Fisheries and Oceans Canada - Quarterly financial report for the quarter ended September 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 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 fiscal year to date (YTD) results

The following section highlights the financial results and provides explanations as at September 30, 2024, compared to the same period last year.

2.1 Significant changes in authorities

In the second quarter of 2024-25, total budgetary authorities available for use increased by $468.5 million (10.5%) compared to the same period in the previous year:

• Vote 1 authorities increased by $158.8 million
• Vote 5 authorities increased by $345.9 million
• Vote 10 authorities decreased by $40.6 million
• Statutory authorities increased by $4.5 million

Comparison of net budgetary authorities, by Vote, as at September 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 second quarter of 2024-25, total budgetary expenditures amounted to $1,106.0 million compared to $1,032.6 million reported in the same quarter of 2023-24. This represents an increase of $73.4 million, or 7.1%.

• Vote 1 - Net Operating expenditures (decrease of $4.1 million or 0.7%)
  This variance is mainly attributed to a decrease in retroactive salary payments as a result of the timing of signed collective agreements as well as a decrease in costs related to the lease of a charter vessel under the Pacific Salmon Strategy Initiative, both of which occurred last fiscal year. This is partially offset by an increase in marine service revenues due to a timing difference in the collection of revenues.
• Vote 5 - Capital expenditures (increase of $86.5 million or 26.2%)
  This variance is mainly attributed to an increase in the amount of work in construction engineering services related to the advancement of the Polar Icebreaker project and the Near-Shore Fisheries Research Vessel.
• Vote 10 - Grants and Contributions expenditures (decrease of $10.4 million or 11.5%)
  The variance is mainly attributed to the receipt of fewer applications for the License Retirement Program within the Pacific Salmon Strategy Initiative as the program starts to wind down.
• Statutory – Authorities used (increase of $1.5 million or 3.2%)
  This variance is mainly attributed to an increase in contributions to Employee Benefit Plans which is related to the growth in salary expenditures.

Comparison of authorities used, by Vote, during the second quarter 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 $12.6 million)

  This variance is mainly attributed to an increase in compensation due to the signing of collective bargaining agreements from the previous fiscal year.

• Professional and Special Services (increase of $44.2 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.

• Rentals (decrease of $5.9 million)

  This variance is mainly explained by the lease of a charter vessel under the Pacific Salmon Strategy Initiative in the same quarter last fiscal year.

• Repair and Maintenance (increase of $6.9 million)

  This variance is mainly explained by an increase in engineering services for the Near-Shore Fisheries Research Vessel.

• Acquisition of Land, Buildings and Works (increase of $5.6 million)

  This variance is mainly attributed to an increase in marine installation costs for various Small Craft Harbours projects.

• Acquisition of Machinery and Equipment (increase of $24.3 million)

  This variance is mainly explained by the acquisition of light icebreakers as well as an increase in work related to the Small Craft Acquisition Program. In addition, there was an increase in vessel dry docking and betterment work related to various Vessel Life Extension projects.

• Transfer Payments (decrease of $10.4 million)

  The variance is mainly attributed to the receipt of fewer applications for the License Retirement Program within the Pacific Salmon Strategy Initiative as the program starts to wind down.

• Other Subsidies and Payments (increase of $9.9 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 $11.7 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 Tricia Mitchell as Regional Director General, Ontario and Prairies Region, as of July 19, 2024.
• The appointment of Céline Gaudet as Regional Director General, Gulf Region, as of August 26, 2024.
• The appointment of Marian Campbell Jarvis as Senior Assistant Deputy Minister, Programs Sector, as of September 5, 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.