 when compared to the same quarter of 2020-21. This is primarily due to increased spending on fuel resulting from higher commodity prices as well as more consumption as a result of the easing of COVID-19 restrictions during that time period.

Expenditures related to the Acquisition of Land, Buildings and Works decreased by a total of $11.7 million in the third quarter of 2021-22 when compared to the same quarter of 2020-21. The variance is mainly attributed to the completion of various Budget 2018 Small Craft Harbour projects.

Expenditures related to Acquisition of Machinery and Equipment decreased by a total of $59.2 million in the third quarter of 2021-22 when compared to the same quarter of 2020-21. This variance is mainly explained by temporary incorrect coding offset by the increase in Repair and Maintenance, both of which are expected to be corrected in time for year-end reporting.

Expenditures related to Transfer Payments increased by a total of $291.4 million in the third quarter of 2021-22 when compared to the same quarter of 2020-21. This increase is primarily due to the signing of new contribution agreements to advance reconciliation on Indigenous rights and fisheries issues.

Expenditures related to Other Subsidies and Payments decreased by a total of $56.6 million in the third quarter of 2021-22 when compared to the same quarter of 2020-21. The majority of the decrease is due to the timing of reallocating financial transactions between departments.

Sales of goods and services decreased by $31.3 million in the third quarter of 2021-22 when compared to the same quarter of 2020-21. This decrease is primarily attributable corrections due to overstated revenues in our financial system from a previous quarter.

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 stakeholders needs. The Department maintains a Departmental Risk Profile which assesses corporate strategic risks, which if not addressed, could impair DFO-CCG’s ability to deliver on its mandate and achieve results under the Department’s core responsibilities. Additional information regarding the Department’s key risk areas is presented in the 2021-22 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 shifted to future years. To minimize these impacts, the Department continuously monitors its program funding and expenditures throughout the year.

With respect to the COVID-19 pandemic, DFO continues to adapt its mitigation strategies to align with updated public health guidance. Departmental revenues and expenditures continue to be impacted as the pandemic disrupted the timely delivery of new and existing programs. As an operational and scientific department, a large portion of our workforce has been working onsite and will continue to do so as we transition into a Beyond COVID work environment. When operationally feasible and safe to do so, there are opportunities to establish hybrid work arrangements. DFO will continue to protect the health and safety of its employees and provide essential services to Canadians, all while abiding by the guidance and recommendations of public health officials and experts.

4. Significant changes in relation to operations, personnel and programs

In 2021-22 the Department is transitioning from our legacy financial system to SAP, which is in-line with the Government of Canada standard. This standardization of the Enterprise Reporting System (ERP) will simplify government-wide reporting and ensure ongoing accuracy of financial information through the consolidation of several reporting systems into one.

The following changes in personnel were made since the last published quarterly report:

The appointment of the Honourable Joyce Murray as Minister of Fisheries, Oceans and the Canadian Coast Guard, as of October 27, 2021.
The appointment of Tony Blanchard as Regional Director General, Newfoundland and Labrador Region, as of November 1, 2021.
The appointment of Sylvain Vézina as Regional Director General, Quebec Region, as of November 8, 2021.

5. Approval by senior officials

Approved by:

Original signed by
_________________________
Timothy Sargent,
Deputy Minister

Original signed by
_________________________
Hugo Pagé,
Chief Financial Officer

Ottawa, Canada

Statement of authorities (unaudited)

(in thousands of dollars)

	Total available for use for the year ending March 31, 2021*	Used during the quarter ended December 31, 2020	Year to date used at quarter-end	Total available for use for the year ending March 31, 2022*	Used during the quarter ended December 31, 2021	Year to date used at quarter-end
	Fiscal year 2020-21			Fiscal year 2021-22
Vote 1 – Net Operating expenditures	1,909,061	444,231	1,218,155	2,069,553	491,301	1,354,849
Vote 5 – Capital expenditures	1,022,423	190,382	410,052	1,342,281	210,777	429,018
Vote 10 – Grants and Contributions	995,164	48,087	117,135	1,261,757	341,501	469,016
Statutory Authorities
Statutory - Contributions to employee benefit plans	162,552	40,131	120,395	178,045	42,073	126,218
Statutory - Minister of Fisheries and Oceans – Salary and motor car allowance	89	22	67	91	15	58
Statutory - Spending of proceeds from the disposal of surplus Crown assets	0	151	156	0	0	0
Statutory – Refunds of amounts credited to revenues in previous years	0	0	0	0	0	0
Statutory - Payments to support Canada's fish harvesters pursuant to the Public Health Events of National Concern Payments Act	469,400	6,768	140,906	0	0	0
Statutory - Payments to the Canadian Seafood Stabilization Fund pursuant to the Public Health Events of National Concern Payments Act	0	0	0	0	0	0
Total Statutory Authorities	632,041	47,072	261,524	178,136	42,088	126,276
Total Authorities	4,558,689	729,772	2,006,866	4,851,727	1,085,667	2,379,159

* Includes only Authorities available for use and granted by Parliament at quarter-end.

Departmental budgetary expenditures by standard object (unaudited)