Fisheries and Oceans Canada - Quarterly Financial Report for the Quarter Ended June 30, 2016
This quarterly financial report has been prepared by management as required by section 65.1 of the Financial Administration Act and in the form and manner prescribed by the Treasury Board Accounting Standard 1.3. The quarterly report should be read in conjunction with the Main Estimates, Supplementary Estimates (A) as well as Budget 2015 and Budget 2016.
This quarterly report has not been subject to an external audit or review.
Further details on Fisheries and Oceans Canada's authority, mandate and programs may be found in the Report on Plans and Priorities and the Main Estimates (Part II).
1.1 Basis of Presentation
This quarterly report has been prepared by management using an expenditure basis of accounting. The accompanying Statement of Authorities includes Fisheries and Oceans Canada's spending authorities granted by Parliament and those used by the Department consistent with the Main Estimates and Supplementary Estimates (A) for 2016-17. This quarterly report has been prepared using a special purpose financial reporting framework designed to meet financial information needs with respect to the use of spending authorities.
The authority of Parliament is required before moneys can be spent by the Government. Approvals are given in the form of annually approved limits through appropriation acts or through legislation in the form of statutory spending authority for specific purposes.
The Department uses the full accrual method of accounting to prepare and present its annual departmental financial statements that are part of the departmental performance reporting process. However, the spending authorities voted by Parliament remain on a cash basis.
2. Highlights of Fiscal Quarter and Fiscal Year-to-Date
The following section highlights the financial results and provides explanations for the fiscal quarter ended June 30, 2016 as compared to the same period last year.
Highlights of Fiscal Quarter and Fiscal Year to Date (thousands of dollars)
|2015-16 Authorities as at June 30, 2015||2016-17 Authorities as at June 30, 2016||Variance in Authorities||Year-to-date expenditures as at June 30, 2015||Year-to-date expenditures as at June 30, 2016||Variance in Expenditures|
|Vote 1 – Net Operating expenditures||1,228,042||1,369,803||141,761||239,810||251,751||11,941|
|Vote 5 – Capital expenditures||648,535||948,598||300,063||83,948||44,581||(39,367)|
|Vote 10 – Grants and Contributions||93,237||94,450||1,213||8,876||10,382||1,506|
Statement of Voted and Statutory Authorities
Total budgetary authorities available for use increased in 2016-17 from those in 2015-16 by $451.5 million (21.6%). This is the result of an increase in Vote 1 authorities of $141.8 million, an increase in Vote 5 authorities of $300.1 million, an increase in Vote 10 authorities of $1.2 million, and an increase in spending authority for statutory payments of $8.5 million.
The negative amounts in the table below do not represent cuts to program spending. They represent the achievement of milestone projects as well as planned changes in the funding profile of initiatives. As well, some variances are due to timing of the authorities granted by Parliament.
|Explanation of Changes (thousands of dollars)||Total Change|
|Vote 1 – Net Operating expenditures|
|Federal Infrastructure Investments (Budget 2016)||41,010|
|Strategy to address financial pressures and to maintain service integrity for the Canadian Coast Guard||37,000|
|Investing in ocean and freshwater research in Canada||22,866|
|Fuel costs for the Canadian Coast Guard||16,000|
|Federal Contaminated Sites Action Plan (FCSAP)||6,175|
|Funding to address the threat of pollutants from the Manolis L||6,000|
|Support regulatory reviews for major natural resource projects||5,991|
|Federal Infrastructure Initiative (Budget 2015)||5,226|
|Transfer between votes||3,044|
|Other departmental requirements||(1,551)|
|Sub-total Net Operating expenditures||141,761|
|Vote 5 – Capital expenditures|
|Federal Infrastructure Investments (Budget 2016)||118,370|
|Purchase, construction and life extension of vessels (ships and helicopters)||105,871|
|Federal Infrastructure Initiative (Budget 2015)||95,266|
|Investing in ocean and freshwater research in Canada||12,600|
|Funding to enhance marine emergency response capacity in British Columbia||7,974|
|Transfer between votes||1,260|
|Small Craft Harbours Program for repair and maintenance||(22,200)|
|Enhancement of the safety of marine transportation in the Arctic (World Class Tanker Safety System)||(7,429)|
|Reinvestment of revenues from the sale or transfer of real property||(6,500)|
|Other departmental requirements||(5,149)|
|Sub-total Capital expenditures||300,063|
|Vote 10 – Grants and Contributions|
|Investing in ocean and freshwater research in Canada||4,470|
|Establish a certification and market access program for seal products||1,417|
|Other departmental requirements||903|
|Transfer between votes||(4,304)|
|Implementation of the Tla'amin First Nation Final Agreement||(1,273)|
|Sub-total Grants and Contributions||1,213|
|Sub-total Statutory Authorities||8,494|
Authorities Used Analysis
In the first quarter of 2016-17, total budgetary expenditures amounted to $338.7 million compared to $363.4 million reported in the same quarter of 2015-16, which represents a decrease of $24.6 million or 6.8%.
Authorities used in Vote 1, Net Operating expenditures, increased by $11.9 million compared to the same quarter last year representing an increase of approximately 5.0% between the two years. The increase is mainly due to higher spending on professional services by the legal sector which is a result of the Department of Justice’s new billing process that requires pre-payment for legal counsel and litigation expenses. The total increase is also as a result of higher repair and maintenance expenditures for Canadian Coast Guard (CCG) vessels caused by timing differences in the vessel maintenance schedule.
Authorities used in Vote 5, Capital expenditures, decreased by $39.4 million compared to the same quarter last year representing a decrease of approximately 46.9% between the two years. This is mainly due to a $43.8 million decrease in spending on professional services related to CCG Offshore Fisheries Science Vessels shipbuilding contract payments that were made in the first quarter of 2015-16. The total decrease is offset slightly by an increase in Federal Infrastructure Initiative expenditures.
Authorities used in Vote 10, Grants and Contributions expenditures, increased by $1.5 million compared to the same quarter last year representing an increase of approximately 17.0% between the two years. The increase is mainly as a result of the new Ocean and Freshwater Science Contribution Program in the Ecosystems and Oceans Science sector. In addition, the total increase is also related to the timing differences due to the Aboriginal Fisheries Strategy (AFS) and Aboriginal Aquatic Resource and Oceans Management (AAROM) programs as the programs have actively been negotiating agreements earlier in the year.
Statutory authorities increased by $1.3 million compared to the same quarter last year representing an increase of approximately 4.1%, and indicating no significant variance between the two years.
Statement of Departmental Budgetary Expenditures by Standard Object
The decrease of $24.6 million in total net budgetary expenditures in the first quarter of 2016-17 as compared to the same quarter in 2015-16 is reflected primarily in the net effect of the following standard objects of expenditures:
Personnel expenditures increased slightly by a total of $1.2 million in the first quarter of 2016-17 when compared to the same quarter of 2015-16. An increase of $2.3 million is related to higher part-time, seasonal, casual and student pay which is offset by lower spending on severance pay, termination benefits and holiday pay in lieu of leave.
Expenditures related to Transportation and Communications increased by a total of $1.5 million in the first quarter of 2016-17 when compared to the same quarter of 2015-16. This is mainly due to higher travel costs related to Federal Infrastructure Initiative construction projects.
Expenditures related to Professional and Special Services decreased by a total of $34.3 million in the first quarter of 2016-17 when compared to the same quarter of 2015-16. This is mainly due to a reduction in shipbuilding contracts and engineering services expenditures for the construction of new CCG Offshore Fisheries Science Vessels.
Expenditures related to Rentals increased by a total of $0.6 million in the first quarter of 2016-17 when compared to the same quarter of 2015-16. This is mainly related to the timing of crown housing cost payments to Public Services and Procurement Canada and leased space in the Maritimes for CCG cadets.
Expenditures related to Repair and Maintenance increased by a total of $1.5 million in the first quarter of 2016-17 when compared to the same quarter of 2015-16. This is mainly as a result of timing differences in CCG’s vessel maintenance schedule.
Expenditures related to the Acquisition of Land, Buildings and Works increased by a total of $5.9 million in the first quarter of 2016-17 when compared to the same quarter of 2015-16. This increase is mainly due to the Federal Infrastructure Initiative, which has resulted in an increased number of Small Craft Harbour improvement projects being underway in the Newfoundland, Maritimes, and Pacific regions.
Expenditures related to the Acquisition of Machinery and Equipment decreased by a total of $4.1 million in the first quarter of 2016-17 when compared to the same quarter of 2015-16. This decrease is mainly due to acceptance of CCG light-lift helicopters that occurred in the first quarter of 2015-16 and a decrease in spending related to CCG’s Marine Communications and Traffic Services communication systems modernization project.
Expenditures related to Transfer Payments increased by a total of $1.5 million in the first quarter of 2016-17 when compared to the same quarter of 2015-16. An increase of $0.9 million is due to the new Ocean and Freshwater Science Contribution Program. The total increase is also related to higher volume of Aboriginal Fisheries Strategy (AFS) and Aboriginal Aquatic Resource and Oceans Management (AAROM) agreements.
Other Subsidies and Payments increased by a total of $3.9 million in the first quarter of 2016-17 when compared to the same quarter of 2015-16. This is mainly due to a $3.0 million installment payment that was made to the Great Lakes Fisheries Commission in the first quarter of 2016-17. The increase is a result of a timing difference as this payment is normally made during the second quarter of the fiscal year.
3. Risks and Uncertainties
Fisheries and Oceans Canada operates in a dynamic environment. Fish stock fluctuation, northern development and the expansion of navigable waters, environmental changes and severe weather events, changes in the Canadian workforce, technological advances, changing maritime safety and security demands, and globalization of fisheries markets are among the factors impacting the Department. The Department continues to assess how it conducts its business, provides services and delivers its programs to meet client and stakeholder needs.
This environment raises many challenges for the Department that are reflected in six mission-critical corporate risks listed below:
- Infrastructure Maintenance Risk;
- Environmental Impacts on Fisheries Risk;
- Legal Challenges Risk;
- Fleet, Harbours, Land-based and Other Assets Risk;
- Hazard and Crisis Risk; and
- Program Delivery Risk.
Fisheries and Oceans Canada’s senior management reviews the mission critical risk response strategies and action plans regularly, completes a full review of the corporate risks annually and considers management of these risks at each stage of the planning, review and reporting cycles. In addition, the external Departmental Audit Committee reviews the Corporate Risk Profile, and provides advice for continual improvement.
There are financial considerations associated with a number of the risks; however, this is most prominently reflected in the Program Delivery Risk, an internal mission critical corporate risk that is defined as follows: As a result of factors such as increasing operational costs, reliance on third parties, increasing stakeholder expectations, and an internal environment of transformation, there is a risk that the Department may not be able to align resources to future program delivery needs.
A risk prioritization session was held jointly with the Directors General Management Committee and the Directors General Policy Committee in October 2015 and the Program Delivery Risk was identified as the sixth highest risk in severity for the Department for 2016-17. The Deputy’s Management Committee validated the prioritization of risks in November 2015 and decided to mitigate the Program Delivery Risk through the implementation of action plans. Each action plan has a lead at the Assistant Deputy Minister level and is monitored throughout the year.
The 2016-17 finance-related risk action plans for the Program Delivery Risk are as follows:
- Proactively plan and prioritize all business activities (Programs 1.1 – Integrated Fisheries Management and 1.7 – International Engagement).
- Maintain current mechanisms, processes and use of strategic planning tools for the efficient and effective management of human and financial resources (Program 1.3 – Sustainable Aquaculture Program).
- Look for opportunities to partner with stakeholders to leverage existing resources (Sub-program 2.2.3 – Aquatic Invasive Species).
- Work closely with other Fisheries and Oceans Canada programs to seek synergies, align objectives and increase efficiencies in program delivery (Program 2.5 – Oceans Management).
4. Significant changes in relation to operations, personnel and programs
The following change in personnel was made during the first quarter:
- Following the resignation of Mr. Hunter Tootoo on May 31, 2016, the Honourable Dominic LeBlanc was appointed as Minister of Fisheries, Oceans and the Canadian Coast Guard, effective June 1st, 2016.
- Following the retirement of Mr. Matthew King on March 31, 2016, Ms. Catherine Blewett was appointed as Deputy Minister of Fisheries and Oceans Canada effective June 20, 2016.
5. Approval by Senior Officials
Original signed by
Catherine Blewett, Deputy Minister
Original signed by
Tony Matson CPA, CMA,
Chief Financial Officer
August 25, 2016
Statement of Authorities (unaudited)
(in thousands of dollars)
|Fiscal year 2015-16||Fiscal year 2016-17|
|Total available for use for the year ending March 31, 2016*||Used during the quarter ended June 30, 2015||Year to date used at quarter-end||Total available for use for the year ended March 31, 2017*||Used during the quarter ended June 30, 2016||Year to date used at quarter-end|
|Vote 1 - Net Operating expenditures||1,228,042||239,810||239,810||1,369,803||251,751||251,751|
|Vote 5 - Capital expenditures||648,535||83,948||83,948||948,598||44,581||44,581|
|Vote 10 - Grants and Contributions||93,237||8,876||8,876||94,450||10,382||10,382|
|Statutory - Contributions to employee benefit plans||122,672||30,668||30,668||131,164||31,820||31,820|
|Statutory - Minister of Fisheries and Oceans - Salary and motor car allowance||82||21||21||84||7||7|
|Statutory - Spending of proceeds from the disposal of surplus Crown assets||-||52||52||-||181||181|
|Statutory - Refunds of amounts credited to revenues in previous years||-||-||-||-||4||4|
|Total Statutory Authorities||122,754||30,741||30,741||131,248||32,012||32,012|
* Includes Only Authorities available for use and granted by Parliament at quarter-end
Departmental Budgetary Expenditures by Standard Object (unaudited)
(in thousands of dollars)
|Fiscal year 2015-16||Fiscal year 2016-17|
|Planned expenditures for the year ending March 31, 2016*||Expended during the quarter ended June 30, 2015||Year to date used at quarter-end||Planned expenditures for the year ended March 31, 2017*||Expended during the quarter ended June 30, 2016||Year to date used at quarter-end|
|Transportation and communications||54,274||10,335||10,335||59,351||11,827||11,827|
|Professional and special services||185,096||66,886||66,886||261,133||32,571||32,571|
|Repair and maintenance||203,256||20,614||20,614||210,749||22,105||22,105|
|Utilities, materials and supplies||78,603||14,758||14,758||107,411||14,045||14,045|
|Acquisition of land, buildings and works||220,668||7,560||7,560||221,714||13,475||13,475|
|Acquisition of machinery and equipment||416,754||17,218||17,218||711,558||13,165||13,165|
|Other subsidies and payments||13,480||6,741||6,741||16,257||10,601||10,601|
|Total gross budgetary expenditures||2,140,483||372,609||372,609||2,592,014||349,641||349,641|
|Less Revenues netted against expenditures:|
|Sales of goods and services||47,915||9,234||9,234||47,915||10,915||10,915|
|Total Revenues netted against expenditures:||47,915||9,234||9,234||47,915||10,915||10,915|
|Total net budgetary expenditures||2,092,568||363,375||363,375||2,544,099||338,726||338,726|
* Includes Only Authorities available for use and granted by Parliament at quarter-end
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