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Fisheries and Oceans Canada - Quarterly Financial Report for the Quarter Ended June 30, 2021

1. Introduction

This quarterly financial report has been prepared as required by section 65.1 of the Financial Administration Act. The quarterly report should be read in conjunction with the current year’s Main Estimates.

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 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 2021-22 Main Estimates. 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 money can be spent by the Government. Approval is given in the form of annually approved limits through appropriation acts or through legislation in the form of statutory spending authority for specific purposes. In comparison to 2020-21 where only partial authorities were received by the end of the first quarter, Full Supply of the 2021-22 Main Estimates was received at the end of June, as is customary.

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, 2021, as compared to the same period last year.

Highlights of the Fiscal Quarter and the Fiscal Year-to-Date (YTD) Results (thousands of dollars)
  2020-21 Authorities as at June 30, 2020 2021-22 Authorities as at June 30, 2021 Variance in Authorities Expenditures during the quarter ended June 30, 2020 Expenditures during the quarter ended June 30, 2021 Variance in Expenditures
Vote 1 – Net Operating expenditures 1,378,659 1,885,592 506,933 352,413 433,105 80,692
Vote 5 – Capital expenditures 589,581 1,155,700 566,119 65,468 57,254 (8,214)
Vote 10 – Grants and Contributions 654,717 1,173,395 518,678 24,525 26,279 1,754
Statutory Authorities 636,516 168,380 (468,136) 40,160 42,088 1,928
Total 3,259,473 4,383,067 1,123,594 482,566 558,726 76,160

Statement of Voted and Statutory Authorities

Total budgetary authorities available for use increased in 2021-22 from those in 2020-21 by $1,123.6 million (34.5%). This is the result of an increase in Vote 5 authorities of $566.1 million, an increase in Vote 10 authorities of $518.7 million, an increase in Vote 1 authorities of $506.9 million, offset by a decrease in spending authority for forecasted statutory payments of $468.1 million.

Amounts displayed in this table represent the achievement of project milestones, planned changes to funding profiles, as well as variances due to the timing that authorities are granted by Parliament. As such, the negative amounts do not represent reductions to program spending.

Explanation of Changes
(2021-22 compared to 2020-21)
Change (thousands of dollars)
Vote 1 – Net Operating expenditures
Receipt of Full Supply in 2021-22 vs partial receipt of authorities in 2020-21 302,018
Funding for signed collective agreements 46,119
Funding profile change 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) 44,981
Funding profile change for the Oceans Protection Plan 32,224
Funding for the Big Bar Landslide 19,611
Funding for the Canadian Coast Guard's fleet renewal and recapitalization projects 25,003
Funding to support self-employed fish harvesters in Canada affected by COVID-19 14,233
Funding for the Sustainable Aquaculture Program 10,727
Funding profile change to implement the fish stocks provisions in the Fisheries Act 8,476
Funding profile change to protect Canada's nature, parks and wild spaces 7,997
Sunsetting funding for the renewal of Canada's network of small craft harbours (Budget 2018) (9,000)
Other Departmental Adjustments 4,544
Sub-total Net Operating expenditures 506,933
Vote 5 – Capital expenditures
Funding related to the Canadian Coast Guard's 2012 fleet renewal projects 198,593
Funding profile change for the Canadian Coast Guard's fleet recapitalization projects 110,221
Funding profile change for the Oceans Protection Plan 97,069
Funding profile change to procure icebreakers for the Canadian Coast Guard 50,658
Funding profile change 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) 46,452
Funding for the Big Bar Landslide 37,900
Receipt of Full Supply in 2021-22 vs partial receipt of authorities in 2020-21 32,865
Funding profile change for the Program Icebreaker project (11,348)
Other Departmental Adjustments 3,709
Sub-total Capital expenditures 566,119
Vote 10 – Grants and Contributions
Funding to advance reconciliation on Indigenous rights and fisheries issues 277,611
Funding to support self-employed fish harvesters in Canada affected by COVID-19 126,300
Funding for the Trans Mountain Expansion Project 90,352
Receipt of Full Supply in 2021-22 vs partial receipt of authorities in 2020-21 17,733
Funding profile change for the enhancement and expansion of the Indigenous Fisheries Program Suite 5,941
Funding profile change to protect Canada's nature, parks and wild spaces 3,576
Sunsetting funding for the Fisheries and Aquaculture Clean Technology Adoption Program (5,463)
Other Departmental Adjustments 2,628
Sub-total Grants and Contributions 518,678
Statutory
Payments to support Canada’s fish harvesters pursuant to the Public Health Events of National Concern Payments Act (469,400)
Other Departmental Adjustments 1,264
Sub-total Statutory Authorities (468,136)
Total Authorities 1,123,594

Authorities Used Analysis

In the first quarter of 2021-22, total budgetary expenditures amounted to $558.7 million compared to $482.6 million reported in the same quarter of 2020-21, which represents an increase of $76.2 million or 15.8%.

Authorities used in Vote 1, Net Operating expenditures, increased by $80.7 million compared to the same quarter last year representing an increase of approximately 22.9% between the two years. This is primarily due to a timing difference in the reallocation of financial transactions between departments and an increase in personnel expenditures in 2021-22. This is partially offset by a decrease attributable to the preparation work for the Big Bar landslide project as the scope of project evolves and moves towards the next phase.

Authorities used in Vote 5, Capital expenditures, decreased by $8.2 million compared to the same quarter last year representing a decrease of approximately 12.6% between the two years. This is primarily due to a difference in the timing of scheduled payments for large initiatives such as the Oceans Protection Plan and Canadian Coast Guard acquisition projects, as well as a decrease of work for marine installations due to COVID-19. This is partially offset by an increase in engineering costs related to the next phase of the Big Bar landslide project.

Authorities used in Vote 10, Grants and Contributions expenditures, increased by $1.8 million compared to the same quarter last year representing a 7.2% increase between the two years. This increase is primarily due to the upward spending trend related to the Atlantic Fisheries Fund. This is partially offset by a decrease attributable to a timing difference in payments for the Canadian Coast Guard Auxiliary.

Statutory authorities used increased by $1.9 million compared to the same quarter last year, representing an increase of approximately 4.8%. This is mainly attributed to an increase in contributions to Employee Benefit Plans which is related to the growth in salary expenditures.

Statement of Departmental Budgetary Expenditures by Standard Object

The increase of $76.2 million in total net budgetary expenditures in the first quarter of 2021-22 as compared to the same quarter in 2020-21 is primarily due to the following:

Expenditures related to Personnel increased by a total of $22.4 million in the first quarter of 2021-22 when compared to the same quarter of 2020-21. The increase is in line with additional funding provided to the Department which has increased its complement of employees.

Expenditures related to Professional and Special Services increased by a total of $2.4 million in the first quarter of 2021-22 when compared to the same quarter of 2020-21. This is primarily due to an increase in technical assessment contracts for oil response services and timing of payments related to the Offshore Fisheries Science Vessel project as it nears its closeout phase. This is partially offset by a reduction of on-site work associated with the Big Bar landslide project as the scope of project progresses and moves toward the next phase and a timing difference in the recognition of prepaid legal services year-over-year.

Expenditures related to Rentals decreased by a total of $5.9 million in the first quarter of 2021-22 when compared to the same quarter of 2020-21. This decrease is primarily related to the costs associated with the rental of a towing vessel that occurred in 2020-21, as well as a reduction of on-site work required prior to the implementation phase of the Big Bar landslide project due to the progression of the scope and movement toward the next phase.

Expenditures related to Repair and Maintenance increased by a total of $6.0 million in the first quarter of 2021-22 when compared to the same quarter of 2020-21. The increase is mainly attributed to Vessel Maintenance projects and engineering oil response services for the Canadian Coast Guard as well as additional repair and maintenance costs compared to the same period last year.

Expenditures related to Utilities, Materials, and Supplies decreased by a total of $4.9 million in the first quarter of 2021-22 when compared to the same quarter of 2020-21. This is primarily related to the timing of fuel purchases for Canadian Coast Guard Vessels as well as a reduction of on-site work required prior to the implementation phase of the Big Bar landslide project as the as the scope of project progresses and moves toward the next phase.

Expenditures related to the Acquisition of Land, Buildings and Works decreased by a total of $7.3 million in the first quarter of 2021-22 when compared to the same quarter of 2020-21. The variance is mainly attributed to a reduction in work on marine installations due to COVID-19 and the acquisition of land for Search and Rescue stations which occurred in 2020-21.

Expenditures related to Acquisition of Machinery and Equipment decreased by a total of $14.3 million in the first quarter of 2021-22 when compared to the same quarter of 2020-21. This variance is mainly attributed to the timing of payments for the Medium Icebreakers and Helicopters Projects.

Expenditures related to Transfer Payments increased by a total of $1.8 million in the first quarter of 2021-22 when compared to the same quarter of 2020-21. This increase is primarily due to a larger number of contribution agreements being signed related to the Atlantic Fisheries Fund. This is partially offset by a decrease attributable to a timing difference in payments for the Canadian Coast Guard Auxiliary.

Expenditures related to Other Subsidies and Payments increased by a total of $67.7 million in the first quarter of 2021-22 when compared to the same quarter of 2020-21. This is primarily due to a timing difference in the reallocation of financial transactions between departments.

Sales of goods and services decreased by $7.4 million in the first quarter of 2021-22 when compared to the same quarter of 2020-21. This decrease is primarily attributable to the timing of receipt of invoices for Marine Service Fees, and Dredging Fees.

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 stakeholders needs. The Department maintains a Departmental Risk Profile which assesses the most corporate strategic risks, which if not addressed, could impair DFO-CCG’s ability to deliver on its mandate and achieve results under the Department’s core responsibilities. Additional information regarding the Department’s key risk areas is presented in the 2021-22 Departmental Plan.

Certain risks would have financial impacts should they materialize, for example many factors affecting the timing of transfer payments lie outside the control of the Department and could require funds to be shifted to future years. To minimize these impacts, the Department continuously monitors its program funding and expenditures throughout the year.

The COVID-19 pandemic continues to present certain elements of risk and uncertainties to DFO’s priorities and operations. The impact on departmental revenues and expenditures continues to be felt as the pandemic adversely affected the timely delivery of new and existing programs. It has also come with its share of challenges and opportunities for employees at DFO. Many employees kept working onsite either part-time or full-time to ensure the Department continued to deliver its mandate, while employees who could work remotely shifted to a temporary virtual mode. As vaccination rates increase across the country and different regions begin to ease restrictions, the Department is strategically working towards a transition to a post-pandemic workplace by building on lessons learned and leveraging new opportunities for a flexible, productive, and agile workplace. As DFO progresses towards a new normal, it will continue to protect the health and safety of its employees and provide essential services to Canadians, all while doing so as per the guidance and recommendations of public health officials and experts.

The department continues to address the financial risks associated with Phoenix pay issues by applying an established set of controls. To mitigate the impact on its employees, Fisheries and Oceans Canada has a pay support team to help employees whose pay has been impacted and to accelerate urgent matters to the Pay Centre. The Department continues to work diligently, both with internal and with external stakeholders, to resolve any and all issues.

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

In 2021-22 the Department transitioned from our legacy financial system to SAP, which is in-line with the Government of Canada standard. This standardization of the Enterprise Reporting System (ERP) will simplify government-wide reporting and will ensure ongoing accuracy of financial information through the consolidation of several reporting systems in to one.

The following changes in personnel were made since the last published quarterly report:

5. Approval by Senior Officials

Approved by:

Original signed by
_________________________
Timothy Sargent,
Deputy Minister

Original signed by
_________________________
Hugo Pagé,
Chief Financial Officer

Ottawa, Canada

Statement of Authorities (unaudited)

(in thousands of dollars)

  Fiscal year 2020-21 Fiscal year 2021-22
Total available for use for the year ending March 31, 2021* Used during the quarter ended June 30, 2020 Year to date used at quarter-end Total available for use for the year ending March 31, 2022* Used during the quarter ended June 30, 2021 Year to date used at quarter-end
Vote 1 – Net Operating expenditures 1,378,659 352,413 352,413 1,885,592 433,105 433,105
Vote 5 – Capital expenditures 589,581 65,468 65,468 1,155,700 57,254 57,254
Vote 10 – Grants and Contributions 654,717 24,525 24,525 1,173,395 26,279 26,279
Statutory Authorities
Statutory - Contributions to employee benefit plans 160,827 40,132 40,132 168,290 42,073 42,073
Statutory - Minister of Fisheries and Oceans – Salary and motor car allowance 89 22 22 90 15 15
Statutory - Spending of proceeds from the disposal of surplus Crown assets 0 6 6 0 0 0
Statutory - Refunds of amounts credited to revenues in previous years 0 0 0 0 0 0
Statutory - Payments to support Canada's fish harvesters pursuant to the Public Health Events of National Concern Payments Act 469,400 0 0 0 0 0
Statutory - Payments to the Canadian Seafood Stabilization Fund pursuant to the Public Health Events of National Concern Payments Act 6,200 0 0 0 0 0
Total Statutory Authorities 636,516 40,160 40,160 168,380 42,088 42,088
Total Authorities 3,259,473 482,566 482,566 4,383,067 558,726 558,726

* 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 2020-21 Fiscal year 2021-22
Planned expenditures for the year ending March 31, 2021* Expended during the quarter ended June 30, 2020 Year to date used at quarter-end Planned expenditures for the year ending March 31, 2022* Expended during the quarter ended June 30, 2021 Year to date used at quarter-end
Expenditures:
Personnel 975,663 305,959 305,959 1,305,473 328,346 328,346
Transportation and communications 52,221 5,409 5,409 102,866 6,262 6,262
Information 1,929 279 279 3,670 404 404
Professional and special services 298,773 67,024 67,024 643,995 69,379 69,379
Rentals 16,034 7,821 7,821 37,805 1,949 1,949
Repair and maintenance 133,493 15,443 15,443 207,414 21,408 21,408
Utilities, materials and supplies 73,437 12,083 12,083 138,303 7,161 7,161
Acquisition of land, buildings and works 75,035 9,813 9,813 340,516 2,512 2,512
Acquisition of machinery and equipment 482,638 26,237 26,237 432,289 11,961 11,961
Transfer payments 1,130,317 24,525 24,525 1,173,395 26,279 26,279
Other subsidies and payments 49,941 18,527 18,527 37,352 86,241 86,241
Public Debt Charges 0 33 33 0 0 0
Total gross budgetary expenditures 3,289,481 493,153 493,153 4,423,078 561,902 561,902
Less Revenues netted against expenditures:
Sales of goods and services 30,008 10,587 10,587 40,011 3,176 3,176
Total Revenues netted against expenditures 30,008 10,587 10,587 40,011 3,176 3,176
Total net budgetary expenditures 3,259,473 482,566 482,566 4,383,067 558,726 558,726

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

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