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Report on Plans and Priorities 2013-14

Future-oriented Financial Statements of Fisheries and Oceans Canada

For the years ended March 31, 2013 and March 31, 2014

Fisheries and Oceans Canada
Management Responsibility for Future-oriented Financial Statements

Departmental management is responsible for these future-oriented financial statements, including responsibility for the appropriateness of the assumptions on which these statements are prepared. These statements are based on the best information available and assumptions adopted as at November 30, 2012 and reflect the plans described in the Report on Plans and Priorities.

 

Roch Huppé, Chief Financial Officer
Ottawa, Canada
February 5, 2013
Matthew King, Deputy Minister
Ottawa, Canada
February 5, 2013

 

Future-oriented Statement of Financial Position (unaudited)
As at March 31


(in thousands of dollars)
  Estimated
Results
2013
Forecast
2014
Liabilities
Accounts payable and accrued liabilities (Note 6) 297,073 242,857
Vacation pay and compensatory leave 74,409 73,696
Deferred revenue (Note 7) 8,946 8,973
Other liabilities (Note 8) 36,547 35,380
Employee future benefits (Note 9) 157,404 155,896
Environmental and contingent liabilities (Note 10) 136,725 136,725
Total gross liabilities 711,104 653,527
 
Liabilities held on behalf of Government
Deferred revenue (Note 7) (8,946) (8,973)
Total liabilities held on behalf of Government (8,946) (8,973)
 
Total net liabilities 702,158 644,554
 
Financial assets
Due from Consolidated Revenue Fund 251,471 221,165
Accounts receivable and advances (Note 11) 21,442 21,132
Total gross financial assets 272,913 242,297
 
Financial assets held on behalf of Government
Accounts receivable and advances (Note 11) (14,765) (14,305)
Total financial assets held on behalf of Government (14,765) (14,305)
 
Total net financial assets 258,148 227,992
 
Departmental net debt 444,010 416,562
 
Non-financial assets
Inventory (Note 12) 43,137 46,525
Tangible capital assets (Note 13) 2,608,952 2,589,044
Total non-financial assets 2,652,089 2,635,569
 
Departmental net financial position (Note 14) 2,208,079 2,219,007
Environmental and contingent liabilities (Note 10)
Contractual obligations (Note 15)
Information for the year ended March 31, 2013 includes actual amounts from April 1, 2012 to November 30, 2012.
The accompanying notes form an integral part of these financial statements.

 

Roch Huppé, Chief Financial Officer
Ottawa, Canada
February 5, 2013
Matthew King, Deputy Minister
Ottawa, Canada
February 5, 2013

 

Future-oriented Statement of Operations and Departmental Net Financial Position (unaudited)
For the Year Ended March 31


(in thousands of dollars)
  Estimated
Results
2013
Forecast
2014
Expenses
Economically Prosperous Maritime Sectors and Fisheries 545,490 423,885
Sustainable Aquatic Ecosystems 284,753 294,222
Safe and Secure Waters 863,239 801,664
Internal Services 358,204 311,973
Total Expenses 2,051,686 1,831,744
 
Revenues
Sales of goods and services 91,148 91,252
Gain on sale of capital assets 2,553 3,544
Other revenues 3,167 3,724
Revenues earned on behalf of Government (43,234) (43,337)
Total revenues 53,634 55,183
Net cost of operations before Government funding and transfers 1,998,052 1,776,561
 
Government funding and transfers
Net cash provided by Government 1,875,319 1,699,588
Change in due from the Consolidated Revenue Fund 32,618 (30,306)
Services provided without charge by other government departments (Note 16) 119,506 118,207
Transfer of assets to other government departments 5 -
Total Government funding and transfers 2,027,448 1,787,489
 
Net cost of operations after government funding and transfers (29,396) (10,928)
 
Departmental net financial position - Beginning of year 2,178,683 2,208,079
 
Departmental net financial position - End of year 2,208,079 2,219,007
Segmented Information (Note 17)
Information for the year ended March 31, 2013 includes actual amounts from April 1, 2012 to November 30, 2012.
The accompanying notes form an integral part of these financial statements.

 

Future-oriented Statement of Change in Departmental Net Debt (Unaudited)
For the Year Ended March 31


(in thousands of dollars)
  Estimated
Results
2013
Forecast
2014
Net cost of operations after government funding and transfers (29,396) (10,928)
 
Change due to tangible capital assets
Acquisition of tangible capital assets 210,878 186,762
Amortization of tangible capital assets (182,575) (186,354)
Proceeds from disposal of tangible capital assets (4,414) (4,181)
Net loss on disposal of tangible capital assets (18,546) (16,135)
Transfers from other government departments 5 -
Total change due to tangible capital assets 5,348 (19,908)
 
Change due to inventories (4,579) 3,388
 
Net decrease in departmental net debt (28,627) (27,448)
 
Departmental net debt - Beginning of year 472,637 444,010
 
Departmental net debt - End of year 444,010 416,562
Information for the year ended March 31, 2013 includes actual amounts from April 1, 2012 to November 30, 2012.
The accompanying notes form an integral part of these financial statements.

 

Future-oriented Statement of Cash Flow (unaudited)
For the Year Ended March 31


(in thousands of dollars)
  Estimated
Results
2013
Forecast
2014
Operating activities
Net cost of operations before government funding and transfers 1,998,052 1,776,561
Non-cash Items:
Amortization of tangible capital assets (182,575) (186,354)
Net loss on disposal of tangible capital assets (18,546) (16,135)
Services provided without charge by other government departments (Note 16) (119,506) (118,207)
 
Variations in Statement of Financial Position:
Decrease (increase) in accounts payable and accrued liabilities (10,142) 54,216
Decrease (increase) in vacation pay and compensatory leave (1,762) 713
Decrease in other liabilities 7,880 1,167
Decrease in employee future benefits 543 1,508
Increase (decrease) in accounts receivable and advances (510) 150
Increase (decrease) in inventory (4,579) 3,388
Cash used in operating activities 1,668,855 1,517,007
 
Capital investing activities
Acquisitions of tangible capital assets 210,878 186,762
Proceeds from the disposal of tangible capital assets (4,414) (4,181)
Cash used in capital investing activities 206,464 182,581
 
Net cash provided by the Government of Canada 1,875,319 1,699,588
Information for the year ended March 31, 2013 includes actual amounts from April 1, 2012 to November 30, 2012.
The accompanying notes form an integral part of these financial statements.

Notes to the Future-oriented Financial Statements (Unaudited)

1. Authority and Objectives

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

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

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

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

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

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

Internal Services are activities and resources that are administered to support the needs of programs under all three strategic outcomes and other corporate obligations: Management and Oversight Services; Communications; Legal Services; Human Resources Management; Information Management; Information Technology; Financial Management; Travel and Other Administrative Services; Real Property; Materiel; and Acquisition. Internal Services include only those activities and resources that apply across an organization and not to those provided specifically to a program.

 

2. Methodology and Significant Assumptions

The future-oriented financial statements have been prepared on the basis of the government priorities and the plans of Fisheries and Oceans Canada as described in the Report on Plans and Priorities.

The main assumptions were adopted as at November 30, 2012 and are as follows:

  1. The activities of Fisheries and Oceans Canada will remain substantially the same as for the previous year.

  2. Expenses and revenues, including the determination of amounts internal and external to the government, are based on historical experience. The general historical pattern is expected to continue.

  3. Allowances for uncollectibility are based on historical experience. The general historical pattern is expected to continue.

  4. Estimated year end information for 2012-2013 is used as the opening position for the 2013-2014 planned results.

 

3. Variations and Changes to the Forecast Financial Information

While every attempt has been made to forecast final results for the remainder of 2012-2013 and for 2013-2014, actual results achieved for both years are likely to vary from the forecast information presented, and this variation could be material.

In preparing these future-oriented financial statements, Fisheries and Oceans Canada has made estimates and assumptions concerning the future. These estimates and assumptions may differ from the subsequent actual results. Estimates and assumptions are continually evaluated and are based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances. Factors that could lead to material differences between the future-oriented financial statements and the historical financial statements include:

  1. The timing and amounts of acquisitions and disposals of property, plant and equipment may affect gains/losses and amortization expense.

  2. Implementation of new collective agreements.

  3. Economic conditions may affect both the amount of revenue earned and the collectability of loans receivable.

  4. Interest rates in effect at the time of issue will affect the net present value of non-interest bearing loans.

  5. Further changes to the operating budget through additional new initiatives or technical adjustments later in the year.

Fisheries and Oceans Canada will not be updating the forecasts for any changes to authorities or forecast financial information made in ensuing supplementary estimates.

 

4. Summary of Significant Accounting Policies

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

Significant accounting policies are as follows:

  1. Parliamentary authorities:

    Fisheries and Oceans Canada is financed by the Government of Canada through Parliamentary authorities. Financial reporting of authorities provided to Fisheries and Oceans Canada do not parallel financial reporting according to generally accepted accounting principles since authorities are primarily based on cash flow requirements. Consequently, items recognized in the future-oriented Statement of Operations and Departmental Net Financial Position and in the future-oriented Statement of Financial Position are not necessarily the same as those provided through authorities from Parliament. The notes provide a reconciliation between the bases of reporting.

  2. Net cash provided by Government:

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

  3. Consolidated Revenue Fund:

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

  4. Revenues:

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

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

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

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

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

  5. Expenses are recorded on an accrual basis:

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

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

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

  6. Employee future benefits:

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

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

  7. Accounts receivable and advances:

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

  8. Contingent liabilities:

    Contingent liabilities are potential liabilities that may become actual liabilities when one or more future events occur or fail to occur. To the extent that the future event is likely to occur or fail to occur, and a reasonable estimate of the loss can be made, an estimated liability is accrued and an expense recorded. If the likelihood is not determinable or if an amount cannot be reasonably estimated the contingency is disclosed in the notes to the future-oriented 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 Fisheries and Oceans Canada becomes aware of the contamination and is obligated, or is likely to be obligated to incur such costs. If the likelihood of Fisheries and Oceans Canada’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 the notes to the future-oriented financial statements.

  10. Inventory:

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

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

  11. Tangible capital assets:

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

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

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

 

5. Parliamentary Authorities

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

The differences are reconciled in the following tables:

a) Reconciliation of net cost of operations to authorities requested


(in thousands of dollars)
  Estimated
Results
2013
Forecast
2014
Net cost of operations before government funding and transfers 1,998,052 1,776,561
Adjustments for items affecting net cost of operations but not affecting authorities:
Amortization of tangible capital assets (182,575) (186,354)
Net loss on disposal of tangible capital assets (18,546) (16,135)
Services provided without charge by other government departments (119,506) (118,207)
Decrease in accrued liabilities not charged to authorities 17,231 23,773
Decrease (increase) in vacation pay and compensatory leave (1,762) 713
Decrease in employee future benefits 543 1,508
Increase (decrease) in inventory (4,579) 3,388
Bad debt expense (708) (751)
Refunds of previous years expenditures 4,937 5,287
Earmarked Supplementary Fish Fines (109) (127)
Other 1,710 (1,489)
Total Adjustments for items affecting net cost of operations but not affecting authorities (303,364) (288,394)
 
Adjustments for items not affecting net cost of operations but affecting authorities:
Acquisitions of tangible capital assets 210,878 186,762
Total adjustments for items not affecting net cost of operations but affecting authorities 210,878 186,762
 
Forecast authorities available 1,905,566 1,674,929

b) Authorities requested


(in thousands of dollars)
  Estimated
Results
2013
Forecast
2014
Authorities requested:
Vote 1 – Operating expenditures 1,283,318 1,124,408
Vote 5 – Capital expenditures 400,593 361,453
Vote 10 – Grants and contributions 88,988 59,091
Statutory amounts 132,667 129,977
Total authorities requested 1,905,566 1,674,929

Authorities presented reflect current forecasts of statutory items, approved initiatives included and expected to be included in Estimates documents and, when reasonable estimates can be made, estimates of amounts to be allocated from Treasury Board central votes.

 

6. Accounts payable and accrued liabilities

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

(in thousands of dollars)
  Estimated
Results
2013
Forecast
2014
Accounts payable - Other government departments and agencies 36,614 32,265
Accounts payable - External parties 135,885 120,881
Total accounts payable 172,499 153,146
 
Accrued liabilities 124,574 89,711
 
Total accounts payable and accrued liabilities 297,073 242,857

In Canada’s Economic Action Plan 2012, the Government announced savings measures to be implemented by departments over the next three fiscal years starting in 2012-2013. As a result, Fisheries and Oceans Canada has estimated at March 31, 2013 an obligation for termination benefits for an amount of $44.8 million ($62.0 million in 2011-2012) as part of accrued liabilities to reflect the estimated workforce adjustment costs.

 

7. Deferred revenue

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

(in thousands of dollars)
  Estimated
Results
2013
Forecast
2014
Opening balance 7,923 8,946
Amounts expected to be received 8,935 8,962
Revenue recognized (7,912) (8,935)
Gross closing balance 8,946 8,973
 
Deferred revenues held on behalf of Government (8,946) (8,973)
 
Net closing balance - -

 

8. Other liabilities

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

(in thousands of dollars)
  Estimated
Results
2013
Forecast
2014
Research projects deposits 34,682 33,574
Federal/Provincial cost sharing agreements 639 619
Sales of seized assets - Fisheries Act 920 891
Contractor security deposits 306 296
Total other liabilities 36,547 35,380

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

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

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

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

 

9. Employee future benefits

a) Pension benefits

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

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

b) Severance benefits

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

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

Benefits will be paid from future authorities. Information about the severance benefits, measured as at March 31, is as follows:

(in thousands of dollars)
  Estimated
Results
2013
Forecast
2014
Accrued benefit obligation - Beginning of the year 157,947 157,404
Expense for the year 14,135 13,345
Benefits paid during the year (14,678) (14,853)
Accrued benefit obligation - End of year 157,404 155,896

 

10. Environmental and contingent liabilities

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

a) Contaminated sites

Liabilities are accrued to record the estimated costs related to the management and remediation of contaminated sites where Fisheries and Oceans Canada is obligated or likely to be obligated to incur such costs. As at the date of these future-oriented financial statements, Fisheries and Oceans Canada has identified approximately 935 sites where such action is possible and for which a liability of $102.1 million has been recorded. Fisheries and Oceans Canada has estimated additional clean-up costs of $119.7 million that are not accrued, as these are not considered likely to be incurred at this time. Fisheries and Oceans Canada’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 by Fisheries and Oceans Canada in the year in which they become likely and are reasonably estimable.

b) Claims and litigation

Claims have been made against Fisheries and Oceans Canada in the normal course of operations. These claims include items with pleading amounts and others for which no amount is specified. While the total amount claimed in these actions is significant, their outcomes are not determinable. Fisheries and Oceans Canada has recorded an allowance of $34.6 million for claims and litigations where it is likely that there will be a future payment and a reasonable estimate of the loss can be made. Based on Fisheries and Oceans Canada's assessment, legal proceedings for claims estimated at $313.4 million will be pending at March 31, 2013.

 

11. Accounts receivable and advances

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


(in thousands of dollars)
  Estimated
Results
2013
Forecast
2014
Accounts receivable
Receivables - External parties 35,703 35,034
Receivables - Other federal government departments and agencies 12,293 11,941
Refunds of program expenses 242 258
Subtotal - Receivables 48,238 47,233
 
Less: Allowance for doubtful accounts (27,037) (26,349)
 
Subtotal - Receivables 21,201 20,884
 
Loans and advances
Loans (1) 1,472 1,472
Accrued interest on loans 1,556 1,556
Accountable advances 241 248
Subtotal - Loans and advances 3,269 3,276
 
Less: Allowance on loans and advances (3,028) (3,028)
 
Subtotal - Loans and advances 241 248
 
Total gross accounts receivable, loans and advances 21,442 21,132
 
Accounts receivable held on behalf of Government (14,765) (14,305)
 
Net accounts receivable, loans and advances 6,677 6,827
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). Allowances on loans receivable are determined on a loan by loan basis. As a result of the postponement of principal and interest payments beyond the loan's original term, Fisheries and Oceans Canada has established an allowance equivalent to the total amount of principal and interest on the loans receivable.

 

12. Inventory

The following table presents details of the inventory:

(in thousands of dollars)
  Estimated
Results
2013
Forecast
2014
Inventory held for future program delivery 42,014 45,446
Inventory held for resale 1,123 1,079
Total Inventory 43,137 46,525

 

13. Tangible capital assets


(in thousands of dollars)
  Cost
Opening balance,
April 1, 2013
Acquisitions Adjustments Disposals/ write-offs Closing balance,
March 31, 2014
Land 23,124 - 763 (75) 23,812
Buildings 722,186 78 41,783 (4,423) 759,624
Works and infrastructure 2,378,950 242 76,441 (13,921) 2,441,712
Machinery and equipment 330,699 3,139 11,550 (13,738) 331,650
Informatics 75,146 325 5,962 (4,395) 77,038
Furniture 76 - - (14) 62
Ships and boats 1,764,473 545 28,009 (15,692) 1,777,335
Aircraft 35,233 - - (97) 35,136
Vehicles 69,944 4,185 358 (6,753) 67,734
Leasehold improvements 498,550 14 13,549 (5,240) 506,873
Work in progress 378,256 178,234 (178,415) (18,446) 359,629
Total 6,276,637 186,762 - (82,794) 6,380,605

 

(in thousands of dollars)
  Accumulated Amortization Net Book Value
Opening
balance,
April 1,
2013
Amortization Disposals/ write-offs effect on amortization Closing balance,
March 31, 2014
March 31, 2013 March 31, 2014
Land - - - - 23,124 23,812
Buildings 437,623 18,696 (4,423) 451,896 284,563 307,728
Works and infrastructure 1,234,793 64,214 (13,282) 1,285,725 1,144,157 1,155,987
Machinery and equipment 224,807 17,640 (13,738) 228,709 105,892 102,941
Informatics 64,537 7,849 (4,395) 67,991 10,609 9,047
Furniture 49 5 (13) 41 27 21
Ships and boats 1,309,439 51,791 (15,083) 1,346,147 455,034 431,188
Aircraft 32,541 1,005 (97) 33,449 2,692 1,687
Vehicles 46,769 6,693 (6,558) 46,904 23,175 20,830
Leasehold improvements 317,127 18,461 (4,889) 330,699 181,423 176,174
Work in progress - - - - 378,256 359,629
Total 3,667,685 186,354 (62,478) 3,791,561 2,608,952 2,589,044

 

14. Departmental net financial position

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

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

(in thousands of dollars)
  Estimated
Results
2013
Forecast
2014
Supplementary fish fines - Restricted
Balance - Beginning of year - Restricted 1,553 1,444
Revenues 158 377
Expenses (267) (250)
Balance - End of year - Restricted 1,444 1,571
 
Unrestricted 2,206,635 2,217,436
 
Departmental net financial position - End of year 2,208,079 2,219,007

 

15. Contractual obligations

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

(in thousands of dollars)
  2015 2016 2017 2018 and
Thereafter
Total
Construction of assets 13,828 2,266 - - 16,094
Business Services 12,658 - - - 12,658
Total 26,486 2,266 - - 28,752

 

16. Related party transactions

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

a) Common services provided without charge by other government departments

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

(in thousands of dollars)
  Estimated
Results
2013
Forecast
2014
Employer's contribution to health and dental insurance plans 67,362 66,717
Accommodation 48,795 48,315
Legal services 2,445 2,238
Workers' compensation 904 937
Total 119,506 118,207

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

b) Other transactions with related parties

(in thousand of dollars)
  Estimated
Results
2013
Forecast
2014
Expenses – Other government departments and agencies 279,718 247,109
Revenues – Other government departments and agencies 34 34

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

 

17. Segmented information

Presentation by segment is based on Fisheries and Oceans Canada's program alignment architecture. The presentation by segment is based on the same accounting policies as described in the Summary of Significant Accounting Policies in Note 4. The following table presents the expenses incurred and revenues generated by strategic outcomes, by major object of expense and by major type of revenue. The segment results for the period are as follows:

(in thousand of dollars)
  2013 Total Economically Prosperous Maritime Sectors and Fisheries Sustainable Aquatic Ecosystems Safe and Secure Waters Internal Services 2014 Total
Transfer Payments
First Nations and Inuit people 65,263 43,258 78 - - 43,336
Non-profit organizations 18,602 9,947 752 1,653 - 12,352
Individuals 1,129 750 - - - 750
Other level of governments within Canada 3,676 2,441 - - - 2,441
Other countries and international organizations 295 162 13 21 - 196
Industry 23 16 - - - 16
Total transfer payments 88,988 56,574 843 1,674 - 59,091
 
Operating expenses
Salaries and employee benefits 1,086,352 185,641 175,037 446,368 160,479 967,525
Professional and special services 267,155 45,653 43,045 109,771 39,465 237,934
Amortization of tangible capital assets 182,575 62,557 9,260 68,764 45,773 186,354
Repair and maintenance 130,647 22,326 21,050 53,681 19,300 116,357
Utilities, materials, supplies and fuel 114,400 19,549 18,433 47,005 16,899 101,886
Travel and relocation 60,869 10,402 9,807 25,010 8,992 54,211
Machinery and equipment 55,122 9,420 8,881 22,649 8,143 49,093
Loss on write-offs and write-downs of capital assets and inventory 21,099 4,163 699 8,465 6,352 19,679
Telecommunications 6,876 1,175 1,108 2,825 1,016 6,124
Rental 21,164 3,617 3,410 8,696 3,126 18,849
Communication services 4,804 821 774 1,974 710 4,279
Other 11,635 1,987 1,875 4,782 1,718 10,362
Total operating expenses 1,962,698 367,311 293,379 799,990 311,973 1,772,653
Total expenses 2,051,686 423,885 294,222 801,664 311,973 1,831,744
 
Revenues
Sales of goods and services 91,148 52,032 - 39,220 - 91,252
Gain on sale of capital assets 2,553 158 825 2,404 157 3,544
Other revenues 3,167 375 2,036 118 1,195 3,724
Revenues earned on behalf of Government (43,234) (38,200) (1,478) (3,098) (561) (43,337)
Total Revenues 53,634 14,365 1,383 38,644 791 55,183
 
Net cost of operations before Government funding and transfers 1,998,052 409,520 292,839 763,020 311,182 1,776,561