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Future-oriented Financial Statements of Fisheries and Oceans Canada

Year ended March 31, 2011

Department of Fisheries and Oceans
Management Responsibility for Future-Oriented Financial Statements

Responsibility for the compilation, content, and presentation of the accompanying future-oriented financial information for the year ended March 31, 2011 rests with departmental management. The future-oriented financial information has been prepared by management in accordance with Treasury Board accounting policies which are consistent with Canadian generally accepted accounting principles for the public sector. The future-oriented financial information is submitted for Part III of Estimates (Report on Plans and Priorities), and will be used in the department's Departmental Performance Report to compare with actual results.

Management is responsible for the integrity and objectivity of the information contained in future-oriented financial information and for the process of developing assumptions. Assumptions and estimates are based upon information available and known to management at the time of development, reflect current business and economic conditions, and assume a continuation of current governmental priorities and consistency in departmental mandate and strategic objectives. Much of the future-oriented financial information is based on these assumptions, best estimates, and judgment and gives due consideration to materiality. At the time of preparation of these statements, management believes the estimates and assumptions to be reasonable. However, as with all such assumptions, there is a measure of uncertainty surrounding them. This uncertainty increases as the forecast horizon extends.

The actual results achieved for the fiscal years covered in the accompanying future-oriented financial information will vary from the information presented and the variations may be material. (Note: The DFO is preparing these statements as part of a two-year pilot project and readers should be aware that this is the second year of the project.)

The future-oriented financial statements of the DFO have not been audited.

 

Claire Dansereau, Deputy Minister
Ottawa, Canada
December 31, 2009
Cal Hegge
Chief Financial Officer

 

 

Future-oriented Statement of Operations (unaudited)

For the Year Ended March 31

(in thousands of dollars)
  Forecast
2011
Estimated
Results
2010
Expenses (Note 6)
Safe and Accessible Waterways    
Canadian Coast Guard Agency 723,402 727,800
Small Craft Harbours 141,194 149,667
Science 41,786 40,048
Sustainable Fisheries and Aquaculture    
Fisheries and Aquaculture Management 365,255 376,073
Science 144,893 149,095
Healthy and Productive Aquatic Ecosystems    
Oceans Management 17,567 18,514
Habitat Management 66,925 69,284
Species at Risk Management 24,051 17,611
Science 59,565 61,816
Internal Services 380,746 366,602
Total Expenses 1,965,384 1,976,510
Revenues (Note 7)
Safe and Accessible Waterways    
Canadian Coast Guard Agency 38,314 40,181
Science 2,566 2,565
Small Craft Harbours 1,072 1,072
Sustainable Fisheries and Aquaculture    
Fisheries and Aquaculture Management 38,541 39,611
Healthy and Productive Aquatic Ecosystems    
Habitat Management 22 40
Science 120 170
Total Revenues 80,635 83,639
     
Net Cost of Operations 1,884,749 1,892,871

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

 

Future-oriented Statement of Financial Position (unaudited)

At March 31

(in thousands of dollars)
  Forecast
2011
Estimated
Balances
2010
Assets
Financial Assets
Accounts receivable and advances (Note 8) 22,393 24,234
Total financial assets 22,393 24,234
Non-Financial Assets
Inventory 37,113 37,151
Tangible capital assets (Note 9) 2,567,718 2,424,130
Total non-financial assets 2,604,831 2,461,281
  2,627,224 2,485,515
Liabilities
Accounts payable and accrued liabilities 330,528 327,686
Vacation pay and compensatory leave 72,380 70,961
Lease obligation for tangible capital assets (Note 10) 58 134
Deferred revenue (Note 11) 23 23
Other liabilities (Note 12) 18,360 18,647
Employee severance benefits (Note 13) 180,692 177,149
Environmental liabilities (Note 14) 70,000 61,955
Contingent liabilities (Note 14) 648 648
Total liabilities 672,689 657,203
Equity of Canada(Note 15) 1,954,535 1,828,312
  2,627,224 2,485,515

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

 

Future-oriented Statement of Equity of Canada (unaudited)

For the Year Ended March 31

(in thousands of dollars)
  Forecast
2011
Estimated
Balances
2010
Equity of Canada, beginning of year 1,828,312 1,732,121
Net cost of operations (1,884,749) (1,892,871)
Current year appropriations used (Note 5) 1,963,097 1,993,884
Revenue not available for spending (42,720) (43,925)
Change in net position in the Consolidated Revenue Fund (Note 5) (11,553) (68,630)
Services provided without charge by other government departments (Note 16) 102,148 107,733
Equity of Canada, end of year 1,954,535 1,828,312

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

 

Future-oriented Statement of Cash Flow (unaudited)

For the Year Ended March 31

(in thousands of dollars)
  Forecast
2011
Estimated
Balances
2010
Operating activities
Net cost of operations 1,884,749 1,892,871
Non-cash Items
Amortization of tangible capital assets (Note 9) (189,269) (180,082)
Net loss on disposal of tangible capital assets (6,191) (5,890)
Loss on write-offs and write-downs of tangible capital assets (19,100) (18,173)
Services provided without charge by other government departments (102,148) (107,733)
Other 7,329 6,974
Variations in Statement of Financial Position
(Decrease) Increase in accounts receivable and advances (1,841) 5,582
(Decrease) Increase in inventory (38) (1,395)
(Increase) in accounts payable and accrued liabilities (2,842) (61,970)
(Increase) Decrease in vacation pay and compensatory leave (1,419) (3,379)
Decrease (Increase) in other liabilities 287 (4,985)
(Increase) Decrease in employee severance benefits (3,543) (8,436)
(Increase) Decrease in environmental liabilities (8,045) 8,500
(Increase) Decrease in contingent liabilities (100)
Cash used by operating activities 1,557,929 1,521,784
Capital Investment Activities
Principal obligation of tangible capital lease 76 73
Acquisitions of tangible capital assets 352,459 361,032
Proceeds from the disposal of tangible capital assets (1,640) (1,560)
Cash used by investing activities 350,895 359,545
Net cash provided by Government of Canada 1,908,824 1,881,329

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


Notes to Future-oriented Financial Statements (unaudited)

For the years ended March 31, 2010 and March 31, 2011

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 ten program activities, which are described below.

Safe and Accessible Waterways: Providing access to Canadian waterways and ensuring the overall safety and integrity of Canada's marine infrastructure for the benefit of all Canadians.

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: Delivering an integrated fisheries and aquaculture program that is credible, science-based, affordable, effective, and contributes to sustainable wealth for Canadians while respecting Aboriginal and treaty rights.

Fisheries and Aquaculture Management: The conservation of Canada’s fisheries resources to ensure sustainable resource utilization through close collaboration with resource users and stakeholders based on shared stewardship. Fisheries and Aquaculture Management contributes to international fisheries conservation negotiations and relations, shared management of interception fisheries in international waters, management of the Aboriginal, commercial, recreational fishing in the coastal waters of Canada's three oceans and creating the conditions for a vibrant and innovative aquaculture industry and for an economically prosperous fishing sector as a whole.

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: Ensuring the sustainable development and integrated management of resources in or around Canada's aquatic environment and carrying out critical science and fisheries management activities.

Oceans Management: Conservation and sustainable use of Canada's oceans in collaboration with other levels of government, Aboriginal organizations and other non-government stakeholders through the development and implementation of objectives-based integrated oceans management plans and the application of marine conservation tools.

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.

Species At Risk Management: Development of recovery strategies, action plans and management plans for all aquatic species; promoting recovery implementation and monitoring of marine and anadromous (moving between fresh and salt water) species over which the federal government has exclusive jurisdiction; and promoting freshwater species for which certain provinces have specific delegated responsibilities related to fisheries management through regulations under the Fisheries Act.

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

Internal Services: Activities and resources that are administered to support the needs of programs and other corporate obligations of an organization. These groups 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; Acquisition Services; and Travel and Other Administrative Services. Internal Services include only those activities and resources that apply across an organization and not to those provided specifically to a program.

 

2. Underlying Assumptions

These future-oriented statements have been prepared:

  • as at December 31, 2009.

  • on the basis of government policies, government priorities, and external environment at the time the future-oriented financial information was finalized.

  • according to the requirements of Treasury Board Accounting Policies which are based on Canadian generally accepted accounting principles for the public sector.

  • on the basis that the resources provided will enable the DFO to deliver the expected results specified in the Report on Plans and Priorities.

  • on the basis of historical cost

 

3. Variations and Changes to the Forecast Financial Information

While every attempt has been made to accurately forecast final results from 2009-10 to 2010-11, actual results achieved are likely to vary from the forecast information presented, and this variation could be material.

Once the Report on Plans and Priorities is presented, the DFO will not be updating the forecasts for any changes to appropriations or forecast financial information made in ensuing supplementary estimates. Variances will be explained in the Departmental Performance Report.

 

4. 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 5 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 in accordance with the terms and conditions of employment.

    • 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 14(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 14(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 resulting from foreign currency transactions are included in the statement of operations (Note 7, Other revenue).

  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 5-40 years
    Aircraft 15-25 years
    Motor vehicles 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.

 

5. 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.

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

(in thousands of dollars)
  Forecast
2011
Estimated
Balances
2010
Net cost of operations 1,884,749 1,892,871
Adjustments for items affecting net cost of operations but not affecting appropriations  
 
Add (less):
Revenue not available for spending 42,720 43,925
Amortization of tangible capital assets (189,269) (180,082)
Net loss on disposal of tangible capital assets (6,191) (5,890)
Loss on write-offs and write-downs of tangible capital assets (19,100) (18,173)
Services provided without charge by other government departments (102,148) (107,733)
(Decrease) Increase in inventory (38) (1,395)
(Increase) Decrease in vacation pay and compensatory leave (1,419) (3,379)
(Increase) Decrease in environmental liabilities (8,045) 8,500
(Increase) Decrease in contingent liabilities - (100)
(Increase) Decrease in employee severance benefits (3,543) (8,436)
Earmarked supplementary fish fines (249) (254)
Other 13,095 12,925
Total adjustments for items not affecting appropriations (274,187) (260,092)
 
Adjustments for items not affecting net cost of operations but affecting appropriations  
Add (less):
Acquisitions of tangible capital assets 352,459 361,032
Principal obligation of tangible capital lease 76 73
Total adjustments for items affecting appropriations 352,535 361,105
Current year appropriations used 1,963,097 1,993,884

5(b) Appropriations provided and used

(in thousands of dollars)
  Forecast
2011
Estimated
Balances
2010
Appropriations provided
Vote 1 – Operating expenditures 1,283,084 1,317,959
Vote 5 – Capital expenditures 427,591 422,865
Vote 10 – Grants and contributions 126,231 134,096
Statutory amounts 127,831 120,524
Loans and advances for the Freshwater Fish Marketing Corporation 50,000 50,000
Less:    
Appropriations available for future years (51,640) (51,560)
Lapsed appropriations
Forecast authorities available 1,963,097 1,993,884

While the appropriations for loans and advances of the Freshwater Fish Marketing Corporation (FFMC) are included in note 5(b) and available for future years, the activities of the FFMC are not reported in these financial statements.


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

(in thousands of dollars)
  Forecast
2011
Estimated
Balances
2010
Net cash provided by Government of Canada 1,908,824 1,881,329
     
Revenue not available for spending 42,720 43,925
   
Change in net position in the Consolidated Revenue Fund
Decrease (increase) in accounts receivable and advances 1,841 (5,582)
Increase in accounts payable and accrued liabilities 2,842 61,970
Increase (decrease) in other liabilities (287) 4,985
Other 7,157 7,257
  11,553 68,630
Current year appropriations used 1,963,097 1,993,884

 

6. Expenses

The following table presents details of expenses by category.

(in thousands of dollars)
  Forecast 2011 Estimated
Balances
2010
Operating and administration
Personnel and employee benefits 968,760 947,516
Professional and special services 211,785 248,153
Amortization 189,269 180,082
Utilities, material and supplies 127,075 125,817
Repair and maintenance 127,446 133,760
Travel and relocation 64,830 64,830
Environmental liabilities expenses 8,045 (8,500)
Machinery and equipment 60,333 64,734
Rental 25,476 27,697
Loss on write-off and write-downs of tangible capital assets and inventory 19,100 18,173
Telecommunication 20,766 23,482
Loss on disposal of tangible capital assets 7,939 7,554
Communication services 6,030 6,816
Other expenses 2,299 2,300
Total operating and administration 1,839,153 1,842,414
Transfer payments
First Nations and Inuit People 100,595 106,863
Non-profit organizations 12,925 13,730
Individuals 10,414 11,063
Other level of governments within Canada 1,464 1,556
Other countries and international organizations 442 468
Industry 391 416
Total transfer payments 126,231 134,096
Total expenses 1,965,384 1,976,510

 

7. Revenues

The following table presents details of revenues by category.

(in thousands of dollars)
  Forecast
2011
Estimated
Balances
2010
Revenue  
Sales of goods and services 73,346 76,333
Gains on disposals of tangible capital assets 1,767 1,683
Other revenue 5,317 5,410
Revenue from earmarked supplementary fish fines 205 213
Total revenues 80,635 83,639

 

8. Accounts receivable and advances

The following table presents details of accounts receivable and advances.

(in thousands of dollars)
  Forecast
2011
Estimated
Balances
2010
Receivables
Receivables from external parties 10,294 34,794
Receivables from other federal government departments and agencies 12,253 12,253
Accrued interest on loans 1,556 1,556
Refunds of program expenses 170 170
Less:
Allowance for doubtful accounts on external receivables (2,136) (24,801)
Total receivables 22,137 23,972
Loans and advances
Accountable advances 256 262
Loans (1) 1,472
Allowance on loans and advances (1,472)
Total loans and advances 256 262
Total accounts receivable and advances 22,393 24,234

(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).

 

9. Tangible capital assets

(in thousands of dollars)
  Cost
Opening balance
April 1, 2010
Acquisitions during the year Disposals / write-offs
during the year
Other (1) Closing balance
March 31, 2011
Land 20,664 356 57 20,963
Buildings 531,291 498 1,067 19,313 550,035
Works and infrastructure 2,013,942 2,166 14,249 110,777 2,112,636
Machinery and equipment 387,328 12,248 15,225 8,938 393,289
Informatics hardware 45,209 16,950 8,427 6,153 59,885
Informatics software 30,662 71 611 1,796 31,918
Arms and weapons for defense 287 161 57 4 395
Other equipment, including furniture 564 41 33 572
Ships and boats 1,735,278 1,920 14,476 117,208 1,839,930
Aircrafts 34,293 2,959 1,221 36,031
Motor vehicles 77,736 13,289 6,147 177 85,055
Other vehicles 9,042 818 366 308 9,802
Leasehold improvements 546,444 178 2,662 4,572 548,532
Work in progress (2) 404,896 288,645 15,128 (259,323) 419,090
Work-in-progress – software (2) 27,471 12,159 1,694 (2,594) 35,342
Assets under capital lease 525 525
Total 5,865,632 352,459 81,420 7,329 6,144,000

 

(in thousands of dollars)
  Accumulated Amortization Net Book Value
Accumulated amortization April 1, 2010 Amortization for the year Disposals/ write-offs Accumulated amortization March 31, 2011 March 31, 2011 March 31, 2010
Land 20,963 20,664
Buildings 348,011 2,801 806 350,006 200,029 183,280
Works and infrastructure 1,092,356 28,882 8,315 1,112,923 999,713 921,586
Machinery and equipment 276,237 56,740 14,320 318,657 74,632 111,091
Informatics hardware 42,236 20,415 7,923 54,728 5,157 2,973
Informatics software 24,746 1,552 447 25,851 6,067 5,916
Arms and weapons for defense 271 151 44 378 17 16
Other equipment, including furniture 500 95 27 568 4 64
Ships and boats 1,208,412 46,787 13,470 1,241,729 598,201 526,866
Aircrafts 32,975 4,050 1,166 35,859 172 1,318
Motor vehicles 42,602 21,047 6,059 57,590 27,465 35,134
Other vehicles 6,663 890 256 7,297 2,505 2,379
Leasehold improvements 366,151 5,754 1,656 370,249 178,283 180,293
Work-in-progress (2) 419,090 404,896
Work-in-progress – software (2) 35,342 27,471
Assets under capital lease 342 105 447 78 183
Total 3,441,502 189,269 54,489 3,576,282 2,567,718 2,424,130

Amortization expense for the year ended March 31, 2011, is $189,269 (2010 - $180,082)

(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.

 

(in thousands of dollars)
  Cost
Opening balance
April 1, 2009
Acquisitions during the year Disposals / write-offs
during the year
Other (1) Closing balance
March 31, 2010
Land 20,363 355 54 20,664
Buildings 507,948 497 1,015 23,861 531,291
Works and infrastructure 1,931,293 2,165 13,556 94,040 2,013,942
Machinery and equipment 380,958 12,352 14,486 8,504 387,328
Informatics hardware 50,178 1,952 8,018 1,097 45,209
Informatics software 24,463 71 581 6,709 30,662
Arms and weapons for defense 302 35 54 4 287
Other equipment, including furniture 560 35 31 564
Ships and boats 1,641,245 1,917 13,771 105,887 1,735,278
Aircrafts 35,455 1,162 34,293
Motor vehicles 67,195 16,221 5,849 169 77,736
Other vehicles 8,282 816 349 293 9,042
Leasehold improvements 544,450 177 2,533 4,350 546,444
Work in progress (2) 342,461 312,300 14,393 (235,472) 404,896
Work-in-progress – software (2) 19,411 12,139 1,611 (2,468) 27,471
Assets under capital lease 525 525
Total 5,575,089 361,032 77,463 6,974 5,865,632

 

(in thousands of dollars)
  Accumulated Amortization Net Book Value
Accumulated amortization April 1, 2009 Amortization for the year Disposals/ write-offs Accumulated amortization March 31, 2010 March 31, 2010 March 31, 2009
Land 20,664 20,363
Buildings 327,438 21,340 767 348,011 183,280 180,510
Works and infrastructure 1,034,610 65,657 7,911 1,092,356 921,586 896,683
Machinery and equipment 273,939 15,922 13,624 276,237 111,091 107,019
Informatics hardware 46,803 2,971 7,538 42,236 2,973 3,375
Informatics software 21,605 3,566 425 24,746 5,916 2,858
Arms and weapons for defense 294 18 41 271 16 8
Other equipment, including furniture 508 18 26 500 64 52
Ships and boats 1,178,115 43,112 12,815 1,208,412 526,866 463,130
Aircrafts 32,805 1,279 1,109 32,975 1,318 2,650
Motor vehicles 42,460 5,907 5,765 42,602 35,134 24,735
Other vehicles 6,565 342 244 6,663 2,379 1,717
Leasehold improvements 347,882 19,845 1,576 366,151 180,293 196,569
Work-in-progress (2) 404,896 342,461
Work-in-progress – software (2) 27,471 19,411
Assets under capital lease 237 105 342 183 288
Total 3,313,261 180,082 51,841 3,441,502 2,424,130 2,261,829

Amortization expense for the year ended March 31, 2010, is $180,082 (2009- $173,592)

(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.

 

10. 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 $447,029 as at March 31, 2011 (Note 9). Interest costs are included in Other expenses (Note 6). The obligations for the upcoming years include the following:

(in thousands of dollars)
  Forecast
2011
Estimated
Balances
2010
Maturing year
2011 80
2012 and thereafter 58 58
Total future minimum lease payments 58 138
Less: imputed interest (4.1%) (4)
Balance of obligations under leased tangible capital assets 58 134


11. 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:

(in thousands of dollars)
  Opening balance
April 1,2010
Donations received Revenue Recognized Closing balance
March 31, 2011
Deferred revenue
Restricted donations 23 3 3 23

(in thousands of dollars)
  Opening balance
April 1, 2009
Donations received Revenue Recognized Closing balance
March 31, 2010
Deferred revenue
Restricted donations 23 3 3 23

 

12. 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:

(in thousands of dollars)
  Opening balance
April 1, 2010
Receipts
and other credits
Payments
and other charges
Closing balance
March 31, 2011
Federal / provincial cost-sharing agreements 1,134 873 (890) 1,117
Research projects deposits 16,311 13,270 (13,521) 16,060
Sales of seized assets - Fisheries Act 855 585 (598) 842
Contractors' security deposits 347 408 (414) 341
Total 18,647 15,136 (15,423) 18,360

(in thousands of dollars)
  Opening balance
April 1, 2009
Receipts
and other credits
Payments
and other charges
Closing balance
March 31, 2010
Federal / provincial cost sharing agreements 1,040 873 (779) 1,134
Research projects deposits 11,600 13,270 (8,559) 16,311
Sales of seized assets - Fisheries Act 715 585 (445) 855
Contractors' security deposits 307 408 (368) 347
Total 13,662 15,136 (10,151) 18,647
  • 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.

  • Research projects 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 bidder fail to honor a contract.

 

13. 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 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.

(in thousands of dollars)
  Forecast
2011
Estimated
Balances
2010
Accrued benefit obligation, beginning of year 177,149 168,713
Expense for the year 25,621 30,514
Benefits paid during the year (22,078) (22,078)
Accrued benefit obligation, end of year 180,692 177,149

 

14. 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 $70 million ($62 million in 2009-10) has been recorded. The DFO has estimated additional costs of $135.1 million ($135.1 million in 2009-2010) 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. 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 ($0.6 million in 2010-2011 and $0.6 million in 2009-2010) and an expense recorded in the financial statements.

 

15. Equity of Canada


(in thousands of dollars)
  Forecast
2011
Estimated
Balances
2010
Restricted Equity of Canada, April 1 420 674
Supplementary Fish Fines Account
Revenues 205 213
Expenses (454) (467)
Restricted Equity of Canada, March 31 171 420
Unrestricted Equity of Canada, March 31 1,954,364 1,827,892
Total Equity of Canada at March 31 1,954,535 1,828,312

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.

 

16. 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 receives 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:

(in thousands of dollars)
  Forecast
2011
Estimated Balances
2010
Accommodation provided by Public Works and Government Services Canada 42,140 43,400
Employer’s contribution to the health and dental insurance plans provided by Treasury Board Secretariat 55,541 60,223
Administration costs and commissions paid to provincial workers’ compensation boards by Social Development Canada 1,203 950
Legal services provided by Justice Canada 3,264 3,160
Total services provided without charge 102,148 107,733

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.

17. Comparative information

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