Fisheries and Oceans Canada - Quarterly financial report for the quarter ended June 30, 2024

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.

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 2024-25 Main Estimates.

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 fiscal quarter results

The following section highlights the financial results and provides explanations for the fiscal quarter ended June 30, 2024, as compared to the same period last year.

2.1 Significant changes in authorities

In the first quarter of 2024-25, total budgetary authorities available for use increased by $573.8 million (14.0%) compared to the same period in the previous year:

• Vote 1 authorities increased by $164.9 million
• Vote 5 authorities increased by $445.1 million
• Vote 10 authorities decreased by $40.6 million
• Statutory authorities increased $4.5 million

Comparison of net budgetary authorities, by Vote, as at June 30 of fiscal years 2023-24 and 2024-25 (in millions of dollars)

Note: Funding presented reflects approved reference levels and does not include any Budget 2024 decisions.

The following table provides a detailed explanation of these changes.

2.2 Significant changes in expenditures

In the first quarter of 2024-25, total budgetary expenditures amounted to $823.9 million compared to $715.2 million reported in the same quarter of 2023-24. This represents an increase of $108.7 million, or 15.2%.

• Vote 1 - Net Operating expenditures (increase of $22.9 million or 5.2%)
  This variance is mainly attributed to an increase related to signed collective agreements.
• Vote 5 - Capital expenditures (increase of $82.6 million or 49.4%)
  This variance is mainly attributed to an increase in the amount of work in construction engineering and architectural services related to the Arctic Offshore Patrol Ships and the advancement of the Polar Icebreaker project.
• Vote 10 - Grants and Contributions expenditures (increase of $2.1 million or 3.2%)
  This variance is mainly attributed to a timing difference in payments related to Indigenous Reconciliation Priorities and the Ghost Gear Program.
• Statutory – Authorities used (increase of $1.2 million or 2.5%)
  This is mainly attributed to an increase in contributions to Employee Benefit Plans which is related to the growth in salary expenditures due to signed collective agreements.

Comparison of authorities used, by Vote, as at June 30 of fiscal years 2023-24 and 2024-25 (in millions of dollars)

As reflected in Table 2: Departmental Budgetary Expenditures by Standard Object (unaudited), the net increase by standard object is mainly attributed to:

• Personnel (increase of $43.1 million)

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

• Professional and Special Services (increase of $70.2 million)

  This variance is mainly attributed to an increase in the amount of work in construction engineering and architectural services related to the Arctic Offshore Patrol Ships and the advancement of the Polar Icebreaker project.

• Repair and Maintenance (decrease of $19.4 million)

  This variance is mainly explained by coding adjustments to realign expenditures to Acquisition of Machinery and Equipment (as per below). The coding has been corrected in order to allow the year over year variance to be properly reflected in future years.

• Acquisition of Machinery and Equipment (increase of $24.4 million)

  This variance is mainly explained by coding adjustments to realign expenditures from Repair and Maintenance (as per above). The coding has been corrected in order to allow the year over year variance to be properly reflected in future years. In addition, there was an increase in vessel dry docking and betterment work related to various Vessel Life Extension projects.

• Other Subsidies and Payments (decrease of $5.2 million)

  This variance is mainly explained by a timing difference in the processing of financial transactions between departments.

• Sales of Goods and Services (increase of $9.9 million)

  This variance is mainly explained by a timing difference in the collection of revenues due to corrections in our financial system from previous quarters.

3. Risks and uncertainties

Fisheries and Oceans Canada operates in a dynamic environment that is affected by a number of factors, including: northern development; evolving relationships with Indigenous partners; navigating waters; climate change; demographics; technological advances; changing maritime safety and security demands; and global geopolitical and economic conditions. The Department maintains a Departmental Risk Profile which assesses corporate strategic risks, which if not managed and mitigated, 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 2024-25 Departmental Plan.

Certain risks would have financial impacts should they materialize such as affecting the timing of transfer payments or delays in the delivery of shipbuilding projects, which lie 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 program funding and expenditures throughout the year. In addition, the Department has put strategies in place such as the Vessel Life Extension program to ensure accountability and that objectives are met. Budget 2023 announced a commitment to refocus operations, transfer payments, professional services and travel spending. Departments were asked to provide proposals, targeting savings so they could be re-invested in other priority areas for Canadians. To mitigate the risk on our service delivery, while achieving our overall targets, Fisheries and Oceans is focusing on reducing spending in areas with little impact and without any expected decline in service standards.

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 Audrey Furey as Chief Audit Executive, Internal Audit, as of April 1, 2024 (as announced on January 15, 2024).
• The appointment of Christiana Cavazzoni as Assistant Deputy Minister, Chief Digital Officer, as of April 1, 2024 (as announced on February 5, 2024).
• The appointment of Marc Mes as Deputy Commissioner, Canadian Coast Guard - Programs, as of April 1, 2024.
• The appointment of Amy Amos as Regional Director General, Arctic Region, as of April 2, 2024.

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.