Financial Statements of Fisheries and Oceans Canada

Year ended March 31, 2015

Fisheries and Oceans Canada

Statement of Management Responsibility Including Internal Control Over Financial Reporting

Responsibility for the integrity and objectivity of the accompanying financial statements for the year ended March 31, 2015, and all information contained in these statements rests with the management of Fisheries and Oceans Canada. These financial statements have been prepared by management using the Government's accounting policies, which are based on Canadian public sector accounting standards.

Management is responsible for the integrity and objectivity of the information in these financial statements. Some of the information in the financial statements is based on management's best estimates and judgment, and gives due consideration to materiality. To fulfill its accounting and reporting responsibilities, management maintains a set of accounts that provides a centralized record of the department's financial transactions. Financial information submitted in the preparation of the Public Accounts of Canada, and included in the department's Departmental Performance Report, is consistent with these financial statements.

Management is also responsible for maintaining an effective system of internal control over financial reporting designed to provide reasonable assurance that financial information is reliable, that assets are safeguarded and that transactions are properly authorized and recorded in accordance with the Financial Administration Act and other applicable legislation, regulations, authorities and policies.

Management seeks to ensure the objectivity and integrity of data in its financial statements through careful selection, training, and development of qualified staff; through organizational arrangements that provide appropriate divisions of responsibility; through communication programs aimed at ensuring that regulations, policies, standards, and managerial authorities are understood throughout the department and through conducting an annual risk-based assessment of the effectiveness of the system of internal control over financial reporting.

The system of internal control over financial reporting is designed to mitigate risks to a reasonable level based on an ongoing process to identify key risks, to assess effectiveness of associated key controls, and to make any necessary adjustments.

A risk-based assessment of the system of internal control over financial reporting for the year ended March 31, 2015, was completed in accordance with the Treasury Board Policy on Internal Control and the results and action plans are summarized in the annex.

The effectiveness and adequacy of the department's system of internal control is reviewed by the work of internal audit staff, who conduct periodic audits of different areas of the department's operations, and by the Departmental Audit Committee, which oversees management's responsibilities for maintaining adequate control systems and the quality of financial reporting, and which recommends the financial statements to the Deputy Minister.

The financial statements of Fisheries and Oceans Canada have not been audited.

 

Matthew King,
Deputy Minister
Ottawa, Canada
September 3, 2015
Marty Muldoon, CPA, CMA, MBA
Chief Financial Officer
Ottawa, Canada
August 26, 2015

 

Statement of Financial Position (Unaudited)

As at March 31

(in thousands of dollars)
  2015 2014
Liabilities
Accounts payable and accrued liabilities (Note 4) $ 286,076 $ 317,521
Vacation pay and compensatory leave 71,010 68,405
Deferred revenue (Note 5) 12,861 11,208
Other liabilities (Note 6) 24,807 26,797
Employee future benefits (Note 7) 46,711 56,491
Contingent liabilities (Note 8) 108,683 130,138
Total gross liabilities 550,148 610,560
 
Liabilities held on behalf of Government
Deferred revenue (Note 5) (12,861) (11,208)
Total liabilities held on behalf of Government (12,861) (11,208)
 
Total net liabilities 537,287 599,352
 
Financial assets
Due from Consolidated Revenue Fund 276,223 268,595
Accounts receivable and advances (Note 9) 37,412 29,994
Loans receivable (Note 10) - -
Total gross financial assets 313,635 298,589
 
Financial assets held on behalf of Government
Accounts receivable and advances (Note 9) (30,827) (22,604)
Loans receivable (Note 10) - -
Total financial assets held on behalf of Government (30,827) (22,604)
 
Total net financial assets 282,808 275,985
 
Departmental net debt 254,479 323,367
 
Non-financial assets
Inventory (Note 11) 50,918 51,188
Tangible capital assets (Note 12) 2,711,932 2,671,788
Total non-financial assets 2,762,850 2,722,976
 
Departmental net financial position (Note 13) $ 2,508,371 $ 2,399,609

Contingent liabilities (Note 8)
Contractual obligations (Note 14)

The accompanying notes form an integral part of these financial statements.

 

Matthew King, Deputy Minister
Ottawa, Canada
September 3, 2015
Marty Muldoon, CPA, CMA, MBA
Chief Financial Officer
Ottawa, Canada
August 26, 2015

 

Statement of Operations and Departmental Net Financial Position (Unaudited)

For the Year Ended March 31

(in thousands of dollars)
  Planned Results
2015
2015 2014
Expenses
Economically Prosperous Maritime Sectors and Fisheries $ 433,670 $ 482,667 $ 509,546
Sustainable Aquatic Ecosystems 238,987 261,074 303,354
Safe and Secure Waters 727,669 692,776 716,615
Internal Services 317,289 313,778 336,753
Total expenses 1,717,615 1,750,295 1,866,268
 
Revenues
Sales of goods and services 89,906 85,698 86,319
Net gain (net loss) on disposal of tangible capital assets including adjustments 1,335 3,394 2,804
Other revenues 2,146 4,847 3,102
Revenues earned on behalf of Government (41,991) (49,677) (47,508)
Total revenues 51,396 44,262 44,717
 
Net cost of operations before government funding and transfers 1,666,219 1,706,033 1,821,551
 
Government funding and transfers
Net cash provided by Government   1,709,841 1,788,789
Change in due from the Consolidated Revenue Fund   7,628 13,775
Services provided without charge by other government departments (Note 15)   115,240 122,107
Transfer of the transition payments for implementing salary payments in arrears (Note 16)   (25,295) -
Transfer of assets and liabilities from (to) other government departments (Notes 12)   7,381 59
Total Government funding and transfers   1,814,795 1,924,730
 
Net cost of operations after government funding and transfers   (108,762) (103,179)
 
Departmental net financial position - Beginning of year   2,399,609 2,296,430
 
Departmental net financial position - End of year   $ 2,508,371 $ 2,399,609

Segmented Information (Note 17)

The accompanying notes form an integral part of these financial statements.

Statement of Change in Departmental Net Debt (Unaudited)

For the Year Ended March 31

(in thousands of dollars)
  2015 2014
Net cost of operations after government funding and transfers ($  108,762) ($ 103,179)
Change due to tangible capital assets
Acquisition of tangible capital assets 244,649 212,737
Amortization of tangible capital assets (199,230) (177,204)
Proceeds from disposal of tangible capital assets (16,050) (2,137)
Net gain on disposal of tangible capital assets including adjustments 3,394 2,804
Transfers to other government departments (Note 12) 7,381 (137)
Total change due to tangible capital assets 40,144 36,063
 
Change due to inventories (270) 2,678
 
Net decrease in departmental net debt (68,888) (64,438)
 
Departmental net debt - Beginning of year 323,367 387,805
 
Departmental net debt - End of year $ 254,479 $ 323,367

The accompanying notes form an integral part of these financial statements.

Statement of Cash Flows (Unaudited)

For the Year Ended March 31

(in thousands of dollars)
  2015 2014
Operating activities
Net cost of operations before government funding and transfers $ 1,706,033 $ 1,821,551
Non-cash items:
Amortization of tangible capital assets (199,230) (177,204)
Gain on disposal of tangible capital assets including adjustments 3,394 2,804
Services provided without charge by other government departments (Note 15) (115,240) (122,107)
Transfer of the transition payments for implementing salary payments in arrears (Note 16) 25,295 -
Variations in Statement of Financial Position:
Decrease in accounts payable and accrued liabilities 31,445 14,695
Increase in vacation pay and compensatory leave (2,605) (773)
Decrease in other liabilities 1,990 7,558
Decrease in employee future benefits 9,780 28,732
Decrease (increase) in contingent liabilities 21,455 (793)
(Decrease) increase in accounts receivable and advances (805) 1,048
(Decrease) increase in inventory (270) 2,678
Cash used in operating activities 1,481,242 1,578,189
 
Capital investing activities
Acquisitions of tangible capital assets 244,649 212,737
Proceeds from disposal of tangible capital assets (16,050) (2,137)
Cash used in capital investing activities 228,599 210,600
 
Net cash provided by the Government of Canada $ 1,709,841 $ 1,788,789

The accompanying notes form an integral part of these financial statements.

Notes to the Financial Statements (Unaudited)

For the Year Ended March 31

1. Authority and objectives

Fisheries and Oceans Canada was established under the Department of Fisheries and Oceans Act and reports to Parliament through the Minister of Fisheries and Oceans.

Fisheries and Oceans Canada's main legislative authorities are:

  • the Oceans Act;
  • the Fisheries Act;
  • the Species at Risk Act;
  • the Coastal Fisheries Protection Act; and
  • the Canada Shipping Act, 2001.

Fisheries and Oceans Canada has three strategic outcomes that are delivered through twenty-five programs. The three strategic outcomes are:

Economically Prosperous Maritime Sectors and Fisheries: Through its policies, programs and services, and while supporting the sustainable and effective use of Canada's water resources, Fisheries and Oceans Canada contributes to the capacity of Canada's maritime sectors and fisheries to derive economic benefits and further enhance their competitiveness.

Sustainable Aquatic Ecosystems: Fisheries and Oceans Canada's programs and policies contribute to the conservation, protection, and sustainability of Canada's aquatic ecosystems through the management of risks that affect species, oceans and fish habitats.

Safe and Secure Waters: Fisheries and Oceans Canada contributes to maintaining and improving maritime safety and security through the provision of maritime infrastructure, information, products and services necessary to ensure safe navigation and the protection of life and property.

Internal Services are groups of related activities and resources that are administered to support the needs of programs and other corporate obligations of an organization. Internal services include only those activities and resources that apply across an organization, and not those provided to a specific program. The groups of activities are Management and Oversight Services; Communications Services; Legal Services; Human Resources Management Services; Financial Management Services; Information Management Services; Information Technology Services; Real Property Services; Materiel Services; and Acquisition Services.

2. Summary of significant accounting policies

These financial statements have been prepared using the Government's accounting policies stated below which are based on Canadian public sector accounting standards. The presentation and results using the stated accounting policies do not result in any significant differences from Canadian public sector accounting standards.

Significant accounting policies are as follows:

  1. Parliamentary authorities
    Fisheries and Oceans Canada is financed by the Government of Canada through Parliamentary authorities. Financial reporting of authorities provided to Fisheries and Oceans Canada do not parallel financial reporting according to generally accepted accounting principles since authorities are primarily based on cash flow requirements. Consequently, items recognized in the Statement of Operations and Departmental Net Financial Position and in the Statement of Financial Position are not necessarily the same as those provided through authorities from Parliament. Note 3 provides a reconciliation between the bases of reporting. The planned results amounts in the "Expenses" and "Revenues" sections of the Statement of Operations and Departmental Net Financial Position are the amounts reported in the Future-oriented Statement of Operations included in the 2014-15 Report on Plans and Priorities . Planned results are not presented in the "Government funding and transfers" section of the Statement of Operations and Departmental Net Financial Position and in the Statement of Change in Departmental Net Debt because these amounts were not included in the 2014-15 Report on Plans and Priorities.

  2. Net Cash Provided by Government
    Fisheries and Oceans Canada operates within the Consolidated Revenue Fund (CRF), which is administered by the Receiver General for Canada. All cash received by Fisheries and Oceans Canada is deposited to the CRF and all cash disbursements made by Fisheries and Oceans Canada are paid from the CRF. The net cash provided by Government is the difference between all cash receipts and all cash disbursements, including transactions between departments of the Government.

  3. Due from the CRF
    Amounts due from or to the CRF are the result of timing differences that occur at year-end between when a transaction affects authorities and when it is processed through the CRF. Amounts due from the CRF represent the net amount of cash that Fisheries and Oceans Canada is entitled to draw from the CRF without further authorities to discharge its liabilities.

  4. Revenues
    Revenues from regulatory fees are recognized in the accounts based on the services provided in the year.

    Funds received from external parties for specified purposes are recorded upon receipt as deferred revenue. These revenues are recognized in the period in which the related expenses are incurred.

    Funds that have been received are recorded as deferred revenue, provided Fisheries and Oceans Canada has an obligation to other parties for the provision of goods, services or the use of assets in the future.

    Other revenues are accounted for in the period in which the underlying transaction or event that gave rise to the revenue takes place.

    Revenues that are non-respendable are not available to discharge Fisheries and Oceans Canada's liabilities. While the Deputy Minister is expected to maintain accounting control, he has no authority regarding the disposition of non-respendable revenues. As a result, non-respendable revenues are considered to be earned on behalf of the Government of Canada and are therefore presented in reduction of the entity's gross revenues.

  5. Expenses
    Expenses are recorded on the accrual basis:

    Transfer payments are recorded as expenses when authorization for the payment exists and the recipient has met the eligibility criteria or the entitlements established for the transfer payment program. In situations where payments do not form part of an existing program, transfer payments are recorded as expenses when the Government announces a decision to make a non-recurring transfer, provided the enabling legislation or authorization for payment receives parliamentary approval prior to the completion of the financial statements. Transfer payments that become repayable as a result of conditions specified in the contribution agreement that have come into being are recorded as a reduction to transfer payment expense and as a receivable.

    Vacation pay and compensatory leave are accrued as the benefits are earned by employees under their respective terms of employment.

    Services provided without charge by other government departments for accommodation, employer contributions to the health and dental insurance plans, legal services and workers' compensation are recorded as operating expenses at their estimated cost.

  6. Employee future benefits

    1. Pension benefits: Eligible employees participate in the Public Service Pension Plan, a multi-employer plan administered by the Government of Canada. Fisheries and Oceans Canada's contributions to the Plan are charged to expenses in the year incurred and represent the total departmental obligation to the Plan. Fisheries and Oceans Canada's responsibility with regard to the Plan is limited to its contributions. Actuarial surpluses or deficiencies are recognized in the financial statements of the Government of Canada, as the Plan's sponsor.

    2. Severance benefits: Employees entitled to severance benefits under labour contracts or conditions of employment earn these benefits as services necessary to earn them are rendered. The obligation relating to the benefits earned by employees is calculated using information derived from the results of the actuarially determined liability for employee severance benefits for the Government as a whole.

  7. Accounts and loans receivable
    Accounts and loans receivable are stated at the lower of cost and net recoverable value. A valuation allowance is recorded for accounts and loans receivable where recovery is considered uncertain.

  8. Contingent liabilities
    Contingent liabilities are potential liabilities that may become actual liabilities when one or more future events occur or fail to occur. To the extent that the future event is likely to occur or fail to occur, and a reasonable estimate of the loss can be made, an estimated liability is accrued and an expense recorded. If the likelihood is not determinable or if an amount cannot be reasonably estimated the contingency is disclosed in the notes to the financial statements.

  9. Environmental liabilities
    Environmental liabilities consist of estimated costs related to the remediation of contaminated sites as well as estimated costs related to obligations associated with the retirement of tangible capital assets and other environmental liabilities.

    1. Contaminated Sites: A liability for remediation of contaminated sites is recognized when all of the following criteria are satisfied: an environmental standard exists, contamination exceeds the environmental standard, the government is directly responsible or accepts responsibility, it is expected that future economic benefits will be given up and a reasonable estimate of the amount can be made. The liability reflects the Government's best estimate of the amount required to remediate the sites to the current minimum standard for its use prior to contamination. When the cash flows required to settle or otherwise extinguish a liability are expected to occur over extended future periods, a present value technique is used. The discount rate applied is taken from the government's consolidated revenue fund monthly lending rates for periods of one year and over. The discount rates used are based on the term rate associated with the estimated number of years to complete remediation.

    2. Asset Retirement Obligations: A liability for an asset retirement obligation is recognized when all of the following criteria are satisfied: there is an agreement, contract, legislation, or a constructive or equitable obligation that obligates the government to incur retirement costs in relation to a tangible capital asset, the past event or transaction giving rise to the retirement liability has occurred, it is expected that future economic benefits will be given up and a reasonable estimate of the amount can be made. These costs are normally capitalized and amortized over the asset's estimated useful life based on the Government's best estimates of the cost to retire the tangible asset. The liability reflects the present value of estimated future cash flows required to retire the assets where amounts can be reasonably estimated and is expected to be settled as the related sites, facilities or assets are removed from service.

  10. Inventory
    Inventory held for future program delivery consists of spare parts, materials, supplies and fuel. Spare parts, materials and supplies are valued at cost or net realizable value. Fuel is valued using the moving weighted average cost method.

    Inventory held for resale consists of supplies for the production of publications and publications which will be sold in the future. It is valued at the lower of cost or net realizable value.

  11. Tangible capital assets
    All tangible capital assets and leasehold improvements having an initial cost of $10,000 or more are recorded at their acquisition cost. Fisheries and Oceans Canada does not capitalize intangibles, works of art and historical treasures that have cultural, aesthetic or historical value, assets located on Indian reserves or museum collections.

    Amortization of tangible capital assets is done on a straight-line basis over the estimated useful life of the asset as follows:

    Asset Class Amortization Period
    Buildings 15-40 years
    Work and infrastructure 5-75 years
    Machinery and equipment 3-25 years
    Informatics 3-5 years
    Other Equipment 10 years
    Ships and boats 5-40 years
    Aircrafts 15-25 years
    Vehicles 5-20 years
    Leasehold improvements Period of expected use; lesser of economic life of the improvement or the lease term
    Work in progress Work in progress are recorded in the applicable asset class in the year that they become available for use and are not amortized until they become available for use.

  12. Measurement uncertainty
    The preparation of these financial statements requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses reported in the financial statements. At the time of preparation of these statements, management believes the estimates and assumptions to be reasonable.

    The most significant items where estimates are used are the workforce adjustment liability, allowance for vacation pay and compensatory leave, liability for employee future benefits, contingent liabilities, environmental liabilities, allowance for bad debts, and the useful life of tangible capital assets.

    Actual results could significantly differ from those estimated. Management's estimates are reviewed periodically and, as adjustments become necessary, they are recorded in the financial statements in the year they become known.

3. Parliamentary authorities

Fisheries and Oceans Canada receives most of its funding through annual parliamentary authorities. Items recognized in the Statement of Operations and Departmental Net Financial Position and the Statement of Financial Position in one year may be funded through parliamentary authorities in prior, current or future years. Accordingly, Fisheries and Oceans Canada has different net results of operations for the year on a government funding basis than on an accrual accounting basis. The differences are reconciled in the following tables:


(a) Reconciliation of net cost of operations to current year authorities used

(in thousands of dollars)
  2015 2014
Net cost of operations before government funding and transfers $ 1,706,033 $ 1,821,551
Adjustments for items affecting net cost of operations but not affecting authorities:
Amortization of tangible capital assets ($ 199,230) (177,204)
Net gain on disposal of tangible capital assets including adjustments 3,394 2,804
Services provided without charge by other government departments (115,240) (122,107)
Decrease in accrued liabilities not charged to authorities 44,340 31,882
Increase in vacation pay and compensatory leave (2,605) (773)
Decrease in employee future benefits not charged to authorities 6,444 32,068
Decrease (increase) in contingent liabilities 21,455 (793)
Transition payments for implementing salary payments in arrears 25,295 -
(Decrease) increase in inventory (270) 2,678
Bad debt expense (426) (1,199)
Refunds of previous years expenditures 4,088 2,936
Revenues not available for spending in the current year 727 2,775
Increase in deferred revenue (1,653) (933)
Increase in earmarked supplementary fines (Note 13) (63) (2)
Other 29 (17)
Total Adjustments for items affecting net cost of operations but not affecting authorities (213,715) (227,885)
 
Adjustments for items not affecting net cost of operations but affecting authorities:
Acquisition of tangible capital assets 244,649 212,737
Total Adjustments for items not affecting net cost of operations but affecting authorities 244,649 212,737
 
Current year authorities used $ 1,736,967 $ 1,806,403

b) Authorities provided and used

(in thousands of dollars)
  2015 2014
Authorities provided:
Vote 1 - Operating expenditures $ 1,218,749 $ 1,342,830
Vote 5 - Capital expenditures 486,380 409,221
Vote 10 - Grants and contributions 91,510 88,234
Statutory amounts 127,385 140,011
Total authorities provided 1,924,024 1,980,296
Less:
Authorities available for future years (1,523) (1,660)
Lapsed authorities:
Operating (26,218) (59,415)
Capital (157,502) (109,854)
Grants and Contributions (1,800) (2,964)
Spending of proceeds from the disposal of surplus Crown assets (14) -
Current year authorities used $ 1,736,967 $ 1,806,403

4. Accounts payable and accrued liabilities

The following table presents the details of Fisheries and Oceans Canada's accounts payable and accrued liabilities:

(in thousands of dollars)
  2015 2014
Accounts payable - Other government departments and agencies $ 30,732 $ 33,097
Accounts payable - External parties 159,267 162,357
Total accounts payable 189,999 195,454
 
Accrued liabilities 96,077 122,067
 
Total accounts payable and accrued liabilities $ 286,076 $ 317,521

In Canada's Economic Action Plan 2012, the Government announced savings measures to be implemented by departments over the next three fiscal years starting in 2012-2013. As a result, Fisheries and Oceans Canada has recorded at March 31, 2015, an obligation for termination benefits for an amount of $500,000 ($44,690,000 in 2013-2014) as part of accrued liabilities to reflect the estimated workforce adjustment costs.

5. Deferred revenue

Deferred revenue from fishing licenses represents the balance at year-end of unearned revenues stemming from fees received prior to services being performed. Other revenues are from external parties which are restricted to fund the expenditures related to specific projects. Revenue is recognized in the period in which these expenditures are incurred or in which the service is performed.

(in thousands of dollars)
  2015 2014
Opening balance $ 11,208 $ 10,275
Amounts received 12,859 11,206
Revenue recognized (11,206) (10,273)
Gross closing balance 12,861 11,208
 
Deferred revenues held on behalf of Government (12,861) (11,208)
 
Net closing balance $ - $ -

6. Other liabilities

Other liabilities represent deferred revenue funds received by Fisheries and Oceans Canada under regulations, cost-sharing agreements or to fund projects.

Details of the transactions related to these accounts are as follows:

(in thousands of dollars)
  Opening balance Receipts
and other credits
Payments
and other charges
Closing balance
Research projects deposits $ 24,995 $ 6,885 ($  9,066) $ 22,814
Federal/Provincial cost-sharing agreements 281 1,030 (997) 314
Sales of seized assets - Fisheries Act 1,172 367 (289) 1,250
Contractor security deposits 349 80 - 429
Total other liabilities $ 26,797 $ 8,362 ($ 10,352) $ 24,807

Research projects deposits: This account was established to record contributions received from organizations and individuals, for the furtherance of research work.

Federal/provincial cost-sharing agreements: This account was established to record the deposit of money received from the provinces for cost-shared programs. The funds are disbursed according to agreements.

Sale of seized assets: This account was established to record the proceeds of sale of seized items by Fisheries and Oceans Canada from a person contravening the Fisheries Act. Money so received is held in the Consolidated Revenue Fund pending final resolution of the case by the Minister of Fisheries and Oceans Canada or the courts.

Contractor security deposits: This account was established to record money held to ensure that a contractor's obligations under contracts are carried out, to protect the interests of subcontractors, sub-subcontractors and suppliers, and to protect the Crown against loss should a bidder fail to honor a contract.

7. Employee future benefits

  1. Pension benefits

    Fisheries and Oceans Canada's employees participate in the Public Service Pension Plan, which is sponsored and administered by the Government of Canada. Pension benefits accrue up to a maximum period of 35 years at a rate of 2 percent per year of pensionable service, times the average of the best five consecutive years of earnings. The benefits are integrated with Canada/Québec Pension Plan benefits and they are indexed to inflation.

    Both the employees and Fisheries and Oceans Canada contribute to the cost of the Plan. Due to the amendment of the Public Service Superannuation Act following the implementation of provisions related to Economic Action Plan 2012, employee contributors have been divided into two groups - Group 1 relates to existing Plan members as of December 31, 2012, and Group 2 relates to members joining the Plan as of January 1, 2013. Each group has a distinct contribution rate.

    The 2014-2015 expense amounts were $84,399,113 ($95,867,633 in 2013-2014). For Group 1 members, the expense represents approximately 1.41 times (1.6 times in 2013-14) the employee contributions and, for Group 2 members, approximately 1.39 times (1.5 times in 2013-2014) the employee contributions.

    Fisheries and Oceans Canada's responsibility with regard to the Plan is limited to its contributions. Actuarial surpluses or deficiencies are recognized in the financial statements of the Government of Canada, as the Plan's sponsor.

  2. Severance benefits

    Fisheries and Oceans Canada provides severance benefits to its employees based on eligibility, years of service and salary at termination of employment. These severance benefits are not pre-funded. Benefits will be paid from future authorities.

    As part of the collective agreement negotiations with certain employee groups, and changes to the conditions of employment for executives and certain non-represented employees, the accumulation of severance benefits under the employee severance pay program ceased for these employees commencing in 2012. Employees subject to these changes have been given the option to be immediately paid full or partial value of benefits earned to date or collect the full or remaining value of benefits on termination from the public service. These changes have been reflected in the calculation of the outstanding severance benefit obligation.

Information about the severance benefits, measured as at March 31, is as follows:

(in thousands of dollars)
  2015 2014
Accrued benefit obligation, beginning of year $ 56,491 $ 85,223
Expense for the year 11,880 41,113
Benefits paid during the year (21,660) (69,845)
Accrued benefit obligation, end of year $ 46,711 $ 56,491

8. Contingent liabilities

Contingent liabilities arise in the normal course of operations and their ultimate disposition is unknown. They are grouped into two categories as follows:

  1. Environmental Liabilities

    Remediation of contaminated sites

    The government has developed a “Federal Approach to Contaminated Sites”, which incorporates a risk-based approach to the management of contaminated sites. Under this approach the Government has inventoried the contaminated sites on federal lands that have been identified, allowing them to be classified, managed and recorded in a consistent manner. This systematic approach aides in the identification of the high risk sites in order to allocate limited resources to those sites which pose the highest risk to the environment and human health.

    Fisheries and Oceans Canada has identified approximately 4,368 sites (5,338 sites in 2014) where contamination may exist and assessment, remediation and monitoring may be required. Of these, Fisheries and Oceans Canada has identified 930 sites (898 sites in 2014) where action is possible and for which a net liability of $104,558,273 ($96,498,180 in 2014) has been recorded. This liability represents management's best estimate of the amount required to complete the remediation of the sites to the current minimum standard for its use prior to contamination, based on information available at the financial statement date. A net present value technique has been used for sites where the cash flows are expected to occur over extended future periods.

    The following table presents the total estimated amounts of these liabilities by nature and source, the associated expected recoveries and the total undiscounted future expenditures as at March 31, 2015, and March 31, 2014. When the liability estimate is based on a future cash requirement, the Government of Canada lending rate applicable to loans with similar terms to maturity has been used to discount the estimated future expenditures. The March 2015 rates range from 0.61% for 2 year term to 2.12% for a 25 or greater year term.

    Nature & Source of Liability
    Nature & Source 2015 2014
    Number of Sites Estimated Liability Estimated Total Undiscounted Expenditures Expenditures Recoveries Number of Sites Estimated Liability Estimated Total Undis-counted Expenditures Estimated Recoveries
    Radioactive Material (1) - - - - - - - -
    Former Mineral Exploration Sites (2) - - - - - - - -
    Military & Former Military Sites (3) - - - - - - - -
    Fuel Related Practices (4) 88 13,810,480 14,220,843 - 85 9,877,485 10,543,814 -
    Landfill/ Waste Sites (5) 11 1,063,433 1,095,966 - 9 986,510 1,045,410 -
    Engineered Asset/ Air & Land Transportation (6) 1 216,836 223,591 - 1 210,646 223,572 -
    Marine Facilities/Aquatic Sites (7) 784 77,167,118 79,709,840 - 761 72,841,722 77,795,716 -
    Parks & Protected Areas (8) - - - - - - - -
    Office/Commercial/ Industrial Operations (9) 35 11,528,744 11,920,265 - 35 12,158,167 12,994,414 -
    Other (10) 11 771,662 795,785 - 7 423,651 451,696 -
    Totals 930 104,558,273 107,966,290 - 898 96,498,180 103,054,620 -
    1. Contamination associated with former nuclear operations, e.g. low-level radioactive waste, radioactive isotopes.
    2. Contamination associated with former mine activities, e.g. heavy metals, petroleum hydrocarbons, etc. Sites often have multiple sources of contamination.
    3. Contamination associated with the operations of military and former military sites where activities such as fuel handling and storage activities, waste sites, metals/PCB-based paint used on buildings resulted in former or accidental contamination, e.g. petroleum hydrocarbons, PCBs, heavy metals. Sites often have multiple sources of contamination.
    4. Contamination primarily associated with fuel storage and handling, e.g., accidental spills related to fuel storage tanks or former fuel handling practices, e.g. petroleum hydrocarbons, polyaromatic hydrocarbons and BTEX.
    5. Contamination associated with former landfill/waste site or leaching from materials deposited in the landfill/waste site, e.g. metals, petroleum hydrocarbons, polyaromatic hydrocarbons, BTEX, other organic contaminants, etc.
    6. Contamination associated with the operations of engineered assets such as airports, railways and roads where activities such as, fuel storage/handling, waste sites, firefighting training facilities and chemical storage areas resulted in former or accidental contamination, e.g. metals, petroleum hydrocarbons, polyaromatic hydrocarbons, BTEX and other organic contaminants. Sites often have multiple sources of contamination.
    7. Contamination associated with the operations of marine assets, e.g., port facilities, harbours, navigation systems, light stations, hydrometric stations, where activities such as fuel storage/handling, use of metal based paint (e.g., on light stations) resulted in former or accidental contamination, e.g. metals, petroleum hydrocarbons, polyaromatic hydrocarbons and other organic contaminants. Sites often have multiple sources of contamination.
    8. Contamination associated with the operations and maintenance of parks and protected areas where activities such as fuel storage/handling, waste sites and use of metal based paint resulted in former or accidental contamination, e.g. metals, petroleum hydrocarbons, polyaromatic hydrocarbons, PCBs and other organic contaminants. Sites often have multiple sources of contamination.
    9. Contamination associated with the operations of the office/commercial/industrial facilities where activities such as fuel storage/handling, waste sites and use of metal-based paint resulted in former or accidental contamination, e.g. metals, petroleum hydrocarbons, polyaromatic hydrocarbons, BTEX, etc. Sites often have multiple sources of contamination.
    10. Contamination from other sources, e.g. use of pesticides, herbicides, fertilizers at agricultural sites; use of PCBs, firefighting training areas, firing ranges and training facilities, etc.

    Of the remaining 3,438 sites, 646 sites were closed, as they were either remediated or assessed and found not to be contaminated, and there are 2,792 sites for which an estimated liability has not been determined, primarily due to the fact the sites are not yet fully assessed and contamination has not yet been determined or they have not developed a detailed remediation plan. As the sites are assessed, if contamination is found, and it exceeds the environmental standard, a liability will be recognized as soon as a reasonable estimate can be made.

    Of the 2,792 sites that do not have liabilities, 75 are considered high priority for action because they present a higher risk to human health and the environment. These sites are at various stages of testing and evaluation in order to develop a remediation or risk management strategy. Liabilities will be reported as soon as a reasonable estimate can be determined. 761 are considered a medium to low priority based on the low level of risk to human health or the environment. Assessment and remediation will be done on these sites as resources become available. 1,842 sites are not yet classified because they are only at the initial testing stages and contamination has not yet been determined. 91 sites are not considered a priority for action because information indicates there is likely no significant environmental impact or human health threats and there is likely no need for action unless new information becomes available indicating greater concerns, in which case, the sites will be re-examined. 23 sites currently have insufficient information in order to classify. Additional information is required to classify the sites but is not available at this time. As additional information becomes available the sites will be re-examined.

  2. Claims and Litigations

    Claims have been made against Fisheries and Oceans Canada in the normal course of operations. These claims include items with pleading amounts and others for which no amount is specified. While the total amount claimed in these actions is significant, their outcomes are not determinable. Fisheries and Oceans Canada has recorded an allowance of $4,125,000 ($33,640,000 in 2013-2014) for claims and litigations where it is likely that there will be a future payment and a reasonable estimate of the loss can be made. Based on the Department's assessment, legal proceedings for claims estimated at $573,157,300 ($345,385,000 in 2013-2014) will be pending at March 31, 2015.

9. Accounts receivable and advances

The following table presents details of Fisheries and Oceans Canada's accounts receivable and advances balances:

(in thousands of dollars)
  2015 2014
Accounts receivable and advances
Receivables - Other government departments and agencies $ 16,514 $ 13,891
Receivables - External parties 50,977 45,882
Accountable advances 282 178
Subtotal 67,773 59,951
 
Less: Allowance for doubtful accounts on receivables from external parties (30,361) (29,957)
 
Gross accounts receivable and advances 37,412 29,994
 
Accounts receivable held on behalf of Government (30,827) (22,604)
 
Net accounts receivable and advances $ 6,585 $ 7,390

10. Loans receivable

The following table presents details of Fisheries and Oceans Canada's loans receivable balances:

(in thousands of dollars)
  2015 2014
Loans receivable
Loans receivable (1) $ 1,472 $ 1,472
Accrued interest on loans 1,556 1,556
Less: Allowance on loans (3,028) (3,028)
 
Total loans receivable held on behalf of Government $ - $ -

(1) Loans of $1,471,652 have been made to haddock fishermen ($1,343,337, interest of 8% per annum, repayable over 4 years until 1979) and to Canadian producers of frozen groundfish ($128,315, interest of 13 % per annum, repayable over 7 years until 1987). Allowances on loans receivable are determined on a loan by loan basis. As a result of the postponement of principal and interest payments beyond the loan's original term, Fisheries and Oceans Canada has established an allowance equivalent to the total amount of principal and interest on the loans receivable.

11. Inventory

The following table presents details of inventory:

(in thousands of dollars)
  2015 2014
Inventory held for future program delivery $ 50,503 $ 50,637
Inventory held for resale 415 551
Total inventory $ 50,918 $ 51,188

The cost of consumed inventory recognized as an expense in the Statement of Operations and Departmental Net Financial Position is $71,297,936 in 2014-2015 ($68,283,449 in 2013-2014).

12. Tangible capital assets


(in thousands of dollars)
Cost
  Opening Balance Acquisitions Adjustments (1) Disposals and
write-offs
Closing Balance
Land $ 24,232 $ - $ 298 $ 2,309 $ 22,221
Buildings 708,226 - 19,558 3,426 724,358
Works and infrastructure 2,401,165 - 55,665 21,693 2,435,137
Machinery and equipment 351,866 5,855 9,555 8,669 358,607
Informatics 93,603 43 7,004 946 99,704
Other equipment 46 - - - 46
Ships and boats 1,940,853 110 66,668 12,028 1,995,603
Aircrafts 33,662 - 8,660 - 42,322
Vehicles 66,766 1,780 1,993 4,863 65,676
Leasehold improvements 494,719 - 8,782 750 502,751
Work in progress 263,004 236,861 (155,001) 18,736 326,128
  $ 6,378,142 $ 244,649 $ 23,182 $ 73,420 $ 6,572,553

(1) Adjustments include work in progress of $162,372,682 that were transferred to other categories upon completion of the assets. Fisheries and Oceans Canada received transfers from other departments with a net book value of $7,381,258, including work in progress of $7,372,161 and other assets of $9,097.

(in thousands of dollars)
Accumulated Amortization
  Opening Balance Amortization Adjustments(1) Disposals and
write-offs
Closing Balance
Land $ - $ - $ - $ - $ -
Buildings 446,446 16,980 104 3,068 460,462
Works and
infrastructure
1,229,502 76,296 339 16,263 1,289,874
Machinery
and
equipment
235,049 18,455 319 8,104 245,719
Informatics 76,519 7,782 (150) 945 83,206
Other equipment 32 3 - - 35
Ships and
boats
1,312,456 60,798 (400) 11,040 1,361,814
Aircrafts 30,414 155 - - 30,569
Vehicles 51,499 4,084 (39) 4,734 50,810
Leasehold
improvements
324,437 14,677 (339) 643 338,132
  $ 3,706,354 $ 199,230 ($ 166) $ 44,797 $ 3,860,621

(1) Adjustments include work in progress of $162,372,682 that were transferred to other categories upon completion of the assets. Fisheries and Oceans Canada received transfers from other departments with a net book value of $7,381,258, including work in progress of $7,372,161 and other assets of $9,097.

(in thousands of dollars)
Net book value
  2014 2015
Land $ 24,232 $ 22,221
Buildings 261,780 263,896
Works and infrastructure 1,171,663 1,145,263
Machinery and equipment 116,817 112,888
Informatics 17,084 16,498
Other equipment 14 11
Ships and boats 628,397 633,789
Aircrafts 3,248 11,753
Vehicles 15,267 14,866
Leasehold improvements 170,282 164,619
Work in progress 263,004 326,128
  $ 2,671,788 $ 2,711,932

13. Departmental net financial position

A portion of Fisheries and Oceans Canada's net financial position is used for a specific purpose. Related revenues and expenses are included in the Statement of Operations and Departmental Net Financial Position.

The Supplementary Fines - Fisheries Act Account was established pursuant to the Fisheries Act and related regulations to record fines and penalties levied by courts under the Act. The balance in the account is to be used for remedial or preventive action to fish habitat as well as the promotion of proper management, control, conservation, and protection of fisheries or fish habitat.

The Supplementary Fines - Species at Risk Account was established pursuant to the Species at Risk Act and related regulations to record fines and penalties levied by courts under the Act. The balance in the account is to be used for the purpose of conducting research into the protection of the wildlife species in respect of which the offence was committed.

Activity in the aforementioned accounts is as follows:

(in thousands of dollars)
  2015 2014
Restricted - Supplementary Fines
Fisheries Act
Balance - Beginning of year $ 1,744 $ 1,756
Revenues 42 177
Expenses (110) (189)
Balance - End of year 1,676 1,744
 
Species at Risk Act
Balance - Beginning of year 30 20
Revenues 5 10
Expenses - -
Balance - End of year 35 30
 
Total Balance - End of year - Restricted 1,711 1,774
 
Unrestricted 2,506,660 2,397,835
 
Departmental net financial position - End of year $ 2,508,371 $ 2,399,609

14. Contractual obligations

The nature of Fisheries and Oceans Canada's activities can result in some large multi-year contracts and obligations whereby Fisheries and Oceans Canada will be obligated to make future payments in order to carry out its transfer payment programs or when the services/goods are received.

Significant contractual obligations that can be reasonably estimated are summarized as follows:

(in thousands of dollars)
  2016 2017 2018 Total
Construction of assets $ 247,686 $ 54,856 $ 70,130 $ 372,672
Business Services 11,384 11,384 - 22,768
Total $ 259,070 $ 66,240 $ 70,130 $ 395,440

15. Related Party Transactions

Fisheries and Oceans Canada is related as a result of common ownership to all government departments, agencies, and Crown corporations. Fisheries and Oceans Canada enters into transactions with these entities in the normal course of business and on normal trade terms. During the year, Fisheries and Oceans Canada received services which were obtained without charge from other government departments as disclosed below.

a) Common services provided without charge by other government departments

During the year, Fisheries and Oceans Canada received services without charge from certain common service organizations, related to accommodation, legal services, the employer's contribution to the health and dental insurance plans and workers' compensation coverage. These services provided without charge have been recognized in Fisheries and Oceans Canada's Statement of Operations and Departmental Net Financial Position as follows:

(in thousands of dollars)
  2015 2014
Employer's contribution to the health and dental insurance plans $ 63,040 $ 69,145
Accommodation 47,576 49,410
Legal services 3,490 2,548
Worker's compensation 1,134 1,004
  $ 115,240 $ 122,107

The Government has centralized some of its administrative activities for efficiency, cost effectiveness purposes and economic delivery of programs to the public. As a result, the Government uses central agencies and common service organizations so that one department performs services for all other departments and agencies without charge. The costs of these services, such as the payroll and cheque issuance services provided by Public Works and Government Services Canada and audit services provided by the Office of the Auditor General are not included in Fisheries and Oceans Canada's Statement of Operations and Departmental Net Financial Position.

b) Other transactions with related parties


(in thousands of dollars)
  2015 2014
Accounts receivable - Other Government departments and agencies $ 16,514 $ 13,891
Accounts Payable - Other Government departments and agencies 30,732 33,097
Expenses - Other Government departments and agencies 230,262 260,192
Revenues - Other Government departments and agencies 12 82

Expenses and revenues disclosed in b) exclude common services provided without charges, which are already disclosed in a).

16. Transfer of the transition payments for implementing salary payments in arrears

The Government of Canada implemented salary payments in arrears in 2014-15. As a result, a one-time payment was issued to employees and will be recovered from them in the future. The transition to salary payments in arrears forms part of the transformation initiative that replaces the pay system and also streamlines and modernizes the pay processes. This change to the pay system had no impact on the expenses of the Department. However, it did result in the use of additional spending authorities by the Department. Prior to year end, the transition payments for implementing salary payments in arrears were transferred to a central account administered by Public Works and Government Services Canada, who is responsible for the administration of the Government pay system.

17. Segmented information

Presentation by segment is based on Fisheries and Oceans Canada's program alignment architecture. The presentation by segment is based on the same accounting policies as described in the Summary of Significant Accounting Policies in Note 2. The following table presents the expenses incurred and revenues generated by strategic outcomes, by major object of expense and by major type of revenue. The segment results for the period are as follows:

(in thousands of dollars)
  Economically Prosperous Maritime Sectors and Fisheries Sustainable Aquatic Ecosystems Safe and Secure Waters Internal Services 2015 2014
Transfer Payments
First Nations and Inuit people $ 66,327 $ 235 $ - $ - $ 66,562 $ 64,484
Non-profit organizations            
Other levels of governments within Canada 5,190 - - 308 1,133 1,567
Individuals 541 129 - 467 1,137 145
Other countries and international organizations 10 - 105 - 115 65
Industry - 65 20 - 85 55
Total transfer payments 72,893 10,586 5,226 1,005 89,710 85,271
 
Operating Expenses
Salaries and employee benefits 198,113 159,426 404,679 154,513 916,731 1,014,597
Professional and special services 59,091 47,777 53,378 66,550 226,796 248,900
Amortization of tangible capital assets 73,365 7,325 80,940 37,600 199,230 177,204
Repair and maintenance 33,039 2,513 62,635 15,344 113,531 107,871
Utilities, materials, supplies and fuel 44,811 9,396 42,136 9,507 105,850 106,304
Travel, relocation and freight 9,217 10,179 17,708 4,263 41,367 43,376
Machinery and equipment 5,326 8,032 20,028 9,014 42,400 41,238
Rental 5,487 2,168 2,708 2,605 12,968 15,807
Payments in Lieu of Taxes Paid to municipalities 40 - - 10,100 10,140 10,046
Telecommunications 592 1,704 5,057 40 7,393 6,025
Communications services 504 301 466 509 1,780 1,726
Variation in contingent liabilities (25,029) (40) (150) 3,764 (21,455) 793
Other 5,218 1,707 (2,035) (1,036) 3,854 7,110
Total operating expenses 409,774 250,488 687,550 312,773 1,660,585 1,780,997
 
Total expenses 482,667 261,074 692,776 313,778 1,750,295 1,866,268
 
Revenues
Sales of goods and services 53,929 284 31,368 117 85,698 86,319
Net gain (net loss) on disposal of tangible capital assets including adjustments 5,775 685 (17,803) 14,737 3,394 2,804
Revenues earned on behalf of Government (41,191) (4,117) (3,490) (879) (49,677) (47,508)
Other revenues 2,472 3,685 (136) (1,174) 4,847 3,102
Total revenues 20,985 537 9,939 12,801 44,262 44,717
             
Net cost of operations $ 461,682 $ 260,537 $ 682,837 $ 300,977 $ 1,706,033 $ 1,821,551

18. Comparative information

Comparative figures have been reclassified to conform to the current year's presentation.


Fisheries and Oceans Canada

Annex to the Statement of Management Responsibility Including Internal Control over Financial Reporting

Fiscal Year 2014-2015

Table of Contents

  1. Introduction

  2. Departmental system of internal control over financial reporting
    2.1 Internal Control Management
    2.2 Service arrangements relevant to financial statements

  3. Departmental assessment results during fiscal year 2014-2015
    3.1 Design effectiveness testing of key controls
    3.2 Operating effectiveness testing of key controls
    3.3 On-going monitoring of key controls

  4. Fisheries and Oceans Canada's Action Plan
    4.1 Progress during fiscal year 2014-2015
    4.2 Status and action plan for the next fiscal year and subsequent years

1. Introduction

As required by the Treasury Board Policy on Internal Control, this document provides summary information on the measures taken by Fisheries and Oceans Canada to maintain an effective system of internal control over financial reporting, including information on internal control management, assessment results and related action plans.

Further details regarding Fisheries and Oceans Canada's mission, priorities, strategic outcomes and program alignment architecture are available in the Departmental Performance Report and Report on Plans and Priorities.

2. Departmental system of internal control over financial reporting

2.1 Internal Control Management

Fisheries and Oceans Canada has a well-established governance and accountability structure to support departmental assessment efforts and oversight of its system of internal control. A departmental internal control management framework, approved by the Deputy Minister, is in place and includes:

  • Organizational accountability structures as they relate to internal control management to support sound financial management, including roles and responsibilities of senior managers in their areas of responsibility for control management;

  • values and ethics;

  • ongoing communication and training on statutory requirements, and policies and procedures for sound financial management and control; and

  • quarterly monitoring of and regular updates on internal control management, as well as the provision of related assessment results and action plans to the Deputy Minister and departmental senior management and, as applicable, the Departmental Audit Committee.

The Departmental Audit Committee provides advice to the Deputy Minister on the adequacy and functioning of the department's risk management, control and governance frameworks and processes.

2.2 Service Arrangements relevant to financial statements

Fisheries and Oceans Canada relies on other organizations for the processing of certain transactions that are recorded in its financial statements as follows:

Common Arrangements:

  • Public Works and Government Services Canada centrally administers the payroll and the procurement of goods and services in accordance with the Fisheries and Oceans Canada Delegation of Authority, and provides accommodation services;

  • the Treasury Board Secretariat provides Fisheries and Oceans Canada with information used to calculate various accruals and allowances, such as the accrued severance liability;

  • administration costs and commissions paid to provincial workers' compensation boards are provided by Employment and Social Development Canada;

  • the Department of Justice Canada provides legal services to Fisheries and Oceans Canada; and

  • Shared Services Canada provides information technology (IT) infrastructure services to Fisheries and Oceans Canada in the areas of data center and network services.

Specific Arrangements:

  • An external service provider, pursuant to a contract with the Government of Canada, administers the Marine Navigation Services Fee revenues for the west coast on behalf of the Canadian Coast Guard Marine Navigation program. The external service provider has the authority and responsibility to ensure that billing and collection of the Western Region's Marine Navigation Services Fee are made in accordance with the terms and conditions set out by the Canadian Coast Guard Marine Navigation program. As a result, reliance is placed on the control procedures of the external service provider; and

  • Public Works and Government Services Canada provides Fisheries and Oceans Canada billing, banking, electronic funds processing and similar payment services for a significant portion of the revenues from commercial fishing licenses.

3. Departmental assessment results during fiscal year 2014-2015

Fisheries and Oceans Canada completed all design effectiveness testing in 2012-2013 and continued to advance its operating effectiveness testing of key control areas in the current year. On-going monitoring has been implemented as per the Internal Control Action Plan for most key control areas. The two remaining areas requiring initial operating effectiveness testing, capital assets and inventory, are progressing and on target to complete in 2016-2017 according to plans.

3.1 Design effectiveness testing of key controls

Fisheries and Oceans Canada completed all design effectiveness testing for the significant business processes in 2012-2013.

3.2 Operating effectiveness testing of key controls

In 2014-15, Fisheries and Oceans Canada completed operating effectiveness testing of operating expenditures and the department's two primary revenue streams; marine service fees and fishing licenses according to plans.

Results and remediation requirements were identified in action plans communicated to senior management for each of the completed sub-processes in scope and remediation is complete or underway. As a result of operating effectiveness testing, the Department identified the following area in the revenue process for licensing that required remediation:

  • The Department should strengthen controls over the multiple regional fishing license systems and its processing of receipts.

Operational effectiveness testing was initiated in 2014-2015 for the Capital Assets process, which is scheduled to be completed in 2016-2017 according to initial internal control implementation plans.

3.3 On-going monitoring of key controls

In 2014-2015, the Department completed planned ongoing monitoring of budgeting and forecasting financial close, as well as information technology general controls of financial system and delegation of authority.

It was noted that the Department had remediated a number of medium and low-risk issues. The review also identified the following items requiring remediation:

  • The Department should strengthen its controls over information technology change management processes for the departmental financial management system.

4. Fisheries and Oceans Canada's Action Plan

4.1 Progress during fiscal year 2014-2015

During 2014-2015, Fisheries and Oceans Canada continued to make significant progress in assessing and improving its key controls. The following table summarizes the Department's progress based on the plans identified in the previous fiscal year's annex.

Progress During Fiscal Year 2014-2015
Element in previous year's action plan Status
Perform operating effectiveness testing of operating expenditure (procurement to payment), and Revenue areas.
  • The Department has completed operating effectiveness for operating expenditure (procure to payment) and the Department's two primary revenue streams: marine services fees and for fishing licenses.
Perform on-going monitoring for budgeting and forecasting, financial close, information technology financial systems controls and delegation of authority controls.
  • The Department has completed on-going monitoring of the planned key control areas, identified processes for remediation and informed senior management of the results. Remediation has been completed or is well underway for completion in 2015-2016.

  • The review of financial system controls included an initial assessment of the delegation of authority database which was interfaced with the financial system in January 2014 as part of an automated control developed under the financial management transformation initiative.

Remediation activities remaining from prior assessments.
  • Entity Level Controls: The Department has completed a departmental fraud and risk assessment and developed a remediation plan. Significant progress has been made in the development of an Investigation Management Framework and Administrative Investigation Standard.

  • Tangible Capital Assets and Inventory: The Department has completed a material management rationalization initiative and will begin implementation of recommendations in 2015-2016. A Directive and Guideline on the Management of Movable Assets was put in place in April 2014 and the third phase of a risk-based asset verification project has been completed.

  • Salary and Benefits: The Department began transition to the centralized pay services at the government-wide service centre in February 2015 as part of a pay modernization initiative.

4.2 Status and action plan for the next fiscal year and subsequent years

Fisheries and Oceans is progressing as planned towards completing the operating effectiveness tests of the final two processes, capital assets and inventory in 2016-2017. The Department is also focusing on on-going monitoring. Fisheries and Oceans Canada has developed a risk-based monitoring plan that identifies key controls to be tested over a multi-year period in order to ensure that key controls are functioning over time as specified and any necessary corrective actions that are identified are initiated. The Department monitors the remediation of issues identified during design effectiveness testing and this monitoring includes tests of operating effectiveness as necessary, in order to confirm whether remediation requirements identified have been addressed.

The operating effectiveness testing and rotational on-going monitoring five-year plan are shown in the following table:

Status summary - next fiscal year and subsequent years:
Key Control Areas Assessment Elements
Operating Effectiveness Testing On-going Monitoring Phase Future On-going Monitoring Plan
2015-16 2016-17 2017-18
Business processes
Entity Level Controls X X    
Tangible Capital Assets 2016-17 2016-17  
Inventory 2016-17 2016-17  
Financial Close X X
Revenue
  • Marine services

  • Fisheries Licensing

X

X

X

X

Budgeting and Forecasting X X
Operating Expenditures X X    
Environmental Liabilities X X    
Salaries and Benefits X X  
Grants and Contributions X X    
Information Technology General Controls
Financial system X X    
Delegation of authority X X    
Salary Management X X    
Legend:
X denotes work has been completed in previous years
✔ denotes work is planned for completion in future years