Financial Statements of Fisheries and Oceans Canada
Year ended March 31, 2025

Statement of management responsibility including internal control over financial reporting

Responsibility for the integrity and objectivity of the accompanying financial statements for the year ended March 31, 2025, and all information contained in these financial statements, rests with the management of Fisheries and Oceans Canada (the “Department”). These financial statements have been prepared by management using the Government of Canada’s accounting policies, which are based on Canadian public sector accounting standards.

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

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

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

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

A risk-based assessment of the system of internal control over financial reporting for the year ended March 31, 2025, was completed in accordance with the Treasury Board Policy on Financial Management and the results and action plans are summarized in the annex.

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

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

Ottawa, Canada
September 17, 2025

Year ended March 31, 2025

Statement of financial position (Unaudited)

As at March 31, 2025

Contractual obligations (note 19)

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

Ottawa, Canada
September 17, 2025

Statement of operations and departmental net financial position (Unaudited)

For the year ended March 31, 2025

Segmented information (note 22)

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

Statement of change in departmental net debt (Unaudited)

For the year ended March 31, 2025

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

Statement of cash flows (Unaudited)

For the year ended March 31, 2025

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

Notes to the financial statements (Unaudited)

For the year ended March 31, 2025

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.

The Department’s main legislative authorities are:

• the Oceans Act
• the Fisheries Act
• the Species at Risk Act
• the Coastal Fisheries Protection Act
• the Canada Shipping Act, 2001
• the Fishing and Recreational Harbours Act

The Department is currently organized into the following core responsibilities:

• Fisheries: Manage Canada’s fisheries, Indigenous fisheries programs, aquaculture activities and supports commercial fishing harbours while applying relevant legislation.
• Aquatic Ecosystems: Conserve and protect Canada’s oceans and other aquatic ecosystems and species from human impact and invasive species.
• Marine Navigation: Provide information and services to facilitate navigation in Canadian waters.
• Marine Operations and Response: Provide marine response services and operates Canada’s civilian maritime fleet.
• Internal Services are those groups of related activities and resources that the federal government considers to be services in support of programs and/or required to meet corporate obligations of an organization. Internal Services refers to the activities and resources of the 10 distinct service categories that support Program delivery in the organization, regardless of the Internal Services delivery model in a department. The 10 service categories are: Management and Oversight Services; Communications Services; Legal Services; Human Resources Management Services; Financial Management Services; Information Management Services; Information Technology Services; Real Property Services; Materiel Services; and Acquisition Services.

2. Summary of significant accounting policies

These financial statements have been prepared using the Department’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
   The Department is financed by the Government of Canada through parliamentary authorities. Financial reporting of authorities provided to the Department does not parallel financial reporting according to generally accepted accounting principles since authorities are primarily based on cash flow requirements. Consequently, items recognized in the Statement of Operations and Departmental Net Financial Position and in the Statement of Financial Position are not necessarily the same as those provided through authorities from Parliament. Note 3 provides a reconciliation between the bases of reporting. The planned results amounts in the “Expenses” and “Revenues” sections of the Statement of Operations and Departmental Net Financial Position are the amounts reported in the Future-oriented Statement of Operations included in the 2024-25 Departmental Plan. Planned results are not presented in the “Government funding and transfers” section of the Statement of Operations and Departmental Net Financial Position and in the Statement of Change in Departmental Net Debt because these amounts were not included in the 2024-25 Departmental Plan.
2. Net Cash Provided by Government
   The Department operates within the Consolidated Revenue Fund (CRF), which is administered by the Receiver General for Canada. All cash received by the Department is deposited to the CRF, and all cash disbursements made by the Department 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. Amounts due from or to the CRF
   Amounts due from or to the CRF are the result of timing differences that occur at year-end between when a transaction affects authorities and when it is processed through the CRF. Amounts due from the CRF represent the net amount of cash that the Department is entitled to draw from the CRF without further authorities to discharge its liabilities.
4. Revenues and deferred revenues
   

   Revenues are comprised of revenues earned from non-tax sources. They include exchange transactions where goods or services are provided for consideration where a performance obligation exists, and non-exchange transactions where no performance obligations exist to provide a good or service. These transactions can be recurring or non-recurring in nature. Recurring transactions are viewed as ongoing, routine activities that form part of the normal course of operations and can be used to indicate if they can be reasonably expected to be earned again in future years.

   Deferred revenues consist of amounts received in advance of the delivery of goods and rendering of services that will be recognized as revenue in a subsequent fiscal year as it is earned. Other revenues are recognized in the period the event giving rise to the revenues occurred.

   Revenues that are non-respendable are not available to discharge the department’s liabilities. While the Deputy Minister is expected to maintain accounting control, she has no authority regarding the disposition of non-respendable revenues. As a result, non-respendable revenues are earned on behalf of the Government of Canada and are therefore presented as a reduction of the entity’s gross revenues. Revenues earned on behalf of Government consist of the sale of services and gains on the sale of assets. These are recognized when earned.

5. Expenses
   Transfer payments are recorded as an expense in the year the transfer is authorized and all eligibility criteria have been met by the recipient. 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 carrying value.
6. Employee future benefits
   1. Pension benefits:
      Eligible employees participate in the Public Service Pension Plan, a multi-employer plan administered by the Government of Canada. The Department’s contributions to the Plan are charged to expenses in the year incurred and represent the total departmental obligation to the Plan. The Department’s responsibility with regard to the Plan is limited to its contributions. Actuarial surpluses or deficiencies are recognized in the financial statements of the Government of Canada, as the Plan’s sponsor.
   2. Severance benefits:
      The accumulation of severance benefits for voluntary departures ceased for applicable employee groups. The remaining obligation for employees who did not withdraw benefits is calculated using information derived from the results of the actuarially determined liability for employee severance benefits for the Government as a whole.
7. Financial instruments
   

   A contract establishing a financial instrument creates, at its inception, rights, and obligations to receive or deliver economic benefits. The financial assets and financial liabilities portray these rights and obligations in the financial statements. The Department recognizes a financial instrument when it becomes a party to a financial instrument contract.

   Financial instruments consist of accounts and loans receivable, and accounts payable and accrued liabilities.

   All financial assets and liabilities are recorded at cost or amortized cost. Any associated transaction costs are added to the carrying value upon initial recognition.

   For financial instruments measured at amortized cost, the effective interest method is used to determine interest revenue or expense.

   Accounts and loans receivable are initially recorded at cost and where necessary are discounted to reflect their concessionary terms. Concessionary terms of loans include cases where loans are made on a long-term, low interest or interest-free basis. Transfer payments that are unconditionally repayable are recognized as loans receivable. When necessary, an allowance for valuation is recorded to reduce the carrying value of accounts and loans receivable to amounts that approximate their net recoverable value.

8. Non-financial assets
   

   The costs of acquiring land, buildings, equipment and other capital properties are capitalized as tangible capital assets and, except for land, are amortized to expense over the estimated useful lives of the assets, as described in note 17. All tangible capital assets and leasehold improvements having an initial cost of $10,000 or more are recorded at their acquisition cost. Tangible capital assets do not include immovable assets located on reserves as defined in the Indian Act, works of art, museum collection and Crown land to which no acquisition cost is attributable and intangible assets.

   Inventories are valued at cost and are comprised of spare parts, materials, supplies and fuel held for future program delivery and are not primarily intended for resale. Inventories that no longer have service potential are valued at the lower of cost or net realizable value. Fuel is valued using the moving weighted average cost method.

9. Contingent liabilities
   Contingent liabilities are potential liabilities which may become actual liabilities when one or more future events occur or fail to occur. If the future event is likely to occur or fail to occur, and a reasonable estimate of the loss can be made, a provision is accrued, and an expense recorded to other expenses. If the likelihood is not determinable or an amount cannot be reasonably estimated, the contingency is disclosed in the notes to the financial statements.
10. Contingent assets
    Contingent assets are possible assets which may become actual assets when one or more future events occur or fail to occur. If the future event is likely to occur or fail to occur, the contingent asset is disclosed in the notes to the financial statements.
11. Environmental liabilities and asset retirement obligations
    

    An environmental liability for the remediation of contaminated sites is recognized when all of the following criteria are satisfied: an environmental standard exists, contamination exceeds the environmental standard, the Government is directly responsible or accepts responsibility, it is expected that future economic benefits will be given up and a reasonable estimate of the amount can be made. The liability reflects the Government’s best estimate of the amount required to remediate the sites to the current minimum standard for its use prior to contamination. If the likelihood of the Department’s responsibility is not determinable, a contingent liability is disclosed in the notes to the financial statements.

    An asset retirement obligation is recognized when all of the following criteria are satisfied: there is a legal obligation to incur retirement costs in relation to a tangible capital asset, the past event or transaction giving rise to the retirement liability has occurred, it is expected that future economic benefits will be given up, and a reasonable estimate of the amount can be made. The costs to retire an asset are normally capitalized and amortized over the asset’s estimated remaining useful life. An asset retirement obligation may arise in connection with a tangible capital asset that is not recognized or no longer in productive use. In this case, the asset retirement cost would be expensed. The measurement of the liability is the government’s best estimate of the amount required to retire a tangible capital asset.

    When the future cash flows required to settle or otherwise extinguish a liability are estimable, predictable and expected to occur over extended future periods, a present value technique is used. The discount rate used reflects the Government’s cost of borrowing, associated with the estimated number of years to complete remediation.

    The recorded liabilities are adjusted each year, as required, for present value adjustments, inflation, new obligations, changes in management estimates and actual costs incurred.

12. Measurement uncertainty
    

    The preparation of these financial statements requires management to make estimates and assumptions that affect the reported and disclosed amounts of assets, liabilities, revenues and expenses reported in the financial statements and accompanying notes at March 31. The estimates are based on facts and circumstances, historical experience, general economic conditions and reflect the Government’s best estimate of the related amount at the end of the reporting period. The most significant items where estimates are used are contingent liabilities, environmental liabilities and asset retirement obligations, the liability for employee future benefits and the useful life of tangible capital assets.

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

    Environmental liabilities and asset retirement obligations are subject to measurement uncertainty as discussed in note 5 due to the evolving technologies used in the estimation of the costs for remediation of contaminated sites or asset retirements, the use of discounted present value of future estimated costs, inflation, interest rates and the fact that not all sites have had a complete assessment of the extent and nature of remediation or asset retirement costs. Changes to underlying assumptions, the timing of the expenditures, the technology employed, or the revisions to environmental standards or changes in regulatory requirements could result in significant changes to the environmental liabilities recorded.

13. Related party transactions
    

    Related party transactions, other than inter-entity transactions, are recorded at the exchange amount.

    Inter-entity transactions are transactions between commonly controlled entities. Inter-entity transactions, other than restructuring transactions, are recorded on a gross basis and are measured at the carrying amount, except for the following:

    1. Services provided on a recovery basis are recognized as revenues and expenses on a gross basis and measured at the exchange amount.
    2. Certain services received on a without charge basis are recorded for departmental financial statement purposes at the carrying amount.

3. Parliamentary authorities

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

The differences are reconciled in the following tables:

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

(b) Authorities provided and used

4. Accounts payable and accrued liabilities

The following table presents the details of the Department’s accounts payable and accrued liabilities:

5. Environmental liabilities and asset retirement obligations

Environmental liabilities and asset retirement obligations include:

a) Remediation of contaminated sites

The Government’s “Federal Approach to Contaminated Sites” sets out a framework for management of contaminated sites using a risk-based approach. Under this approach the Government has inventoried the contaminated sites identified on federal lands, allowing them to be classified, managed and recorded in a consistent manner. This systematic approach aids in the identification of the high-risk sites in order to allocate limited resources to those sites which pose the highest risk to human health and the environment.

The Department has identified approximately 1,410 sites (1,592 sites in 2024) where contamination may exist and assessment, remediation and monitoring may be required. Of these, the Department has identified 877 sites (934 sites in 2024) where action is required and for which a gross liability of $298,660,528 ($284,348,666 in 2024) has been recorded. This liability estimate has been determined based on site assessments performed by environmental experts.

In addition, a statistical model based upon a projection of the number of sites that will proceed to remediation and upon which current and historical costs are applied is used to estimate the liability for a group of unassessed sites. As a result, there are approximately 106 unassessed sites (120 sites in 2024) where a liability estimate of $8,865,797 ($9,964,643 in 2024) has been recorded using this model.

These two estimates combined, totalling $307,526,325 ($294,313,310 in 2024), represent management’s best estimate of the costs required to remediate the sites to the current minimum standard for its use prior to contamination, based on information available at the financial statement date.

For the remaining 427 sites (538 sites in 2024), no liability for remediation has been recognized. Some of these sites are at various stages of testing and evaluation and if remediation is required, liabilities will be reported as soon as a reasonable estimate can be determined. For other sites, the Department does not expect to give up any future economic benefits (there is likely no significant environmental impact or human health threats). These sites will be re-examined and a liability for remediation will be recognized if future economic benefits will be given up.

The following table presents the total estimated amounts of these liabilities by nature and source, the associated expected recoveries and the total undiscounted future expenditures as at March 31, 2025, and March 31, 2024. When the liability estimate is based on a future cash requirement, the amount is adjusted for inflation using a forecast Consumer Price Index (CPI) rate of 2.0% (2.0% in 2024). Inflation is included in the undiscounted amount.

The Government of Canada’s cost of borrowing by reference to the actual zero-coupon yield curve for Government of Canada bonds has been used to discount the estimated future expenditures. The March 31, 2025, rates range from 2.44% for a 2-year term (4.59% in 2024 for 1-year term) to 3.27% (3.43% in 2024) for a 30 or greater year term.

1. Contamination primarily associated with fuel storage and handling, e.g., accidental spills related to fuel storage tanks or former fuel handling practices, e.g., petroleum hydrocarbons, polyaromatic hydrocarbons and BTEX (benzene, toluene, ethylbenzene and xylenes).
2. Contamination associated with former landfill/waste site or leaching from materials deposited in the landfill/waste site, e.g., metals, petroleum hydrocarbons, BTEX, other organic contaminants, etc.
3. Contamination associated with the operations of engineered assets such as airports, railways and roads where activities such as fuel storage/handling, waste sites, firefighting training facilities and chemical storage areas resulted in former or accidental contamination, e.g., metals, petroleum hydrocarbons, polyaromatic hydrocarbons, BTEX and other organic contaminants. Sites often have multiple sources of contamination.
4. Contamination associated with the operations of marine assets, e.g., port facilities, harbours, navigation systems, light stations, hydrometric stations, where activities such as fuel storage/handling, use of metal-based paint (e.g., on light stations) resulted in former or accidental contamination, e.g., metals, petroleum hydrocarbons, polyaromatic hydrocarbons and other organic contaminants. Sites often have multiple sources of contamination.
5. Contamination associated with the operations of the office/commercial/industrial facilities where activities such as fuel storage/handling, waste sites and use of metal-based paint resulted in former or accidental contamination, e.g., metals, petroleum hydrocarbons, polyaromatic hydrocarbons, BTEX, etc. Sites often have multiple sources of contamination.
6. Contamination from other sources, e.g., use of pesticides, herbicides, fertilizers at agricultural sites; use of PCBs, firefighting training areas, firing ranges and training facilities, etc.

During the year, 112 sites (102 sites in 2024) were closed or zeroed out as they were either remediated or assessed to confirm that they no longer meet all the criteria required to record a liability for contaminated sites.

The Department’s ongoing efforts to assess contaminated sites may result in additional environmental liabilities.

b) Asset retirement obligations

The Department has recorded asset retirement obligations for the removal of asbestos and other hazardous materials in buildings, closure and post-closure obligations associated with other works and infrastructure, removal of leasehold improvements and retirement activities linked to ships and boats.

The changes in the asset retirement obligations for the Department during the year are as follows:

⁽¹⁾ Accretion expense is the increase in the carrying amount of an asset retirement obligation due to the passage of time.

The undiscounted future expenditures, adjusted for inflation, for the planned projects comprising the liability are $657,030,457 ($760,075,666 at March 31, 2024).

Key assumptions used in determining the provision are as follows:

6. Revenues

The Department has the following major types of revenues: Sales of goods and services, other revenues, and revenues earned on behalf of the Government. Sales of goods and services are recorded when they are earned. Other revenues include fines, oil pollution response activities and seizures and forfeitures. These are recorded when they are received.

The following table presents the Department’s significant disaggregated revenues:

¹ The Department has no significant non-recurring revenues.

7. Deferred revenues

Deferred revenues from fishing licences represent the balance at year-end of unearned revenues stemming from fees received prior to services being performed. Revenue is recognized in the period in which these expenditures are incurred or in which the service is performed.

Details of the transactions related to this account are as follows:

8. Lease obligations for tangible capital assets

In 2025, the Department exercised its purchase option under agreements for tangible capital assets, thereby extinguishing the associated lease obligations for future years.

9. Other liabilities

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

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

Federal/Provincial cost-sharing agreements: This account was established to record the deposit of funds 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 the Department from a person contravening the Fisheries Act. Funds received are held in the Consolidated Revenue Fund pending final resolution of the case by the Minister of Fisheries 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 losses should a bidder fail to honour a contract.

10. Employee future benefits

1. Pension benefits
   

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

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

   The 2024-25 expense amounts to $142,514,230 ($138,064,112 in 2023-24). For Group 1 members, the expense represents approximately 1.02 times (1.02 times in 2023-24) the employee contributions and, for Group 2 members, approximately 1.00 times (1.00 times in 2023-24) the employee contributions.

   The Department’s responsibility with regard to the Plan is limited to its contributions. Actuarial surpluses or deficiencies are recognized in the Consolidated Financial Statements of the Government of Canada, as the Plan’s sponsor.

2. Severance benefits
   Severance benefits provided to the Department’s employees were previously based on an employee’s eligibility, years of service and salary at termination of employment. However, since 2011 the accumulation of severance benefits for voluntary departures progressively ceased for substantially all employees. Employees subject to these changes were given the option to be paid the full or partial value of benefits earned to date or collect the full or remaining value of benefits upon departure from the public service. Severance benefits are unfunded and, consequently, the outstanding obligation will be paid from future authorities.

The changes in the obligations during the year were as follows:

11. Contingent liabilities

Contingent liabilities arise in the normal course of operations and their ultimate disposition is unknown.

Claims and litigation

Claims have been made against the Department 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. The Department has recorded an allowance 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. Claims and litigation for which the outcome is not determinable, and a reasonable estimate can be made by management amount to approximately $86,163,000 at March 31, 2025 ($93,485,000 as at March 31, 2024).

Treaty and non-treaty-related negotiation processes are led by Crown-Indigenous Relations and Northern Affairs Canada (CIRNAC) with Fisheries and Oceans leading negotiations with respect to fisheries and marine safety issues. These negotiations arise in areas of the country where Aboriginal rights and title have not been resolved by treaty or by other legal means.

There are currently 59 cases of all types ongoing across Canada, including Recognition of Indigenous Rights and Self-Determination discussions.

12. Accounts receivable and advances

The following table presents details of the Department’s accounts receivable and advances balances:

The following table provides an aging analysis of accounts receivable from external parties and the associated valuation allowances used to reflect their net recoverable value:

13. Loans receivable

The following table presents details of the Department’s loans receivable balances:

The Department’s loans receivable represent unconditionally repayable contributions which are, in substance, loans aimed at stimulating economic development. These unconditionally repayable contributions are non-interest bearing and have annual repayment terms of 5 to 10 years.

14. Risk management

The Department has exposure to the following risks from its use of financial instruments: credit risk, market risk and liquidity risk.

1. Credit Risk

   Credit risk refers to the risk that a counterparty will default on its contractual obligations resulting in financial loss.

   The Department’s maximum exposure to credit risk at March 31, 2025, and March 31, 2024, is the carrying amount of its financial assets.

   The Department has determined that there is no significant concentration of credit risk related to accounts receivable from external parties. An analysis of the age of these financial assets and the associated valuation allowances used to reflect these accounts at their net recoverable value is disclosed in note 12.

   The Department intentionally takes on counterparty risk related to certain loans receivable with concessionary terms in order to support various policy aims. Valuation allowances are applied accordingly to reflect these accounts at their net recoverable value, as explained in note 13.

2. Market Risk

   Market risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market prices. Market risk is comprised of currency risk and interest rate risk.

   1. Currency Risk

      Currency risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in the foreign exchange rates.

      The Department has determined that there is no significant concentration of currency risk related to foreign denominated financial instruments.

   2. Interest Rate Risk

      Interest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market interest rates. The Department’s loans receivable do not bear interest. Although the fair value of these financial instruments will be affected by changes in market interest rates, there is no impact on the Department’s financial statements as these items are measured at cost.

3. Liquidity risk

   Liquidity risk is the risk that an entity will encounter difficulty in meeting its obligations associated with financial liabilities.

   As the funding for the Department’s financial liabilities is drawn from the Consolidated Revenue Fund, its exposure to liquidity risk is fully mitigated.

15. Prepaid expenses

The following table presents details of the Department’s prepaid expenses:

The Department recognized prepaid expenses in 2024-25 associated with an icebreaker vessel contract.

16. Inventory

The following table presents details of the Department’s inventory:

The cost of consumed inventory recognized as an expense in the Statement of Operations and Departmental Net Financial Position is $72,588,027 in 2024-25 ($98,049,939 in 2023-24).

17. Tangible capital assets

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

Differences may be due to rounding.

⁽¹⁾ The acquisition of tangible capital assets included in the work-in-progress category, comprises mainly of projects related to vessels, helicopters and small craft harbour.

⁽²⁾ Adjustments include work in progress of $654,499,715 that were transferred to other categories upon completion of the assets.

18. Departmental net financial position

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

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

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

Activity in the aforementioned accounts is as follows:

19. Contractual obligations

The nature of the Department’s activities can result in some large multi-year contracts and obligations whereby the Department will be obligated to make future payments in order to carry out its programs.

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

20. Related party transactions

Fisheries and Oceans Canada is related as a result of common ownership to all government departments, agencies, and Crown corporations. Related parties also include individuals who are members of key management personnel or close family members of those individuals, and entities controlled by, or under shared control of, a member of key management personnel or a close family member of that individual. The Department enters into transactions with these entities in the normal course of business and on normal trade terms.

(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 recorded at the carrying value in Fisheries and Oceans Canada’s Statement of Operations and Departmental Net Financial Position as follows:

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 Services and Procurement Canada and audit services provided by the Office of the Auditor General are not included in Fisheries and Oceans Canada’s Statement of Operations and Departmental Net Financial Position.

(b) Other transactions with other government departments and agencies

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

21. Transfers of assets and liabilities from/(to) other government departments

During the year, the Department transferred tangible capital assets with Public Health Agency of Canada, Parks Canada, Canada Border Services Agency, Agriculture and Agri-Foods Canada, the Royal Canadian Mountain Police and Environment and Climate Change Canada with a net effect of $614 thousand decrease ($142 thousand increase in 2023-24) in the departmental net financial position affecting categories under machinery and equipment, ships and boats, informatics hardware, other vehicles and other equipment in 2025 (machinery and equipment and ships and boats in 2024). The Department also transferred salary overpayments and emergency salary advances with a net effect of $268 thousand ($68 thousand in 2023-24) decrease in the departmental net financial position.

22. Segmented information

Presentation by segment is based on the Department’s core responsibilities. The presentation by segment is based on the same accounting policies as described in the Summary of significant accounting policies in note 2. The following table presents the expenses incurred and revenues generated for the main core responsibilities, by major object of expense and by major type of revenue. The segment results for the period are as follows:

23. Subsequent events

On June 10, 2025, the Government of Canada announced a reorganization involving the transfer of Canadian Coast Guard programs and responsibilities to the Department of National Defence.

This reorganization includes:

• the reallocation of authorities
• the reassignment of assets and liabilities related to the affected programs

This event does not affect the financial position of the Department as at March 31, 2025, and therefore no adjustments have been made to these financial statements.

The reorganization is expected to have a significant impact on the Department’s operations and financial reporting in future periods. Management is currently assessing the full financial implications of the restructuring. At the time of issuance of these financial statements, a reliable estimate of the financial impact is not yet available.

Annex to the statement of management responsibility including internal control over financial reporting of Fisheries and Oceans Canada for the fiscal year 2024-25 (Unaudited)

Table of contents

1. Introduction

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

3. Departmental assessment results for the 2024-25 fiscal year

4. Departmental action plan for the next fiscal year and subsequent fiscal years

1. Introduction

This document provides summary information on the measures taken by Fisheries and Oceans Canada to maintain an effective system of internal control over financial reporting, as well as information on internal control management, assessment results and related action plans.

Detailed information on the department’s authority, mandate and core responsibilities can be found in the Departmental Plan for the 2024-25 fiscal year and the Departmental Results Report for the 2023-24 fiscal year.

2. Departmental system of internal control over financial reporting

2.1 Internal control management

Fisheries and Oceans Canada has a well-established governance and accountability structure to support departmental assessment efforts and oversight of its overall system of internal control. A departmental internal control management framework is in place and comprises:

• organizational accountability structures as they relate to internal control management to support sound financial management, including the roles and responsibilities of senior departmental managers for control management in their areas of responsibility
• values and ethics
• ongoing communication and training on the legislative and policy requirements for sound financial management and control
• monitoring and regular updates on internal control management, as well as provision of related assessment results and action plans to the Deputy Minister and departmental senior management and, as applicable, the Departmental Audit Committee

The Departmental Audit Committee is an independent advisory committee to the Deputy Minister. It is responsible to provide advice to the Deputy Minister on the adequacy and functioning of the Department’s risk management, control and governance frameworks and processes.

2.2 Service arrangements relevant to financial statements

• Fisheries and Oceans Canada relies on other departments for processing certain transactions that are recorded in its financial statements, as follows.

Common service arrangements:

• Public Services and Procurement Canada administers the payments of salaries and the procurement of goods and services in accordance with the Fisheries and Oceans Canada delegation instrument, and provides accommodation services;
• Shared Services Canada provides information technology (IT) infrastructure services;
• Department of Justice Canada provides legal services; and
• Treasury Board of Canada Secretariat provides information related to public sector insurance and centrally administers payment of the employer’s share of contributions toward statutory employee benefit plans.

Readers of this annex may refer to the annexes of the above-noted departments for a greater understanding of the systems of internal control over financial reporting related to these specific services.

Fisheries and Oceans Canada relies on other external service providers and departments for the processing of certain information or transactions that are recorded in its financial statements, as follows.

Specific arrangements:

• External service providers, pursuant to a contract with the Government of Canada, administer the invoicing of marine navigation services fees revenues for the east coast on behalf of the Canadian Coast Guard Marine Navigation program for foreign vessels. The service providers ensure that appropriate fees are invoiced. The external service providers have the authority and responsibility to ensure that billing of the eastern region’s marine navigation services fees for foreign vessels are made in accordance with the terms and conditions set out by the Canadian Coast Guard Marine Navigation program. As a result, reliance was placed on the control procedures of these external service providers;
• Public Services and Procurement Canada provides Fisheries and Oceans Canada billing, banking, electronic funds processing and similar payment services for a significant portion of the revenues from commercial fishing licenses and marine services fees via the Receiver General Buy Button (RGBB);
• Public Services and Procurement Canada provides Fisheries and Oceans Canada with platform access to its human resources management system of record (MyGCHR); and,
• Treasury Board of Canada Secretariat provides Fisheries and Oceans Canada a Platform as a Service in order for the Department to operate the SAP S/4HANA financial system to capture and report all financial transactions.

3. Departmental assessment results for the 2024 to 2025 fiscal year

The following table summarizes the status of the ongoing monitoring activities according to the previous fiscal year’s rotational plan.

New or significantly amended key controls:

In the current fiscal year, there were no new or significantly amended key controls in existing processes that required a reassessment.

Ongoing monitoring program:

The Department’s risk-based ongoing monitoring program is designed to continuously monitor the effectiveness of internal controls over financial reporting.

As part of its rotational ongoing monitoring plan, the department completed its reassessment of the financial controls within the business processes of Asset Retirement Obligations, Procure to Pay, Delegation of Authority, Grants and Contributions, IT General Controls, CFO Attestation and Costing. In addition, the department completed its targeted reviews of Tangible Capital Assets and Inventory.

For the most part, the key controls tested were found to be operating effectively. Where issues were identified, business process owners have developed action plans to address them. The following areas have been identified for further improvement, with additional measures currently being implemented and monitored:

• Tangible Capital Assets: Enhancements include improved use of the financial system, clearer approval tracking, and strengthened monitoring.
• Asset Retirement Obligations: Measures have been implemented to restrict access to key documentation to authorized personnel only.
• Procure to Pay: Improvements include enhanced data accuracy in the financial system, better documentation retention, stronger access controls, improved procurement monitoring, and more robust financial approvals.
• Inventory: Efforts include improving inventory management through enhanced processes, controls, and system standardization.
• Delegation of Authority: Improvements are underway to strengthen gating processes and access controls.
• Grants and Contributions: Actions are being taken to improve payment accuracy, documentation practices, and risk management.
• IT General Controls: Enhancements are underway to improve access management, monitoring, and change control processes.
• CFO Attestation: Initiatives are underway to enhance stakeholder collaboration and ensure financial controls are clearly understood and consistently applied across the department.
• Costing: Actions are underway to refine access controls and develop a structured quality assurance process to support costing accuracy.

The status of the action plan, to ensure the remediation occurs within a reasonable timeframe, is monitored by the internal control team.

4. Departmental action plan for the next fiscal year and subsequent fiscal years

The Department’s rotational ongoing monitoring plan over the next five fiscal years is shown in the following table. The ongoing monitoring plan is based on:

• an annual validation of the high-risk processes and controls
• related adjustments to the ongoing monitoring plan, as required