Fisheries and Oceans Canada - Quarterly financial report for the quarter ended December 31, 2023

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 (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.

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 2023-24 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 as at December 31, 2023, compared to the same period last year.

2.1 Significant changes in authorities

The total budgetary authorities available for use increased by $153.6 million (3.2%) from the previous fiscal year:

• Vote 1 authorities increased by $142.6 million
• Vote 5 authorities increased by $238.5 million
• Vote 10 authorities decreased by $240.1 million
• Statutory authorities increased $12.5 million

Comparison of net budgetary authorities by vote as at December 31 of fiscal years 2022-23 and 2023-24 (in millions of dollars)

The following table provides a detailed explanation of these changes.

2.2 Significant changes in expenditures

In the third quarter of 2023-24, total budgetary expenditures amounted to $1,044.6 million compared to $935.4 million reported in the same quarter of 2022-23. This represents an increase of $109.2 million, or 11.7%.

• Vote 1 - Net Operating expenditures (increase of $32.5 million or 5.8%)
  This is primarily due to an increase related to newly signed collective agreements, which is partially offset by a timing difference in the processing of financial transactions between departments.
• Vote 5 - Capital expenditures (increase of $55.6 million or 21.0%)
  This variance is mainly attributed to an increase in the amount of work in construction engineering, related to the advancement of the Polar Icebreaker project.
• Vote 10 - Grants and Contributions expenditures (increase of $17.5 million or 25.0%)
  This variance is mainly attributed to a timing difference in payments related to the Trans Mountain Expansion Project, Indigenous Reconciliation Priorities, Pacific Salmon Strategy Initiative and the Fish Funds.
• Statutory – Authorities used (increase of $3.7 million or 8.2%)
  This is mainly attributed to an increase in contributions to Employee Benefit Plans which is related to the growth in salary expenditures due to newly signed collective agreements.

Comparison of authorities used by vote during the third quarter of fiscal years 2022-23 and 2023-24 (in millions of dollars)

The net increase by standard object is mainly attributed to:

• Personnel (increase of $98.9 million)

  This variance is mainly attributed to an increase related to newly signed collective agreements.

• Transportation and Communications (decrease of $5.3 million)

  This variance is mainly explained by a decrease in travel costs related to reductions in travel and employee relocation. In addition, there was a decrease in aircraft charter costs due to delays in maintenance on two of the aircrafts last fiscal year.

• Professional and Special Services (increase of $32.2 million)

  This variance is mainly attributed to an increase in the amount of work in construction engineering, related to the advancement of the Polar Icebreaker project. This is partially offset by a decrease in costs related to the remediation of contaminated sites as well as real estate services for real property projects.

• Repair and Maintenance (decrease of $53.9 million)

  This variance is mainly explained by coding adjustments to realign expenditures to Acquisition of Machinery and Equipment (as per below). This is expected to be corrected in future years. In addition, there was a decrease in costs related to the Medium Icebreakers, Vessel Refurbishment and Small Craft Harbours projects.

• Acquisition of Land, Buildings and Works (increase of $11.9 million)

  The variance is mainly attributed to an increase in costs related to the construction and replacement of a wharf.

• Acquisition of Machinery and Equipment (increase of $33.7 million)

  This variance is mainly explained by coding adjustments to realign expenditures from Repair and Maintenance (as per above). This is expected to be corrected in future years.

• Transfer Payments (increase of $19.0 million)

  This variance is mainly attributed to a timing difference in payments related to the Trans Mountain Expansion Project, Indigenous Reconciliation Priorities, Pacific Salmon Strategy Initiative and the Fish Funds.

• Other Subsidies and Payments (decrease of $24.6 million)

  This variance is mainly explained by 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 2023-24 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 Supriya Edwards as Assistant Deputy Minister People and Culture and Chief Human Resources Officer, as of October 3, 2023.

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.