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Department of Fisheries and Oceans
Management Responsibility for Financial Statements
Responsibility for the integrity and objectivity of the accompanying financial statements for the year ended March 31, 2007, and all information contained in these statements rests with departmental management. These financial statements have been prepared by management in accordance with Treasury Board accounting policies which are consistent with Canadian generally accepted accounting principles for the public sector.
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 DFO's financial transactions. Financial information submitted to the Public Accounts of Canada and included in the DFO's Departmental Performance Report is consistent with these financial statements.
Management maintains a system of financial management and internal control designed to provide reasonable assurance that financial information is reliable, that assets are safeguarded and that transactions are in accordance with the Financial Administration Act, are executed in accordance with prescribed regulations, within parliamentary authorities, and are properly recorded to maintain accountability for Government funds. Management also seeks to ensure the objectivity and integrity of data in its financial statements by careful selection, training and development of qualified staff, by organizational arrangements that provide appropriate divisions of responsibility, and by communication programs aimed at ensuring that regulations, policies, standards and managerial authorities are understood throughout the DFO.
The financial statements of the DFO have not been audited.
Larry Murray, Deputy Minister |
Cal Hegge Assistant Deputy Minister, Human Resources and Corporate Services |
Department of Fisheries and Oceans Canada
Statement of Operations (unaudited)
For the Year Ended March 31
(in thousands of dollars)
2007 | 2006 | |||
Safe and Accessible Waterways | ||||
Canadian Coast Guard Agency | 739,523 | 727,169 | ||
Small Craft Harbours | 133,713 | 153,304 | ||
Science | 71,764 | 54,043 | ||
Sustainable Fisheries and Aquaculture | ||||
Fisheries Management | 462,471 | 393,092 | ||
Science | 216,710 | 199,445 | ||
Aquaculture | 6,199 | 5,376 | ||
Healthy and Productive Aquatic Ecosystems | ||||
Science | 88,899 | 77,488 | ||
Habitat Management | 79,214 | 75,996 | ||
Oceans Management | 28,580 | 23,802 | ||
Total Expenses | 1,827,073 | 1,709,715 |
2007 | 2006 | |||
Safe and Accessible Waterways | ||||
Canadian Coast Guard Agency | 44,292 | 52,568 | ||
Science | 2,801 | 2,803 | ||
Small Craft Harbours | 1,950 | 2,058 | ||
Sustainable Fisheries and Aquaculture | ||||
Fisheries Management | 47,713 | 48,475 | ||
Science | 1,019 | 241 | ||
Aquaculture | 43 | 1 | ||
Healthy and Productive Aquatic Ecosystems | ||||
Habitat Management | 785 | 316 | ||
Science | 224 | 85 | ||
Oceans Management | 161 | 33 | ||
Total Revenues | 98,988 | 106,580 |
2007 | 2006 | |||
Net cost of operations | 1,728,085 | 1,603,135 |
The accompanying notes form an integral part of these financial statements.
Department of Fisheries and Oceans Canada
Statement of Operations (unaudited)
For the Year Ended March 31
(in thousands of dollars)
Assets
2007 |
2006 (Restated) |
|||
Accounts receivable and advances (Note 6) | 27,398 | 19,404 | ||
Total financial assets | 27,398 | 19,404 |
2007 |
2006 (Restated) |
|||
Inventory (Note 7) | 37,265 | 31,300 | ||
Tangible capital assets (Note 8) | 2,303,811 | 2,325,093 | ||
Total non-financial assets | 2,341,076 | 2,356,393 | ||
2,368,474 | 2,375,797 |
Liabilities
2007 |
2006 (Restated) |
|||
Accounts payable and accrued liabilities | 243,655 | 194,105 | ||
Vacation pay and compensatory leave | 69,130 | 60,375 | ||
Lease obligation for tangible capital assets (Note 9) | 178 | - | ||
Environmental liabilities (Note 10a) | 169,197 | 169,762 | ||
Contingent liabilities (Note 10b) | 1,770 | 200 | ||
Deferred revenue (Note 11) | 88 | 187 | ||
Other liabilities (Note 12) | 17,613 | 12,868 | ||
Employee severance benefits (Note 13) | 139,479 | 133,743 | ||
Total liabilities | 641,110 | 571,240 | ||
2007 |
2006 (Restated) |
|||
Equity of Canada (Note 14) | 1,727,364 | 1,804,557 | ||
2,368,474 | 2,375,797 |
The accompanying notes form an integral part of these financial statements.
Department of Fisheries and Oceans Canada
Statement of Operations (unaudited)
For the Year Ended March 31
(in thousands of dollars)
The accompanying notes form an integral part of these financial statements.
Department of Fisheries and Oceans Canada
Statement of Operations (unaudited)
For the Year Ended March 31
(in thousands of dollars)
Operating activities
2007 | 2006 | |||
Net cost of operations | 1,728,085 | 1,603,135 |
Non-cash items
2007 | 2006 | |||
Amortization of tangible capital assets (Note 8) | (172,948) | (170,254) | ||
(Loss) gain on disposal of tangible capital assets | (8,812) | 2,508 | ||
Loss on write-offs and write-downs of tangible capital assets and inventory | (20,543) | (12,499) | ||
Services provided without charge by other government departments | (100,993) | (99,835) | ||
Other | 8,202 | 606 |
Variations in Statement of Financial Position
2007 | 2006 | |||
Increase/(decrease) in accounts receivable and advances | 7,994 | (6,253) | ||
Increase/(decrease) in inventory | 7,421 | 1,140 | ||
(Increase)/decrease in accounts payable and accrued liabilities | (49,550) | 30,394 | ||
(Increase)/decrease in vacation pay and compensatory leave | (8,755) | (5,372) | ||
(Increase)/decrease in lease obligation for tangible capital assets | (178) | 197 | ||
(Increase)/decrease in environmental liabilities | 565 | (10,507) | ||
(Increase)/decrease in contingent liabilities | (1,570) | (200) | ||
(Increase)/decrease in deferred revenue | 99 | 77 | ||
(Increase)/decrease in other liabilities | (4,745) | 262 | ||
(Increase)/decrease in employee severance benefits | (5,736) | (16,207) | ||
Cash used by operating activities | 1,378,536 | 1,317,192 |
2007 | 2006 | |||
Acquisitions of tangible capital assets | 173,528 | 150,795 | ||
Principal obligation of tangible capital lease | (178) | - | ||
Proceeds from the disposal of tangible capital assets | (1,987) | (9,247) | ||
Cash used by investing activities | 171,363 | 141,548 |
Financing activities
2007 | 2006 | |||
Net cash provided by Government of Canada | 1,549,899 | 1,458,740 |
The accompanying notes form an integral part of these financial statements.
Department of Fisheries and Oceans Canada
Notes to Financial Statements (unaudited)
1. Authority and purpose
The Department of Fisheries and Oceans (DFO) was established under the Department of Fisheries and Oceans Act. The DFO reports to Parliament through the Minister of Fisheries and Oceans.
The mandate of the DFO, on behalf of the Government of Canada, is to be responsible for developing and implementing policies and programs in support of Canada's economic, social, ecological and scientific interests in oceans and fresh waters.
The DFO's guiding legislation includes the Oceans Act and the Fisheries Act. The DFO is also one of the three departments responsible for the Species at Risk Act.
The DFO's three strategic outcomes are delivered through nine program activities, which are described below.
Safe and Accessible Waterways
Canadian Coast Guard Agency: Provision of maritime services that contribute to the enhancement and maintenance of maritime safety and commerce, protection of the marine and freshwater environment, as well as oceans and fisheries resource management, security and other government maritime priorities via maritime expertise, Canada's civilian fleet, a broadly distributed shore infrastructure and collaboration with various stakeholders.
Small Craft Harbours: Operation and maintenance of a national system of harbours critical to Canada's commercial fishing industry.
Science: Provision of scientific research, monitoring, advice, products and services and data management in support of Safe and Accessible Waterways.
Sustainable Fisheries and Aquaculture
Fisheries Management: Conservation of Canada's fisheries resources to assure sustainable resource utilization through close collaboration with resource users and stakeholders.
Aquaculture: Creation of the conditions for a vibrant and innovative aquaculture industry that is environmentally and socially responsible, economically viable and internationally competitive.
Science: Provision of scientific research, monitoring, advice, products and services and data management in support of Sustainable Fisheries and Aquaculture.
Healthy and Productive Aquatic Ecosystems
Oceans Management: Conservation and sustainable use of Canada's oceans, in collaboration with others, through integrated oceans management plans which include marine protected areas and marine environmental quality objectives.
Habitat Management: Protection and conservation of freshwater and marine fish habitat, in collaboration with others, through a balanced application of regulatory and non-regulatory activities, including reviewing development proposals, conducting environmental assessments and monitoring compliance and effectiveness.
Science: Provision of scientific research, monitoring, advice, products and services and data management in support of Healthy and Productive Aquatic Ecosystems.
2. Summary of significant accounting policies
The financial statements have been prepared in accordance with Treasury Board accounting policies, which are consistent with Canadian generally accepted accounting principles for the public sector.
Significant accounting policies are as follows:
(a) Parliamentary appropriations - The DFO is financed by the Government of Canada through parliamentary appropriations. Appropriations provided to the DFO do not parallel financial reporting according to Canadian generally accepted accounting principles since appropriations are primarily based on cash flow requirements. Consequently, items recognized in the statements of operations and the statement of financial position are not necessarily the same as those provided through appropriations from Parliament. Note 3 provides a high-level reconciliation between these bases of reporting.
(b) Net cash provided by government - All departments operate within the Consolidated Revenue Fund (CRF), which is administered by the Receiver General for Canada. All cash receipts are deposited to the CRF and all cash disbursements made by departments are paid from the CRF. The net cash provided by Government is the difference between all cash receipts and all cash disbursements including transactions between departments of the federal government.
(c) Change in net position in the CRF is the difference between the net cash provided by Government and appropriations used in a year, excluding the amount of non-respendable revenue recorded by the DFO. It results from timing differences between when a transaction affects appropriations and when it is processed through the CRF.
(d) Revenues
(e)Expenses
(f)Employee future benefits
(g) Accounts receivable and advances are stated at amounts expected to be ultimately realized; a provision is made for receivables where recovery is considered uncertain.
(h)Contingent liabilities - Contingent liabilities are potential liabilities that may become actual liabilities when one or more future events occur or fail to occur. To the extent that the future event is likely to occur or fail to occur, and a reasonable estimate of the loss can be made, an estimated liability is accrued and an expense recorded. If the likelihood is not determinable or an amount cannot be reasonably estimated, and the case is considered material, the contingency is disclosed in note 10b to these financial statements.
(i)Environmental liabilities - Environmental liabilities reflect the estimated costs related to the management and remediation of environmentally contaminated sites. Based on management's best estimates, a liability is accrued and an expense recorded when the contamination occurs or when the DFO becomes aware of the contamination and is obligated, or is likely to be obligated to incur such costs. If the likelihood of the DFO's obligation to incur these costs is not determinable, or if an amount cannot be reasonably estimated, the costs are disclosed as contingent liabilities in note 10a to these financial statements.
(j)Inventories - Inventories consist of parts, material and supplies held for future program delivery. They are valued at cost. If they no longer have service potential, they are valued at the lower of cost or net realizable value.
(k)Foreign currency transactions - Transactions involving foreign currencies are
translated into Canadian dollar equivalents using rates of exchange in effect
at the time of those transactions. Monetary assets and liabilities denominated in foreign currencies are translated using exchange rates in effect on March 31. Gains and losses resulting from foreign currency transactions are included in the statement of operations.
(l)Tangible capital assets - All tangible capital assets and leasehold improvements having an initial cost of $10,000 or more are recorded at their acquisition cost. The DFO does not capitalize intangibles, works of art and historical treasures that have cultural, aesthetic or historical value, assets located on Indian Reserves or museum collections.
Amortization of tangible capital assets is done on a straight-line basis over the estimated useful life of the asset as follows:
Asset Class | Amortization Period |
Buildings | 10-40 years |
Work and infrastructure | 5-75 years |
Machinery and equipment | 3-25 years |
Informatics hardware | 3-5 years |
Informatics purchased and developed software | 3 years |
Arms and weapons for defense | 5-10 years |
Other equipment, including furniture | 10 years |
Ships and boats | 5-25 years |
Aircraft | 15-25 years |
Motor vehicles (non-military) | 5-20 years |
Other vehicles | 10 years |
Leasehold improvements - buildings | * |
Leasehold improvements - works and infrastructure | * |
Assets under capital leases | ** |
* the lesser of the economic life of the improvement or the lease term
** over the period of expected use, i.e., the economic life or lease term
(m)Proceeds associated with the disposal of real property through Public Works and Government Services Canada (PWGSC) are not recorded in the DFO's financial statements. PWGSC is responsible for the accounting and reporting of these proceeds.
(n)Measurement uncertainty - The preparation of these financial statements in accordance with Treasury Board accounting policies, which are consistent with Canadian generally accepted accounting principles for the public sector, requires management to make estimates and assumptions that could affect the reported amounts of assets, liabilities, revenues and expenses reported in the financial statements. At the time of preparation of these statements, management believes the estimates and assumptions to be reasonable. The most significant items where estimates are used are the allowance for vacation pay and compensatory leave, allowance for bad debts, environmental liabilities, the useful life of tangible capital assets, contingent liabilities and employee severance benefits. Actual results could differ significantly from those estimated. Management's estimates are reviewed periodically and, as adjustments become necessary, they are recorded in the financial statements in the year they become known.
3. Parliamentary appropriations
The DFO receives most of its funding through annual parliamentary appropriations. Items recognized in the statement of operations and the statement of financial position in one year may be funded through parliamentary appropriations in prior, current or future years. Accordingly, the DFO has different net results of operations for the year on a government funding basis than on an accrual accounting basis. The differences are reconciled in the following tables.
3(a) Reconciliation of net cost of operations to current year appropriations used
2007 | 2006 | ||
(in thousands of dollars) | |||
Net cost of operations | 1,728,085 | 1,603,135 | |
Adjustments for items affecting net cost of operations but not affecting appropriations | |||
Add (less): | |||
Revenue not available for spending | 52,019 | 53,664 | |
Amortization of tangible capital assets | (172,948) | (170,254) | |
Vacation pay and compensatory leave | (8,755) | (5,372) | |
Employee severance benefits | (5,736) | (16,207) | |
(Loss) gain on disposal of tangible capital assets | (8,812) | 2,508 | |
Loss on write-offs and write-downs of tangible capital assets and inventory | (20,543) | (12,499) | |
Earmarked supplementary fish fines | 173 | 41 | |
Refunds of previous years expenses | 5,849 | 3,702 | |
Variation of inventory | 7,421 | 1,140 | |
Justice Canada fees | (6,330) | (6,024) | |
Donation expense | (114) | (102) | |
Contingent liabilities | (1,570) | (200) | |
Environmental liabilities | 565 | (10,507) | |
Lease obligation for tangible capital assets | (178) | 197 | |
Services provided without charge by other government departments | (100,993) | (99,835) | |
Other | 8,202 | 606 | |
Total adjustments for items not affecting appropriations | (251,750) | (259,142) | |
Adjustments for items not affecting net cost of operations but affecting appropriations | |||
Add (Less): | |||
Acquisitions of tangible capital assets | 173,528 | 150,795 | |
Principal obligation of tangible capital lease | (178) | - | |
Other | (738) | (268) | |
Total adjustments for items affecting appropriations | 172,612 | 150,527 | |
Current year appropriations used | 1,648,947 | 1,494,520 |
3(b) Appropriations provided and used
2007 | 2006 | ||
(in thousands of dollars) | |||
Appropriations provided | |||
Vote 1 - Operating expenditures | 1,245,005 | 1,160,478 | |
Vote 5 - Capital expenditures | 218,174 | 175,293 | |
Vote 10 - Grants and contributions | 156,599 | 119,885 | |
Statutory amounts | 117,421 | 124,078 | |
Loans and advances for the Freshwater Fish Marketing Corporation | 50,000 | 30,000 | |
Less: | |||
Appropriations available for future years | (51,283) | (30,642) | |
Lapsed appropriations | (86,969) | (84,572) | |
Current year appropriations used | 1,648,947 | 1,494,520 |
While the appropriations for loans and advances of the Freshwater Fish Marketing Corporation (FFMC) are included in note 3(b), the activities of the FFMC are not reported in these financial statements.
3(c). Reconciliation of net cash provided by Government to current year appropriations used
2007 | 2006 | |||
(in thousands of dollars) | ||||
Net cash provided by Government of Canada | 1,549,899 | 1,458,740 | ||
Revenue not respendable by the DFO | 52,019 | 53,664 | ||
Change in net position in the Consolidated Revenue Fund | ||||
Increase)/decrease in accounts receivable and advances | (7,994) | 6,253 | ||
Increase/(decrease) in accounts payable and accrued liabilities | 49,550 | (30,394) | ||
Increase/(decrease) in other liabilities | 4,745 | (262) | ||
Increase/(decrease) in deferred revenue | (99) | (77) | ||
Proceeds from disposal of tangible capital assets | 1,987 | 9,247 | ||
Refund of previous years expenses | 5,849 | 3,702 | ||
Donation expenses | (114) | (102) | ||
Earmarked supplementary fish fines | 173 | 41 | ||
Justice Canada fees | (6,330) | (6,024) | ||
Other adjustments | (738) | (268) | ||
47,029 | (17,884) | |||
Current year appropriations used | 1,648,947 | 1,494,520 |
4. Expenses
The following table presents details of expenses by category.
2007 | 2006 | ||
(in thousands of dollars) | |||
Operating and administration | |||
Personnel and employee benefits | 882,615 | 883,808 | |
Professional and Special Services | 227,512 | 207,741 | |
Amortization | 172,948 | 170,254 | |
Repair and Maintenance | 96,035 | 89,815 | |
Utilities, Material and Supplies | 92,246 | 83,006 | |
Machinery and Equipment | 59,777 | 49,715 | |
Travel and Relocation | 52,728 | 47,771 | |
Rental | 28,705 | 27,602 | |
Loss on write-off and write-downs of tangible capital assets and inventory | 20,543 | 12,499 | |
Telecommunication | 18,138 | 17,946 | |
Damage and other claims against the Crown | 17,330 | 572 | |
Loss on disposal of tangible capital assets | 10,137 | 6,243 | |
Information | 5,481 | 5,361 | |
Other expenses | 1,797 | 26,058 | |
Total operating and administration | 1,685,992 | 1,628,391 | |
Transfer payments | |||
Non-profit organizations | 102,000 | 74,157 | |
Individuals | 37,031 | 5,761 | |
Other level of governments within Canada | 1,205 | 1,021 | |
Other countries and international organizations | 745 | 225 | |
Industry | 100 | 160 | |
Total transfer payments | 141,081 | 81,324 | |
Total expenses | 1,827,073 | 1,709,715 |
5. Revenues
The following table presents details of revenues by category.
6. Accounts receivable and advances
The following table presents details of accounts receivable and advances.
2007 | 2006 | |||
(in thousands of dollars) | ||||
Receivables | ||||
Receivables from external parties | 34,416 | 34,595 | ||
Receivables from other federal government departments and agencies | 18,452 | 9,662 | ||
Accrued interest on loans | 1,449 | 1,342 | ||
Refunds of program expenses | 146 | 147 | ||
Less: Allowance for doubtful accounts on external receivables | (27,325) | (26,594) | ||
Total receivables | 27,138 | 19,152 | ||
Loans and advances | ||||
Accountable advances | 260 | 252 | ||
Loans | 1,471 | 1,471 | ||
Allowance on loans and advances | (1,471) | (1,471) | ||
Total loans and advances | 260 | 252 | ||
Total accounts receivable and advances | 27,398 | 19,404 |
7. Restatement of prior period
The comparative financial statements of 2005-06 have been restated to decrease inventory and Equity of Canada by $74 million to correct an error. Inventory balances presented in the 2005-06 financial statements were overstated by $74 million. The overstatement was due to a misclassification that resulted in these assets being presented as both inventory and capital assets. There is no effect on the information presented for the current year.
8. Tangible capital assets
(in thousands of dollars) | Cost | ||||
Opening balance April 1, 2006 |
Acquisitions during the year | Disposals / write-offs during the year | Other (1) | Closing balance March 31, 2007 | |
Land | 19,703 | 307 | (41) | 22 | 19,991 |
Buildings | 438,000 | - | (1,112) | 27,452 | 464,340 |
Works and infrastructure | 1,781,649 | 27 | (16,487) | 92,440 | 1,857,629 |
Machinery and equipment | 370,210 | 5,724 | (18,524) | 10,150 | 367,560 |
Informatics hardware | 61,307 | 1,615 | (7,485) | 198 | 55,635 |
Informatics software | 18,670 | 17 | - | - | 18,687 |
Arms and weapons for defense | 448 | - | (6) | - | 442 |
Other equipment, including furniture | 613 | - | (49) | - | 564 |
Ships and boats | 1,622,573 | 963 | (18,288) | 23,771 | 1,629,019 |
Aircraft | 40,118 | (4,125) | 780 | 36,773 | |
Motor vehicles (non-military) | 65,107 | 7,984 | (7,533) | 120 | 65,678 |
Other vehicles | 7,529 | 270 | (340) | 52 | 7,511 |
Leasehold improvements | 535,881 | 32 | (3,094) | 3,319 | 536,138 |
Engineering work in progress - construction (2) | 309,203 | 150,581 | (14,455) | (150,260) | 295,069 |
Work-in-progress - software (2) | 9,727 | 5,805 | (395) | (278) | 14,859 |
Assets under capital leases | - | 203 | - | - | 203 |
Total | 5,280,738 | 173,528 | (91,934) | 7,766 | 5,370,098 |
(in thousands of dollars) | Accumulated amortization | Net book value | ||||||
Accumulated amortization April 1, 2006 |
Amortization for the year |
Disposal / write-offs | Other (1) | Accumulated amortization March 31, 2006 |
March 31, 2007 | March 31, 2006 | ||
Land | - | - | - | - | - | 19,991 | 19,703 | |
Buildings | 264,647 | 24,206 | (544) | 590 | 288,899 | 175,441 | 173,353 | |
Works and infrastructure | 862,900 | 66,330 | (8,940) | 1,166 | 921,456 | 936,173 | 918,749 | |
Machinery and equipment | 267,107 | 14,325 | (15,269) | - | 266,163 | 101,397 | 103,103 | |
Informatics hardware | 55,875 | 3,084 | (7,436) | 56 | 51,579 | 4,056 | 5,432 | |
Informatics software | 14,080 | 4,173 | - | 18,253 | 434 | 4,590 | ||
Arms and weapons for defense | 401 | 23 | (6) | - | 418 | 24 | 47 | |
Other equipment, including furniture | 558 | 13 | (47) | - | 524 | 40 | 55 | |
Ships and boats | 1,107,254 | 32,696 | (17,023) | - | 1,122,927 | 506,092 | 515,319 | |
Aircraft | 34,061 | 1,786 | (3,735) | - | 32,112 | 4,661 | 6,057 | |
Motor vehicles (non-military) | 45,242 | 5,715 | (7,151) | - | 43,806 | 21,872 | 19,865 | |
Other vehicles | 6,368 | 298 | (331) | - | 6,335 | 1,176 | 1,161 | |
Leasehold improvements | 297,096 | 20,272 | (1,824) | (1,756) | 313,788 | 222,350 | 238,785 | |
Engineering work in progress - construction | - | - | - | - | - | 295,069 | 309,203 | |
Work-in-progress - software | - | - | - | - | - | 14,859 | 9,727 | |
Assets under capital leases | 56 | 27 | - | (56) | 27 | 176 | (56) | |
Total | 2,955,645 | 172,948 | (62,306) | - | 3,066,287 | 2,303,811 | 2,325,093 |
Amortization expense for the year ended March 31, 2007, is $172,948 (2006 - $170,254)
9. Lease obligation for tangible capital assets
The DFO has entered into agreements to rent information technology equipment under capital lease with a cost of $203,218 and accumulated amortization of $27,096 as at March 31, 2007 (Note 8). The obligations for the upcoming years include the following:
2007 | 2006 | ||
(in thousands of dollars) | |||
Maturing year | |||
2008 | 45 | - | |
2009 | 45 | - | |
2010 | 45 | - | |
2011 | 45 | - | |
2012 and thereafter | 15 | - | |
Total future minimum lease payments | 195 | - | |
Less: imputed interest (4.1%) | (17) | - | |
Balance of obligations under leased tangible capital assets | 178 | - |
10. Contingent liabilities
(a) Contaminated sites
Liabilities are accrued to record the estimated costs related to the management and remediation of contaminated sites where the DFO is obligated or likely to be obligated to incur such costs. The DFO has identified sites where such action is possible and for which a liability of $169.2 million ($169.8 million in 2005-06) has been recorded. The DFO has estimated additional costs of $217.6 million ($232.4 million in 2005-06) that are not accrued, as these are not considered likely to be incurred at this time.
The DFO's ongoing efforts to assess contaminated sites may result in additional environmental liabilities related to newly identified sites, or changes in the assessments or intended use of existing sites. These liabilities will be accrued in the year in which they become known.
(b) Claims and litigation
Claims have been made against the DFO in the normal course of operations. Legal proceedings for claims totalling approximately $254.4 million ($242.7 million in 2006) were still pending at March 31, 2007. Some of these potential liabilities may become actual liabilities when one or more future events occur or fail to occur. To the extent that the future event is likely to occur or fail to occur, and a reasonable estimate of the loss can be made, an estimated liability is accrued and an expense recorded in the financial statements.
11. Deferred revenue
Deferred revenue represents the balance at year-end of unearned revenue stemming from donations, which are restricted to fund the research, development, management and promotion of fisheries- and oceans-related issues. Details of the transactions related to this account are as follows:
Opening balance, April 1, 2006 |
Donations received | Revenue Recognized |
Closing balance, March 31, 2007 |
|
(in thousands of dollars) | ||||
Deferred revenue | ||||
Restricted donations | 187 | 0 | (99) | 88 |
12. Other liabilities
Other liabilities represent funds received by the DFO under regulations, cost-sharing agreements or to fund projects. Details of the transactions related to these accounts are as follows:
Opening balance April 1, 2006 | Receipts and other credits | Payments and other charges | Closing balance> March 31, 2007 | |
(in thousands of dollars) | ||||
Federal/provincial cost- sharing agreements |
1,145 | 543 | (1,039) | 649 |
Miscellaneous project deposits |
10,748 | 21,975 | >(16,692) | 16,031 |
Sales of seized assets - Fisheries Act | 712 | 290 | (400) | 602 |
Contractors' security deposits | 263 | 401 | (333) | 331 |
Total | 12,868 | 23,209 | (18,464) | 17,613 |
13. Employee benefits
(a) Pension benefits: The DFO's employees participate in the Public Service Pension Plan, which is sponsored and administered by the Government of Canada. Pension benefits accrue up to a maximum period of 35 years at a rate of two percent per year of pensionable service, times the average of the best five consecutive years of earnings. The benefits are integrated with Canada/Quebec Pension Plans benefits and they are indexed to inflation.
Both the employees and the DFO contribute to the cost of the Plan. The DFO's 2006-07 expense amounts to $84,544,000 ($90,543,000 in 2005-06), which represents approximately 2.2 times (2.6 in 2005-06) the contributions by employees.
The DFO's responsibility with regard to the Plan is limited to its contributions. Actuarial surpluses or deficiencies are recognized in the financial statements of the Government of Canada, as the Plan's sponsor.
(b) Severance benefits: The DFO provides severance benefits to its employees based on eligibility, years of service and final salary. These severance benefits are not pre-funded. Benefits will be paid from future appropriations. Information about the severance benefits, measured as at March 31, are as follows.
2007 | 2006 | ||
(in thousands of dollars) | |||
Accrued benefit obligation, beginning of year | 133,743 | 117,536 | |
Expense for the year | 16,977 | 26,724 | |
Benefits paid during the year | (11,241) | (10,517) | |
Accrued benefit obligation, end of year | 139,479 | 133,743 |
14. Equity of Canada
2007 | 2006 | ||
(in thousands of dollars) | |||
Restricted Equity of Canada, April 1 | 678 | 637 | |
Supplementary Fish Fines Account | |||
Revenues | 315 | 256 | |
Expenses | (142) | (215) | |
Restricted Equity of Canada, March 31 | 851 | 678 | |
Unrestricted Equity of Canada, March 31 | 1,726,513 | 1,803,879 | |
Total Equity of Canada at March 31 | 1,727,364 | 1,804,557 |
Section 79.2 of the Fisheries Act requires that revenues from fines imposed be earmarked and that related payments and expenses be charged against such revenues. The Supplementary Fish Fines Account presents these revenues and expenses and the year-end balance available for future years.
15. Related party transactions
The DFO is related as a result of common ownership to all Government of Canada departments, agencies, and Crown corporations. The DFO enters into transactions with these entities in the normal course of business and on normal trade terms. Also, during the year, the DFO received services which were obtained without charge from other Government departments as presented in part (a).
(a) Services provided without charge by other government departments
During the year, the DFO received without charge from other departments, accommodation, legal fees and the employer's contribution to the health and dental insurance plans, administration costs and commissions paid to provincial workers' compensation boards. These services without charge have been recognized in the DFO's Statement of Operations as follows:
2007 | 2006 | ||
(in thousands of dollars) | |||
Accommodation provided by Public Works and Government Services Canada | 42,328 | 41,620 | |
Employer's contribution to the health and dental insurance plans provided by Treasury Board Secretariat | 54,180 | 54,282 | |
Administration costs and commissions paid to provincial workers' compensation boards by Social Development Canada. | 1,343 | 1,583 | |
Legal services provided by Justice Canada | 3,142 | 2,350 | |
Total services provided without charge | 100,993 | 99,835 |
The Government has structured some of its administrative activities for efficiency and cost-effectiveness purposes so that one department performs these on behalf of all without charge. The costs of these services, which include payroll and cheque issuance services provided by Public Works and Government Services Canada, are not included as an expense in the DFO's Statement of Operations.
(b) Payables and receivables outstanding at year-end with related parties are as follows:
2007 | 2006 | ||
(in thousands of dollars) | |||
Accounts receivable with other government departments and agencies | 18,452 | 9,662 | |
Accounts payable to other government departments and agencies | 31,885 | 35,335 |
16. Comparative information
Comparative figures have been reclassified to conform to the current year's presentation.