Fisheries and Oceans Canada - Quarterly financial report for the quarter ended June 30, 2022

Table of contents

1. Introduction
2. Highlights of fiscal quarter and the fiscal year-to-date (YTD) results
3. Risks and uncertainties
4. Significant changes in relation to operations, personnel and programs
5. Approval by senior officials
6. Appendix

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 and Supplementary Estimates (A).

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.

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 2022-23 Main Estimates and Supplementary Estimates (A).

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 June 30, 2022, as compared to the same period last year.

2.1 Significant changes in authorities

As reflected in Table 1: Statement of authorities (unaudited), the total budgetary authorities available for use decreased by $396.2 million (9.0%) from the previous fiscal year:

• Vote 1 authorities increased by $60.0 million
• Vote 5 authorities increased by $85.6 million
• Vote 10 authorities decreased by $553.3 million
• Statutory authorities increased $11.5 million

Comparison of net budgetary authorities by vote as at June 30 of fiscal years 2021-22 and 2022-23 (in millions of dollars)

The following table provides a detailed explanation of these changes.

2.2 Significant changes in expenditures

As reflected in Table 1: Statement of authorities (unaudited), the year-to-date budgetary expenditures, as at June 30, 2022, have increased by $14.6 million (2.6%) compared to the same period in the previous year:

• Vote 1 expenditures decreased by $56.2 million
• Vote 5 expenditures increased by $61.1 million
• Vote 10 expenditures increased by $6.8 million
• Statutory payments increased by $2.9 million

Comparison of authorities used by vote during the first quarter of fiscal years 2021-22 and 2022-23 (in millions of dollars)

In the first quarter of 2022-23, total budgetary expenditures amounted to $573.3 million compared to $558.7 million reported in the same quarter of 2021-22, which represents an increase of $14.6 million or 2.6%.

• Vote 1 - Net Operating expenditures (decrease of $56.2 million or 13.0%)

  This decrease is primarily due to a timing difference in the processing of financial transactions between departments. This is partially offset by an increase in fuel expenditures for CCG vessels, an increase in travel costs due to reduced COVID-19 restrictions, increased license fees for software and the extension of the lease agreement for Emergency Towing Vessels.

• Vote 5 - Capital expenditures (increase of $61.1 million or 106.7%)

  This is primarily due to an increase in construction and long-lead item contracts for the Offshore Oceanographic Science Vessel as well as costs associated with vessel dry docking and betterment work. In addition, there was an increase in costs related to the implementation of various Budget 2021 Small Craft Harbours projects which were approved late last year.

• Vote 10 - Grants and Contributions (increase of $6.8 million or 25.7%)

  This increase is primarily due to the signing of new contribution agreements related to the Salish Sea Initiative as well as the earlier release of payments compared to last fiscal.

As reflected in Table 2: Departmental budgetary expenditures by standard object (unaudited), the net increase by standard object is mainly attributed to:

• Transportation and Communications (increase of $8.9 million)

  This variance is mainly explained by increased travel costs due to reduced COVID-19 restrictions as well as project costs associated with network upgrades.

• Professional and Special Services (increase of $17.3 million)

  This is primarily due to an increase in construction and long-lead item contracts for the Offshore Oceanographic Science Vessel, partially offset by a reduction in spending related to contracts for the Offshore Fisheries Science Vessel, as the project reached completion.

• Rentals (increase of $10.8 million)

  This variance is mainly explained by increased license fees for software, as well as the extension of the lease agreement for Emergency Towing Vessels and ship rental costs for spot chartering.

• Repair and Maintenance (increase of $20.8 million)

  This variance is primarily due to dry docking and refit work related to vessels as well as Medium Icebreakers Refurbishment projects.

• Utilities, Materials and Supplies (increase of $17.8 million)

  This variance is mainly attributed to an increase in fuel expenditures for the CCG Vessels due to the timing of refueling and higher fuel prices compared to this quarter last year.

• Acquisition of Land, Buildings and Works (increase of $15.4 million)

  The variance is mainly attributed to the implementation of various Budget 2021 Small Craft Harbours projects which were approved late last year.

• Transfer Payments (increase of $6.8 million)

  This increase is primarily due to the signing of new contribution agreements related to the Salish Sea Initiative as well as the earlier release of payments.

• Other Subsidies and Payments (decrease of $96.1 million)

  This decrease is primarily due to a timing difference in the processing of financial transactions between 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; climate change; 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 2022-23 Departmental Plan.

Certain risks would have financial impacts should they materialize such as affecting the timing of transfer payments which lies outside the control of the Department and could require funds to be shifted to future years to meet program requirements. To minimize these impacts, the Department continuously monitors its program funding and expenditures throughout the year.

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

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

• The appointment of Marc Brouillard as Chief Digital Officer, as of April 1, 2022 (as announced on January 10, 2022).
• The appointment of Dominic Laporte as Assistant Deputy Minister, Innovation and Business Transformation, as of April 1, 2022.
• The appointment of Tom Balfour as Assistant Deputy Minister, People and Culture, as of April 1, 2022.
• The appointment of William McGillivray as Regional Director General, Newfoundland and Labrador Region, as of May 9, 2022.

5. Approval by senior officials

Approved by:

6. Appendix

Table 1: Statement of authorities (unaudited)

(in thousands of dollars)

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

Table 2: Departmental budgetary expenditures by standard object (unaudited)

(in thousands of dollars)

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