Fisheries and Oceans Canada - Quarterly Financial Report for the Quarter Ended June 30, 2018

1. Introduction

This quarterly financial report has been prepared by management as required by section 65.1 of the Financial Administration Act and in the form and manner prescribed by the Treasury Board. The quarterly report should be read in conjunction with the Main Estimates as well as Budget 2017 and Budget 2018.

This quarterly report has not been subject to an external audit or review.

Further details on Fisheries and Oceans Canada's authority, mandate and programs may be found in the Departmental Plan and the Main Estimates (Part II).

1.1 Basis of Presentation

This quarterly report has been prepared by management using an expenditure basis of accounting. The accompanying Statement of Authorities includes Fisheries and Oceans Canada's spending authorities granted by Parliament and those used by the Department consistent with the Main Estimates for 2018-19. This quarterly report has been prepared using a special purpose financial reporting framework designed to meet financial information needs with respect to the use of spending authorities.

The authority of Parliament is required before moneys can be spent by the Government. Approvals are given in the form of annually approved limits through appropriation acts or through legislation in the form of statutory spending authority for specific purposes.

The Department uses the full accrual method of accounting to prepare and present its annual departmental financial statements that are part of the departmental results reporting process. However, the spending authorities voted by Parliament remain on an expenditure basis.

2. Highlights of the Fiscal Quarter and the Fiscal Year-to-Date (YTD) results

The following section highlights the financial results and provides explanations for the fiscal quarter ended June 30, 2018 as compared to the same period last year.

Highlights of the Fiscal Quarter and the Fiscal Year-to-Date (YTD) results (thousands of dollars)

  2017-18 Authorities as at June 30, 2017 2018-19 Authorities as at June 30, 2018 Variance in Authorities Year-to-date expenditures as at June 30, 2017 Year-to-date expenditures as at June 30, 2018 Variance in Expenditures
Vote 1 – Net Operating expenditures 1,473,648 1,549,032 75,384 290,891 323,686 32,795
Vote 5 – Capital expenditures 831,693 587,211 (244,482) 96,876 47,117 (49,759)
Vote 10 – Grants and Contributions 135,236 206,011 70,775 11,409 14,619 3,210
Statutory Authorities 135,742 138,514 2,772 30,250 33,980 3,730
Total 2,576,319 2,480,768 (95,551) 429,426 419,402 (10,024)

Statement of Voted and Statutory Authorities

Total budgetary authorities available for use decreased in 2018-19 from those in 2017-18 by $95.5 million (3.7%). This is the result of an increase in Vote 1 authorities of $75.4 million, a decrease in Vote 5 authorities of $244.5 million, an increase in Vote 10 authorities of $70.8 million, and an increase in spending authority for statutory payments of $2.8 million.

Some of the amounts presented in this table represent the achievement of milestone projects as well as planned changes in the funding profile of initiatives. As well, some variances are due to timing of the authorities granted by Parliament. As such, the negative amounts do not represent cuts to program spending.

Explanation of Changes
(2018-19 compared to 2017-18)
Change (thousands of dollars)
Vote 1 – Net Operating expenditures
Funding for the Oceans Protection Plan to improve marine safety and protect Canadaʼs marine environment 57,611
Funding to maintain mission-critical services to Canadians (e.g. fisheries management activities and maintenance of the fleet for continued safety and security of Canadian waters) 30,003
Funding for signing the collective agreements 26,207
Funding for the 2018 Budget measure "Protecting Canada's Nature, Parks and Wild Spaces" and funding for the 2017 Budget measure "Indigenous Guardians" 15,420
Funding to expand the Aquatic Invasive Species Program 6,219
Funding for the 2018 Budget measure, Protecting Marine Life, to implement a comprehensive initiative for the protection and recovery of endangered whale populations 5,497
Other Departmental Requirements 2,601
Funding profile change for the upgrade of federal infrastructure assets (20,799)
Sunsetting funding for the removal of the Kathryn Spirit vessel (20,000)
Transfer between votes (14,868)
Sunsetting funding for Species at Risk (7,486)
Funding profile change for the implementation of a World-Class Tanker Safety System South of 60° North Latitude (Phase II) (5,021)
Sub-total Net Operating expenditures 75,384
Vote 5 – Capital expenditures
Funding for the Oceans Protection Plan to improve marine safety and protect Canadaʼs marine environment 43,632
Funding to maintain mission-critical services to Canadians (e.g. fisheries management activities and maintenance of the fleet for continued safety and security of Canadian waters) 36,943
Transfer between votes 10,802
Transfer from Transport Canada to Fisheries and Oceans for the Port de Carleton 10,500
Funding profile change for the upgrade of federal infrastructure assets (207,278)
Funding profile change for the Canadian Coast Guard Vessels, Lifeboats and Helicopters (138,152)
Other Departmental Requirements (929)
Sub-total Capital expenditures (244,482)
Vote 10 – Grants and Contributions
Funding to support the implementation of the Atlantic Fisheries Fund Program 52,333
Funding for the Oceans Protection Plan to improve marine safety and protect Canadaʼs marine environment 16,705
Funding for the enhancement and expansion of the Indigenous fisheries program suite 7,325
Funding for the Fisheries and Aquaculture Clean Technology Adoption Program 4,136
Transfer between votes 4,066
Other Departmental Requirements 1,210
Funding to support negotiations on fisheries and marine matters (15,000)
Sub-total Grants and Contributions 70,775
Statutory
Sub-total Statutory Authorities 2,772
Total Authorities (95,551)

Authorities Used Analysis

In the first quarter of 2018-19, total budgetary expenditures amounted to $419.4 million compared to $429.4 million reported in the same quarter of 2017-18, which represents a decrease of $10.0 million or 2.3%.

Authorities used in Vote 1, Net Operating expenditures, increased by $32.8 million compared to the same quarter last year representing an increase of approximately 11.3% between the two years. The increase is mostly due to the hiring of staff and transportation and communication costs in support of the Oceans Protection Plan and the Departments’ efforts to maintain mission-critical services to Canadians.

Authorities used in Vote 5, Capital expenditures, decreased by $49.8 million compared to the same quarter last year representing a decrease of approximately 51.4% between the two years. The decrease in capital expenditures is mainly due to the successful completion of the Federal Infrastructure investments and the winding down of initiatives such as the Offshore Fisheries Science Vessels as the vessels are approaching the final stage.

Authorities used in Vote 10, Grants and Contributions expenditures, increased by $3.2 million compared to the same quarter last year representing an increase of approximately 28.1% between the two years. The increase is mostly aligned with the incremental investments in transfer payment programs in 2017-18. Some examples are the Oceans and Freshwater Science Contribution Program and the Coastal Restoration Fund which support the implementation of the Oceans Protection Plan.

Statutory authorities increased by $3.7 million compared to the same quarter last year representing an increase of approximately 12.3%. The increase to contributions to employee benefit plans is directly aligned with the hiring of new incremental staff.

Statement of Departmental Budgetary Expenditures by Standard Object

The decrease of $10.0 million in total net budgetary expenditures in the first quarter of 2018-19 as compared to the same quarter in 2017-18 is primarily due to the following:

Personnel expenditures increased by a total of $33.0 million in the first quarter of 2018-19 when compared to the same quarter of 2017-18. The increase is mostly due to the hiring of staff in support of the Oceans Protection Plan and the Departments’ efforts to maintain mission-critical services to Canadians.

Expenditures related to Transportation and Communications increased by a total of $3.7 million in the first quarter of 2018-19 when compared to the same quarter of 2017-18. The increase is mainly due to travel costs associated with Canadian Coast Guard vessel crew changes resulting from increased operations in support of the Oceans Protection Plan and individual environmental responses.

Expenditures related to Professional and Special Services decreased by a total of $49.0 million in the first quarter of 2018-19 when compared to the same quarter of 2017-18. The decrease is mainly due to the successful completion of the Federal Infrastructure investments and the winding down of initiatives such as the Offshore Fisheries Science Vessels as the vessels are approaching the final stage.

Expenditures related to Repair and Maintenance decreased by a total of $6.0 million in the first quarter of 2018-19 when compared to the same quarter of 2017-18. This is primarily attributable to fluctuations in the Canadian Coast Guard vessel maintenance schedule. In addition, this decrease is partially due to some Vessel Life Extension work that now appears under Acquisition of Machinery and Equipment, as the Department has aligned and adjusted its approach to categorizing capitalizable extension projects.

Expenditures related to Utilities, Materials, and Supplies increased by a total of $2.6 million in the first quarter of 2018-19 when compared to the same quarter of 2017-18. The increase is mainly due to increased diesel fuel purchases by the Canadian Coast Guard.

Expenditures related to the Acquisition of Land, Buildings and Works decreased by a total of $5.8 million in the first quarter of 2018-19 when compared to the same quarter of 2017-18. The decrease is mainly due to the successful completion of Federal Infrastructure investments.

Expenditures related to Acquisition of Machinery and Equipment increased by a total of $8.7 million in the first quarter of 2018-19 when compared to the same quarter of 2017-18. The increase is mainly due to some Vessel Life Extension work, that previously appeared in Repair and Maintenance, that is now reported as Acquisition of Machinery and Equipment. This shift is the result of the Department aligning and adjusting its approach to categorizing capitalizable extension projects. Other increases were noted in computers and telecommunication equipment in support of the hiring of new staff.

Expenditures related to Transfer Payments increased by a total of $3.2 million in the first quarter of 2018-19 when compared to the same quarter of 2017-18. The increase is aligned with the incremental investments in transfer payment programs in 2017-18. Some examples are the Oceans and Freshwater Science Contribution Program and the Coastal Restoration Fund which support the implementation of the Oceans Protection Plan.

Other Subsidies and Payments decreased by a total of $3.2 million in the first quarter of 2018-19 when compared to the same quarter of 2017-18. This is partially due to a net decrease in accounts receivable related to salary overpayments stemming from technical issues with the Phoenix pay system and a decrease in expenditures related to International Fisheries Commissions Agreements.

3. Risks and Uncertainties

Fisheries and Oceans Canada operates in a dynamic environment that is affected by a number of factors, including: increased northern development; expansion of navigable waters; environmental changes; climate change; severe weather events; demographics; technological advances; changing maritime safety and security demands; and global geopolitical and economic conditions. The Department continues to assess how it conducts its business, provides services and delivers its programs to meet client and stakeholder needs. The Department maintains a Corporate Risk Profile which identifies and assesses high-level risks that could affect the achievement of its objectives and priorities. Additional information regarding the Department’s key risk areas is presented in the 2018-19 Departmental Plan.

4. Significant changes in relation to operations, personnel and programs

The following changes in personnel were made during the first quarter:

5. Approval by Senior Officials

Approved by:

Original signed by
_________________________
Catherine Blewett, Deputy Minister

Original signed by
_________________________
Jen O’Donoughue,
Chief Financial Officer

Ottawa, Canada
August 24, 2018

Statement of Authorities (unaudited)

(in thousands of dollars)

  Fiscal year 2017-18 Fiscal year 2018-19
Total available for use for the year ending March 31, 2018* Used during the quarter ended June 30, 2017 Year to date used at quarter-end Total available for use for the year ending March 31, 2019* Used during the quarter ended June 30, 2018 Year to date used at quarter-end
Vote 1 – Net Operating expenditures 1,473,648 290,891 290,891 1,549,032 323,686 323,686
Vote 5 – Capital expenditures 831,693 96,876 96,876 587,211 47,117 47,117
Vote 10 – Grants and Contributions 135,236 11,409 11,409 206,011 14,619 14,619
Statutory Authorities
Statutory - Contributions to employee benefit plans 135,658 29,930 29,930 138,428 33,948 33,948
Statutory - Minister of Fisheries and Oceans – Salary and motor car allowance 84 21 21 86 21 21
Statutory - Spending of proceeds from the disposal of surplus Crown assets 0 299 299 0 0 0
Statutory – Refunds of amounts credited to revenues in previous years 0 0 0 0 11 11
Total Statutory Authorities 135,742 30,250 30,250 138,514 33,980 33,980
Total Authorities 2,576,319 429,426 429,426 2,480,768 419,402 419,402

* Includes only Authorities available for use and granted by Parliament at quarter-end.

Departmental Budgetary Expenditures by Standard Object (unaudited)

(in thousands of dollars)

  Fiscal year 2017-18 Fiscal year 2018-19
Planned expenditures for the year ending March 31, 2018* Expended during the quarter ended June 30, 2017 Year to date used at quarter-end Planned expenditures for the year ending March 31, 2019* Expended during the quarter ended June 30, 2018 Year to date used at quarter-end
Expenditures:
Personnel 977,980 234,055 234,055 1,045,060 267,100 267,100
Transportation and communications 60,832 14,415 14,415 58,123 18,068 18,068
Information 3,236 355 355 2,086 497 497
Professional and special services 277,829 88,819 88,819 289,567 39,849 39,849
Rentals 19,423 4,509 4,509 16,369 4,428 4,428
Repair and maintenance 201,658 27,242 27,242 203,553 21,248 21,248
Utilities, materials and supplies 114,728 15,457 15,457 105,769 18,030 18,030
Acquisition of land, buildings and works 145,864 16,230 16,230 169,519 10,459 10,459
Acquisition of machinery and equipment 667,566 13,193 13,193 403,163 21,846 21,846
Transfer payments 135,236 11,409 11,409 206,011 14,619 14,619
Other subsidies and payments 19,882 16,311 16,311 20,549 13,144 13,144
Total gross budgetary expenditures 2,624,234 441,995 441,995 2,519,769 429,288 429,288
Less Revenues netted against expenditures:
Sales of goods and services 47,915 12,569 12,569 39,001 9,886 9,886
Total Revenues netted against expenditures 47,915 12,569 12,569 39,001 9,886 9,886
Total net budgetary expenditures 2,576,319 429,426 429,426 2,480,768 419,402 419,402

* Includes only Authorities available for use and granted by Parliament at quarter-end.