Financial Statements of
Department of Fisheries and Oceans Canada
Year ended March 31, 2008

Department of Fisheries and Oceans
Management Responsibility for Financial Statements

Responsibility for the integrity and objectivity of the accompanying financial statements for the year ended March 31, 2008, and all information contained in these statements rests with departmental management. These financial statements have been prepared by management in accordance with Treasury Board accounting policies which are consistent with Canadian generally accepted accounting principles for the public sector.

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 DFO's financial transactions. Financial information submitted to the Public Accounts of Canada and included in the DFO's Departmental Performance Report is consistent with these financial statements.

Management maintains a system of financial management and internal control designed to provide reasonable assurance that financial information is reliable, that assets are safeguarded and that transactions are in accordance with the Financial Administration Act, are executed in accordance with prescribed regulations, within parliamentary authorities, and are properly recorded to maintain accountability for Government funds. Management also seeks to ensure the objectivity and integrity of data in its financial statements by careful selection, training and development of qualified staff, by organizational arrangements that provide appropriate divisions of responsibility, and by communication programs aimed at ensuring that regulations, policies, standards and managerial authorities are understood throughout the DFO.

The financial statements of the DFO have not been audited.

Michelle d'Auray, Deputy Minister		Cal Hegge
Ottawa, Canada		Assistant Deputy Minister,
July 25, 2008		Corporate Services

 

Department of Fisheries and Oceans Canada

Statement of Operations (unaudited)

For the Year Ended March 31

(in thousands of dollars)

	2008		2007
Expenses (Note 4)
Safe and Accessible Waterways
Canadian Coast Guard Agency	810,041		739,523
Small Craft Harbours	132,848		133,713
Science	57,327		71,764
Sustainable Fisheries and Aquaculture
Fisheries Management	407,175		462,471
Science	223,677		216,710
Aquaculture	6,186		6,199
Healthy and Productive Aquatic Ecosystems
Habitat Management	90,052		79,214
Science	88,569		88,899
Oceans Management	23,282		28,580
Total Expenses	1,839,157		1,827,073
Revenues (Note 5)
Safe and Accessible Waterways
Canadian Coast Guard Agency	45,994		44,292
Science	3,824		2,801
Small Craft Harbours	1,517		1,950
Sustainable Fisheries and Aquaculture
Fisheries Management	46,996		47,713
Science	501		1,019
Aquaculture	219		43
Healthy and Productive Aquatic Ecosystems
Habitat Management	578		785
Science	512		224
Oceans Management	64		161
Total Revenues	100,205		98,988
Net cost of operations	1,738,952		1,728,085

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

 

Department of Fisheries and Oceans Canada

Statement of Financial Position (unaudited)

At March 31

(in thousands of dollars)

	2008		2007
Assets
Financial assets
Accounts receivable and advances (Note 6)	21,956		27,398
Total financial assets	21,956		27,398
Non-financial assets
Inventory	35,641		37,265
Tangible capital assets (Note 7)	2,266,293		2,303,811
Total non-financial assets	2,301,934		2,341,076
	2,323,890		2,368,474
Liabilities
Accounts payable and accrued liabilities	244,529		243,655
Vacation pay and compensatory leave	64,463		69,130
Lease obligation for tangible capital assets (Note 8)	278		178
Deferred revenue (Note 9)	26		88
Other liabilities (Note 10)	13,660		17,613
Employee severance benefits (Note 11)	138,994		139,479
Environmental liabilities (Note 12a)	223,544		169,197
Contingent liabilities (Note 12b)	400		1,770
Total liabilities	685,893		641,110
Equity of Canada (Note 13)	1,637,997		1,727,364
	2,323,890		2,368,474

Contingent liabilities (Note 12b)

Contractual obligations (Note 14)

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

 

Department of Fisheries and Oceans Canada

Statement of Equity of Canada (unaudited)

For the Year Ended March 31

(in thousands of dollars)

	2008		2007
Equity of Canada, beginning of year	1,727,364		1,804,557
Net cost of operations	(1,738,952)		(1,728,085)
Current year appropriations used (Note 3)	1,616,633		1,648,947
Revenue not available for spending	(53,374)		(52,019)
Change in net position in the Consolidated Revenue Fund (Note 3c)	(11,290)		(47,029)
Services provided without charge by other government departments (Note 15)	97,616		100,993
Equity of Canada, end of year	1,637,997		1,727,364

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

 

Department of Fisheries and Oceans Canada

Statement of Cash Flow (unaudited)

For the Year Ended March 31

(in thousands of dollars)

	2008		2007
Operating activities
Net cost of operations	1,738,952		1,728,085
Non-cash items
Amortization of tangible capital assets (Note 7)	(170,651)		(172,948)
Loss on disposal of tangible capital assets	(6,524)		(8,812)
Loss on write-offs and write-downs of tangible capital assets	(25,986)		(20,543)
Services provided without charge by other government departments	(97,616)		(100,993)
Other	6,110		8,024
Variations in Statement of Financial Position
Increase (decrease) in accounts receivable and advances	(5,442)		7,994
Increase (decrease) in inventory	(1,624)		7,421
(Increase) in accounts payable and accrued liabilities	(874)		(49,550)
Decrease (increase) in vacation pay and compensatory leave	4,667		(8,755)
Decrease in deferred revenue	62		99
Decrease (Increase) in other liabilities	3,953		(4,745)
Decrease (Increase) in employee severance benefits	485		(5,736)
Decrease (Increase) in environmental liabilities	(54,347)		565
Decrease (Increase) in contingent liabilities	1,370		(1,570)
Cash used by operating activities	1,392,535		1,378,536
Capital investment activities
Principal obligation of tangible capital lease	67		(178)
Acquisitions of tangible capital assets	163,101		173,528
Proceeds from the disposal of tangible capital assets	(3,734)		(1,987)
Cash used by investing activities	159,434		171,363
Financing activities
Net cash provided by Government of Canada	1,551,969		1,549,899

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

 

Department of Fisheries and Oceans Canada

Notes to Financial Statements (unaudited)

For the year ended March 31, 2008

1. Authority and purpose

The Department of Fisheries and Oceans (DFO) was established under the Department of Fisheries and Oceans Act. The DFO reports to Parliament through the Minister of Fisheries and Oceans.

The mandate of the DFO, on behalf of the Government of Canada, is to be responsible for developing and implementing policies and programs in support of Canada's economic, social, ecological and scientific interests in oceans and fresh waters.

The DFO's guiding legislation includes the Oceans Act and the Fisheries Act. The DFO is also one of the three departments responsible for the Species at Risk Act.

The DFO's three strategic outcomes are delivered through nine program activities, which are described below.

Safe and Accessible Waterways

Canadian Coast Guard Agency: Provision of maritime services that contribute to the enhancement and maintenance of maritime safety and commerce, protection of the marine and freshwater environment, as well as oceans and fisheries resource management, security and other government maritime priorities via maritime expertise, Canada's civilian fleet, a broadly distributed shore infrastructure and collaboration with various stakeholders.

Small Craft Harbours: Operation and maintenance of a national system of harbours critical to Canada's commercial fishing industry.

Science: Provision of scientific research, monitoring, advice, products and services and data management in support of Safe and Accessible Waterways.

Sustainable Fisheries and Aquaculture

Fisheries Management: Conservation of Canada's fisheries resources to assure sustainable resource utilization through close collaboration with resource users and stakeholders.

Aquaculture: Creation of the conditions for a vibrant and innovative aquaculture industry that is environmentally and socially responsible, economically viable and internationally competitive.

Science: Provision of scientific research, monitoring, advice, products and services and data management in support of Sustainable Fisheries and Aquaculture.

Healthy and Productive Aquatic Ecosystems

Oceans Management: Conservation and sustainable use of Canada's oceans, in collaboration with others, through integrated oceans management plans which include marine protected areas and marine environmental quality objectives.

Habitat Management: Protection and conservation of freshwater and marine fish habitat, in collaboration with others, through a balanced application of regulatory and non-regulatory activities, including reviewing development proposals, conducting environmental assessments and monitoring compliance and effectiveness.

Science: Provision of scientific research, monitoring, advice, products and services and data management in support of Healthy and Productive Aquatic Ecosystems.

2. Summary of significant accounting policies

The financial statements have been prepared in accordance with Treasury Board accounting policies, which are consistent with Canadian generally accepted accounting principles for the public sector.

Significant accounting policies are as follows:

1. Parliamentary appropriations — The DFO is financed by the Government of Canada through parliamentary appropriations. Appropriations provided to the DFO do not parallel financial reporting according to Canadian generally accepted accounting principles since appropriations are primarily based on cash flow requirements. Consequently, items recognized in the statement of operations and the statement of financial position are not necessarily the same as those provided through appropriations from Parliament. Note 3 provides a high-level reconciliation between these bases of reporting.
2. Net cash provided by government — All departments operate within the Consolidated Revenue Fund (CRF), which is administered by the Receiver General for Canada. All cash receipts are deposited to the CRF and all cash disbursements made by departments 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 federal government.
3. Change in net position in the CRF is the difference between the net cash provided by Government and appropriations used in a year, excluding the amount of revenue not available for spending recorded by the DFO. It results from timing differences between when a transaction affects appropriations and when it is processed through the CRF.
4. Revenues
   • Revenues from regulatory fees are recognized in the accounts based on the services provided in the year.
   • Other revenues are accounted for in the period in which the underlying transaction or event occurred that gave rise to the revenues.
   • Revenues that have been received but not earned are recorded as deferred revenues; these include donations received for a specified purpose.
5. Expenses
   • Grants are recognized in the year in which the conditions for payment are met. In the case of grants which do not form part of an existing program, the expense is recognized 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.
   • Contributions are recognized in the year in which the recipient has met the eligibility criteria or fulfilled the terms of a contractual transfer agreement.
   • Vacation pay and compensatory leave are expensed by the DFO in the year that the entitlement occurs.
   • Services provided without charge by other government departments for accommodation, the employer's contribution to the health and dental insurance plans, administration costs and commissions paid to provincial workers' compensation boards and legal services are recorded as operating expenses at their estimated cost.
6. Employee future benefits
   • Pension benefits: Eligible employees participate in the Public Service Pension Plan, a multi-employer plan administered by the Government of Canada. The DFO's contributions to the Plan are charged to expenses in the year incurred and represent the total departmental obligation to the Plan. Current legislation does not require the DFO to make contributions for any actuarial deficiencies of the Plan.
   • Severance benefits: Employees are entitled to severance benefits, as provided for under labour contracts or conditions of employment. These benefits are accrued as employees render the services necessary to earn them. 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 receivable and advances are stated at amounts expected to be ultimately realized; a provision is made for receivables 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 an amount cannot be reasonably estimated, and the case is considered material, the contingency is disclosed in note 12(b) to these financial statements.
9. Environmental liabilities — Environmental liabilities reflect the estimated costs related to the management and remediation of environmentally contaminated sites. Based on management's best estimates, a liability is accrued and an expense recorded when the contamination occurs or when the DFO becomes aware of the contamination and is obligated, or is likely to be obligated to incur such costs. If the likelihood of the DFO's obligation to incur these costs is not determinable, or if an amount cannot be reasonably estimated, the costs are disclosed as contingent liabilities in note 12(a) to these financial statements.
10. Inventories — Inventories consist of parts, material and supplies held for future program delivery. They are valued at cost. If they no longer have service potential, they are valued at the lower of cost or net realizable value.
11. Foreign currency transactions — Transactions involving foreign currencies are translated into Canadian dollar equivalents using rates of exchange in effect at the time of those transactions. Monetary assets and liabilities denominated in foreign currencies are translated using exchange rates in effect on March 31. Gains and losses resulting from foreign currency transactions are included in the statement of operations. (Note 5, Other revenue or Note 4, Other expenses)
12. 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. The DFO 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	10-40 years
    Work and infrastructure	5-75 years
    Machinery and equipment	3-25 years
    Informatics hardware	3-5 years
    Informatics purchased and developed software	3 years
    Arms and weapons for defense	5-10 years
    Other equipment, including furniture	10 years
    Ships and boats	5-25 years
    Aircraft	15-25 years
    Motor vehicles (non-military)	5-20 years
    Other vehicles	10 years
    Leasehold improvements — buildings	*
    Leasehold improvements — works and infrastructure	*
    Assets under capital leases	**

    * the lesser of the economic life of the improvement or the lease term

    ** over the period of expected use, i.e., the economic life or lease term

13. Proceeds associated with the disposal of real property through Public Works and Government Services Canada (PWGSC) are not recorded in the DFO's financial statements. PWGSC is responsible for the accounting and reporting of these proceeds.
14. Measurement uncertainty — The preparation of these financial statements in accordance with Treasury Board accounting policies, which are consistent with Canadian generally accepted accounting principles for the public sector, requires management to make estimates and assumptions that could 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 allowance for vacation pay and compensatory leave, allowance for bad debts, environmental liabilities, the useful life of tangible capital assets, contingent liabilities and employee severance benefits. Actual results could differ significantly 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 appropriations

The DFO receives most of its funding through annual parliamentary appropriations. Items recognized in the statement of operations and the statement of financial position in one year may be funded through parliamentary appropriations in prior, current or future years. Accordingly, the DFO 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.

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

	2008		2007
	(in thousands of dollars)
Net cost of operations	1,738,952		1,728,085
Adjustments for items affecting net cost of operations but not affecting appropriations
Add (less):
Revenue not available for spending	53,374		52,019
Amortization of tangible capital assets	(170,651)		(172,948)
Loss on disposal of tangible capital assets	(6,524)		(8,812)
Loss on write-offs and write-downs of tangible capital assets	(25,986)		(20,543)
Found assets	6,254		7,755
Services provided without charge by other government departments	(97,616)		(100,993)
Increase (decrease) in inventory	(1,624)		7,421
Decrease (increase) in vacation pay and compensatory leave	4,667		(8,755)
(Increase) in lease obligation for tangible capital assets	—		(178)
Decrease (increase) in environmental liabilities	(54,347)		565
Decrease (increase) in contingent liabilities	1,370		(1,570)
Decrease (increase) in employee severance benefits	485		(5,736)
Earmarked supplementary fish fines	(42)		173
Refunds of previous years expenses	5,186		5,849
Donation expense	(83)		(114)
Justice Canada fees	—		(6,330)
Other	50		447
Total adjustments for items not affecting appropriations	(285,487)		(251,750)
Adjustments for items not affecting net cost of operations but affecting appropriations
Add (Less):
Acquisitions of tangible capital assets	163,101		173,528
Principal obligation of tangible capital lease	67		(178)
Other	—		(738)
Total adjustments for items affecting appropriations	163,168		172,612
Current year appropriations used	1,616,633		1,648,947

 

3(b) Appropriations provided and used

	2008		2007
	(in thousands of dollars)
Appropriations provided
Vote 1 — Operating expenditures	1,279,107		1,245,005
Vote 5 — Capital expenditures	263,510		218,174
Vote 10 — Grants and contributions	82,593		156,599
Statutory amounts	123,181		117,421
Loans and advances for the Freshwater Fish Marketing Corporation	50,000		50,000
Less:
Appropriations available for future years	(51,938)		(51,283)
Lapsed appropriations	(129,820)		(86,969)
Current year appropriations used	1,616,633		1,648,947

While the appropriations for loans and advances of the Freshwater Fish Marketing Corporation (FFMC) are included in note 3(b) and available for future years, the activities of the FFMC are not reported in these financial statements.

 

3(c) Reconciliation of net cash provided by Government to current year appropriations used

	2008		2007
	(in thousands of dollars)
Net cash provided by Government of Canada	1,551,969		1,549,899
Revenue not available for spending	53,374		52,019
Change in net position in the Consolidated Revenue Fund
Decrease (increase) in accounts receivable and advances	5,442		(7,994)
Increase in accounts payable and accrued liabilities	874		49,550
(Decrease) in deferred revenue	(62)		(99)
Increase (decrease) in other liabilities	(3,953)		4,745
Proceeds from disposal of tangible capital assets	3,734		1,987
Earmarked supplementary fish fines	(42)		173
Refund of previous years expenses	5,186		5,849
Donation expenses	(83)		(114)
Justice Canada fees	—		(6,330)
Other	194		(738)
	11,290		47,029
Current year appropriations used	1,616,633		1,648,947

 

4. Expenses

The following table presents details of expenses by category.

	2008		2007
	(in thousands of dollars)
Operating and administration
Personnel and employee benefits	881,222		882,615
Professional and special services	245,423		227,512
Amortization	170,651		172,948
Utilities, material and supplies	107,812		92,246
Repair and maintenance	97,246		96,035
Travel and relocation	58,472		52,728
Environmental liabilities expenses	54,347		(565)
Machinery and equipment	51,025		59,777
Rental	29,664		28,705
Loss on write-off and write-downs of tangible capital assets and inventory	25,986		20,543
Telecommunication	18,219		18,138
Loss on disposal of tangible capital assets	9,675		10,137
Communication services	5,280		5,481
Damage and other claims against the Crown	832		17,330
Other expenses	9,935		2,362
Total operating and administration	1,765,789		1,685,992
Transfer payments
Non-profit organizations	69,682		102,000
Individuals	2,466		37,031
Other level of governments within Canada	900		1,205
Other countries and international organizations	295		745
Industry	25		100
Total transfer payments	73,368		141,081
Total expenses	1,839,157		1,827,073

 

5. Revenues

The following table presents details of revenues by category.

	2008		2007
	(in thousands of dollars)
Revenue
Sales of goods and services	91,960		90,882
Gains on disposals of tangible capital assets	3,151		1,325
Other revenue	4,690		6,359
Revenue from earmarked supplementary fish fines	296		315
Interest on Haddock loan	108		107
Total revenues	100,205		98,988

 

6. Accounts receivable and advances

The following table presents details of accounts receivable and advances.

	2008		2007
	(in thousands of dollars)
Receivables
Receivables from external parties	34,689		34,416
Receivables from other federal government departments and agencies	12,643		18,452
Accrued interest on loans	1,556		1,449
Refunds of program expenses	132		146
Less: Allowance for doubtful accounts on external receivables	(27,321)		(27,325)
Total receivables	21,699		27,138
Loans and advances
Accountable advances	257		260
Loans (1)	1,472		1,471
Allowance on loans and advances	(1,472)		(1,471)
Total loans and advances	257		260
Total accounts receivable and advances	21,956		27,398

⁽¹⁾ Loans of $1.4 million have been made to Haddock fishermen ($1.3 million, interest of 8% per annum, repayable over 4 years until 1979) and to Canadian producers of frozen groundfish ($0.1 million, interest of 13 % per annum, repayable over 7 years until 1987).

 

7. Tangible capital assets

(in thousands of dollars)	Cost
	Opening balance April 1, 2007	Acquisitions during the year	Disposals / write-offs during the year	Other (1)	Closing balance March 31, 2008
Land	19,991	389	18	2	20,364
Buildings	464,340	765	357	33,181	497,929
Works and infrastructure	1,857,629	—	17,430	56,047	1,896,246
Machinery and equipment	367,560	4,298	11,140	19,348	380,066
Informatics hardware	55,635	1,079	5,896	2,562	53,380
Informatics software	18,687	—	19	3,800	22,468
Arms and weapons for defense	442	—	—	—	442
Other equipment, including furniture	564	11	25	—	550
Ships and boats	1,629,019	1,335	17,931	13,844	1,626,267
Aircraft	36,773	—	1,317	-1	35,455
Motor vehicles (non-military)	65,678	7,525	7,184	130	66,149
Other vehicles	7,511	952	312	13	8,164
Leasehold improvements	536,138	310	1,197	4,937	540,188
Engineering work in progress- construction (2)	295,069	142,117	24,905	-123,533	288,748
Work-in-progress — software (2)	14,859	4,320	467	-4,076	14,636
Assets under capital lease	203	322	—	—	525
Total	5,370,098	163,423>	88,198	6,254	5,451,577

 

(in thousands of dollars)	Accumulated amortization						Net book value
	Accumulated amortization April 1, 2007	Amortization for the year	Disposal/ write-offs	Other 1	Accumulated amortization March 31, 2008		March 31, 2008	March 31, 2007
Land	—	—	—	—	—		20,364	19,991
Buildings	288,899	18,980	250	57	307,686		190,243	175,441
Works and infrastructure	921,457	62,301	8,034	—	975,724		920,522	936,173
Machinery and equipment	266,163	15,167	10,399	99	271,030		109,036	101,397
Informatics hardware	51,579	2,056	5,011	-116	48,508		4,872	4,056
Informatics software	18,253	2,828	765	24	20,340		2,128	434
Arms and weapons for defense	418	13	—	—	431		11	24
Other equipment, including furniture	524	8	23	—	509		41	40
Ships and boats	1,122,927	44,427	17,333	-6	1,150,015		476,252	506,092
Aircraft	32,112	1,006	1,319	—	31,799		3,656	4,661
Motor vehicles (non-military)	43,805	5,565	7,397	—	41,973		24,176	21,872
Other vehicles	6,335	398	289	-1	6,443		1,721	1,176
Leasehold improvements	313,788	17,797	834	-57	330,694		209,494	222,350
Engineering work in progress - construction (2)	—	—	—	—	—		288,748	295,069
Work-in-progress - software (2)	—	—	—	—	—		14,636	14,859
Assets under capital lease	27	105	—	—	132		393	176
Total	3,066,287	170,651	51,654	—	3,185,284		2,266,293	2,303,811

Amortization expense for the year ended March 31, 2008, is $170,651 (2007 - $172,948)

⁽¹⁾ The column "other" includes transfer of asset costs from work in progress (WIP) accounts to asset accounts, as well as corrections and reclassifications to asset cost and accumulated amortization accounts.

⁽²⁾ Some work-in-progress projects have not been re-classified as tangible capital assets though the related assets were placed in service. This will result in overstated work-in-progress, understated asset value by category and understated annual depreciation expense. The Office of the Auditor General estimated that the value of assets by category could be understated as of March 31, 2008 by an amount ranging from $26 million to $54 million ($81 million as of March 31, 2007).

 

8. Lease obligation for tangible capital assets

The DFO has entered into agreements to rent information technology equipment under capital lease with a cost of $524,772 and accumulated amortization of $132,050 as at March 31, 2008 (Note 7). Interest costs are included in Other expenses (Note 4). The obligations for the upcoming years include the following:

	2008	2007
	(in thousands of dollars)
Maturing year
2008	—	45
2009	81	45
2010	80	45
2011	80	45
2012 and thereafter	58	15
Total future minimum lease payments	299	195
Less: imputed interest (4.1%)	(22)	(17)
Balance of obligations under leased tangible capital assets	277	178

 

9. Deferred revenue

Deferred revenue represents the balance at year-end of unearned revenue stemming from donations, which are restricted to fund the research, development, management and promotion of fisheries- and oceans-related issues. Details of the transactions related to this account are as follows:

	Opening balance, April 1, 2007	Donations received	Revenue Recognized	Closing balance, March 31, 2008
	(in thousands of dollars)
Deferred revenue
Restricted donations	88	21	(83)	26

 

10. Other liabilities

Other liabilities represent funds received by the DFO under regulations, cost-sharing agreements or to fund projects. Details of the transactions related to these accounts are as follows:

	Opening balance, April 1, 2007	Receipts and other credits	Payments and other charges	Closing balance March 31, 2008
	(in thousands of dollars)
Federal/provincial cost-sharing agreements	649	942	(1,026)	565
Miscellaneous project deposits	16,031	12,025	(15,699)	12,357
Sales of seized assets — Fisheries Act	602	270	(305)	567
Contractors' security deposits	331	304	(464)	171
Total	17,613	13,541	(17,494)	13,660

• 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.
• Miscellaneous project deposits — This account was established to record contributions received from organizations and individuals, for the furtherance of research work.
• Sale of seized assets — This account was established to record the proceeds of sale of seized items by the DFO 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 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 low bidder fail to enter into a contract.

 

11. Employee benefits

(a) Pension benefits: The DFO'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 two percent per year of pensionable service, times the average of the best five consecutive years of earnings. The benefits are integrated with Canada/Quebec Pension Plans benefits and they are indexed to inflation.

Both the employees and the DFO contribute to the cost of the Plan. The DFO's 2007-08 expense amounts to $86 million ($84.5 million 2006-07), which represents approximately 2.1 times (2.2 in 2006-07) the contributions by employees.

The DFO'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.

(b) Severance benefits: The DFO provides severance benefits to its employees based on eligibility, years of service and final salary. These severance benefits are not pre-funded. Benefits will be paid from future appropriations. Information about the severance benefits, measured as at March 31, are as follows.

	2008	2007
	(in thousands of dollars)
Accrued benefit obligation, beginning of year	139,479	133,743
Expense for the year	13,457	16,977
Benefits paid during the year	(13,942)	(11,241)
Accrued benefit obligation, end of year	138,994	139,479

 

12. Contingent liabilities

(a) Contaminated sites

Liabilities are accrued to record the estimated costs related to the management and remediation of contaminated sites where the DFO is obligated or likely to be obligated to incur such costs. The DFO has identified sites where such action is possible and for which a liability of $223.5 million ($169.2 million in 2006-07) has been recorded. The DFO has estimated additional costs of $163.3 million ($217.6 million in 2006-07) that are not accrued, as these are not considered likely to be incurred at this time.

The DFO's ongoing efforts to assess contaminated sites may result in additional environmental liabilities related to newly identified sites, or changes in the assessments or intended use of existing sites. These liabilities will be accrued in the year in which they become known.

(b) Claims and litigation

Claims have been made against the DFO in the normal course of operations. Legal proceedings for claims totaling approximately $460.9 million ($254.4 million in 2007) were still pending at March 31, 2008. Some of these potential liabilities 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 ($0.4 million in 2007-2008 and $1.77 million in 2006-2007) and an expense recorded in the financial statements.

13. Equity of Canada

	2008	2007
	(in thousands of dollars)
Restricted Equity of Canada, April 1	851	678
Supplementary Fish Fines Account
Revenues	296	315
Expenses	(338)	(142)
Restricted Equity of Canada, March 31	809	851
Unrestricted Equity of Canada, March 31	1,637,188	1,726,513
Total Equity of Canada at March 31	1,637,997	1,727,364

Section 79.2 of the Fisheries Act requires that revenues from fines imposed be earmarked and that related payments and expenses be charged against such revenues. The Supplementary Fish Fines Account presents these revenues and expenses and the year-end balance available for future years.

14. Contractual Obligations

The nature of the DFO's activities can result in some large multi-year contracts and obligations whereby the DFO will be obligated to make future payments when the services/goods are received. Significant contractual obligations that can be reasonably estimated are summarized as follows:

(in thousands of dollars)	2009	2010	2011	2012	2013 and thereafter	Total
Operating lease	15,000	6,000				21,000
Total	15,000	6,000				21,000

 

15. Related party transactions

The DFO is related as a result of common ownership to all Government of Canada departments, agencies, and Crown corporations. The DFO enters into transactions with these entities in the normal course of business and on normal trade terms. Also, during the year, the DFO received services which were obtained without charge from other Government departments as presented in part (a).

(a) Services provided without charge by other government departments

During the year, the DFO received without charge from other departments, accommodation, legal fees and the employer's contribution to the health and dental insurance plans, administration costs and commissions paid to provincial workers' compensation boards. These services without charge have been recognized in the DFO's Statement of Operations as follows:

	2008	2007
	(in thousands of dollars)
Accommodation provided by Public Works and Government Services Canada	42,283	42,328
Employer's contribution to the health and dental insurance plans provided by Treasury Board Secretariat	50,293	54,180
Administration costs and commissions paid to provincial workers' compensation boards by Social Development Canada.	1,053	1,343
Legal services provided by Justice Canada	3,987	3,142
Total services provided without charge	97,616	100,993

The Government has structured some of its administrative activities for efficiency and cost-effectiveness purposes so that one department performs these on behalf of all without charge. The costs of these services, which include payroll and cheque issuance services provided by Public Works and Government Services Canada, are not included as an expense in the DFO's Statement of Operations.

(b) Payables and receivables outstanding at year-end with related parties are as follows:

	2008	2007
	(in thousands of dollars)
Accounts receivable with other government departments and agencies	12,643	18,452
Accounts payable to other government departments and agencies	35,105	31,885

 

16. Comparative information

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