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Future-oriented Statement of Operations

Year ended March 31, 2010

 

 

Department of Fisheries and Oceans

Management Responsibility for Future-Oriented Financial Statements

Responsibility for the compilation, content, and presentation of the accompanying future-oriented financial information for the year ended March 31, 2010 rests with the management of the Department of Fisheries and Oceans (DFO). The future-oriented financial information has been prepared by management in accordance with Treasury Board accounting policies which are consistent with Canadian generally accepted accounting principles for the public sector. The future-oriented financial information is submitted for Part III of Estimates (Report on Plans and Priorities), and will be used in the DFO's Departmental Performance Report to compare with actual results.

Management is responsible for the integrity and objectivity of the information contained in future-oriented financial information and for the process of developing assumptions. Assumptions and estimates are based upon information available and known to management at the time of development, reflect current business and economic conditions, and assume a continuation of current governmental priorities and consistency in departmental mandate and strategic objectives. Much of the future-oriented financial information is based on these assumptions, best estimates, and judgment and gives due consideration to materiality. At the time of preparation of these statements, management believes the estimates and assumptions to be reasonable. However, as with all such assumptions, there is a measure of uncertainty surrounding them. This uncertainty increases as the forecast horizon extends.

The actual results achieved for the fiscal years covered in the accompanying future-oriented financial information will vary from the information presented and the variations may be material. (Note: The DFO is preparing these statements as part of a two-year pilot project and readers should be aware that this is the first year of the project.)

 

 


_____ Original signed by _____   _____ Original signed by _____

 
Michelle d'Auray,
Deputy Minister
Ottawa, Canada

February 10, 2009

  Cal Hegge,
Assistant Deputy Minister,
Corporate Services

 

 

Department of Fisheries and Oceans Canada

Future-oriented Statement of Operations

For the Year Ended March 31

(in thousands of dollars)


  Forecast
2010
Expenses (Note 6)
 
  Safe and Accessible Waterways
  Canadian Coast Guard Agency   706,167
  Small Craft Harbours   148,215
  Science   39,008
  Sustainable Fisheries and Aquaculture
  Fisheries and Aquaculture Management   350,570
  Science   149,757
  Healthy and Productive Aquatic Ecosystems
  Habitat Management   63,119
  Science   60,399
  Oceans Management   17,946
  Species at Risk   17,435
  Internal Services   336,945
 
  Total Expenses 1,889,561
 
 
Revenues (Note 7)
 
  Safe and Accessible Waterways
  Canadian Coast Guard Agency   50,358
  Science   2,502
  Small Craft Harbours   1,067
  Sustainable Fisheries and Aquaculture
  Fisheries and Aquaculture Management   41,802
  Healthy and Productive Aquatic Ecosystems
  Habitat Management   266
  Science   100
 
  Total Revenues 96,095
 
 
 
Net cost of operations   1,793,466
 

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

 

 

Department of Fisheries and Oceans Canada

Notes to Future-oriented Financial Information

For the year ended March 31, 2010

1. Authority and purpose

The 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 in addition to Internal Services, 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 and Aquaculture Management: Conservation of Canada's fisheries resources to ensure sustainable resource utilization through close collaboration with resource users and stakeholders based on shared stewardship.

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

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.

Species at Risk: Aquatic species at risk are managed to provide for the recovery of extirpated, endangered and threatened species; and the management of special concerned species to prevent them becoming at risk.

Science: Provision of scientific research, monitoring, advice, products and services and data management in support of 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.

Internal Services

Internal Services are groups of related activities and resources that are administered to support the needs of programs and other corporate obligations of an organization. These groups 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, Acquisition Services, and Travel and Other Administrative Services. Internal Services include only those activities and resources that apply across an organization and not to those provided specifically to a program.

2. Underlying Assumptions

These future-oriented statements have been prepared:

  • as at February 3rd, 2009
  • on the basis of government policies, government priorities, and external environment at the time the future-oriented financial information was finalized.
  • according to the requirements of Treasury Board Accounting Policies which are based on Canadian generally accepted accounting principles for the public sector.
  • on the basis that the resources provided will enable the DFO to deliver the expected results specified in the Report on Plans and Priorities.
  • on the basis of historical costs.

3. Variations and Changes to the Forecast Financial Information

While every attempt has been made to accurately forecast final results from 2009-2010, actual results achieved are likely to vary from the forecast information presented, and this variation could be material.

Once the Report on Plans and Priorities is presented, the DFO will not be updating the forecasts for any changes to appropriations or forecast financial information made in ensuing supplementary estimates. Variances will be explained in the DFO's Departmental Performance Report.

4. Summary of significant accounting policies

The future-oriented financial information has 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 future-oriented statement of operations are not necessarily the same as those provided through appropriations from Parliament. Note 5 provides a high-level reconciliation between these bases of reporting.

  (b) Forecasted revenues:

  • Revenues from regulatory fees are recognized in the accounts based on the services provided in the year.
  • Other revenues are accounted for in the period in which the underlying transaction or event occurred that gave rise to the revenues.
  • Revenues that have been received but not yet earned are recorded as deferred revenues.

  (c) Forecasted expenses – these are recorded when the underlying transaction or expense occurred subject to the following:

  • Grants are recognized in the year in which the conditions for payment are met. In the case of grants which do not form part of an existing program, the expense is recognized when the Government announces a decision to make a non-recurring transfer, provided the enabling legislation or authorization for payment receives parliamentary approval prior to the completion of the financial statements;
  • Contributions are recognized in the year in which the recipient has met the eligibility criteria or fulfilled the terms of a contractual transfer agreement;
  • Vacation pay and compensatory leave are expensed by the DFO in the year that the entitlement occurs.
  • Services provided without charge by other government departments for accommodation, the employer's contribution to the health and dental insurance plans and legal services are recorded as operating expenses at their estimated cost.

  (d) Employee future benefits

  • Pension benefits: Eligible employees participate in the Public Service Pension Plan, a multiemployer plan administered by the Government of Canada. The DFO's contributions to the Plan are charged to expenses in the year incurred and represent the total departmental obligation to the Plan. Current legislation does not require the DFO to make contributions for any actuarial deficiencies of the Plan.
  • Severance benefits: Employees are entitled to severance benefits under labour contracts or conditions of employment. These benefits are accrued as employees render the services necessary to earn them. The obligation relating to the benefits earned by employees is calculated using information derived from the results of the actuarially determined liability for employee severance benefits for the Government as a whole.

  (e) Contingent liabilities – Contingent liabilities are potential liabilities which 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 determinable and an amount can be reasonably estimated, a forecast and notation is, accordingly, made.

  (f) 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 department becomes aware of the contamination and is obligated, or is likely to be obligated to incur such costs. If the likelihood of the department's obligation to incur these costs is determinable, and if an amount can be reasonably estimated, a forecast and notation is, accordingly, made.

  (g) 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 and 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

  (h) Proceeds associated with the disposal of real property through Public Works and Government Services Canada (PWGSC) are not recorded in the DFO's future-oriented financial statements. PWGSC is responsible for the accounting and reporting of these proceeds.

  (i) Measurement uncertainty – The preparation of the future-oriented financial information requires management to make estimates and assumptions that affect the reported amounts of all the revenues and expenses reported in the future-oriented Statement of Operations. Assumptions are based upon information available and known to management at the time of development, reflect current business and economic conditions, and assume a continuation of current governmental priorities and consistency in departmental mandate and strategic objectives. At the time of preparation of these statements, management believes the estimates and assumptions to be reasonable. Nonetheless, as with all such estimates and assumptions, there is a measure of uncertainty surrounding them. This uncertainty increases as the forecast horizon extends.

5. Parliamentary appropriations

The DFO receives most of its funding through annual parliamentary appropriations. Items recognized in the statement of operations 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 table.

 

Reconciliation of net cost of operations to appropriations available for use


  Forecast
2010
 
  (in thousands of dollars)
 
Net cost of operations 1,793,466
 
Adjustments for items affecting net cost of operations but not affecting appropriations
 
  Add (less):  
  Revenue not available for spending   46,137
  Amortization of tangible capital assets   (171,530)
  Services provided without charge by other government departments   (107,733)
  Loss on write-offs and write-downs of tangible capital assets   (15,000)
  Loss on disposal of tangible capital assets   (7,500)
  Decrease (increase) in employee severance benefits   (5,000)
  Decrease (increase) in environmental liabilities   (3,124)
  Decrease (increase) in vacation pay and compensatory leave   (1,580)
  Increase (decrease) in inventory   (1,500)
  Refunds of previous years expenses   5,580
  Other   1,661
 
 
  Total adjustments for items not affecting appropriations   (259,589)
 
 
Adjustments for items not affecting net cost of operations but affecting appropriations
 
  Add (less):  
  Acquisitions of tangible capital assets   325,001
 
 
  Total adjustments for items affecting appropriations   65,412
 
 
Appropriations available for use 1,858,878
 

 

 

6. Forecast Expenses

The following table presents details of expenses by category.


  Forecast
2010
 
  (in thousands of dollars)
 
Operating and administration
  Personnel and employee benefits   897,375
  Professional and special services   249,499
  Amortization   171,530
  Repair and maintenance   144,622
  Utilities, material and supplies   109,101
  Machinery and equipment   59,315
  Travel and relocation   57,033
  Rental   28,578
  Telecommunication   18,399
  Loss on write-off and write-downs of tangible capital assets and inventory   15,000
  Loss on disposal of tangible capital assets   7,500
  Communication services   4,917
  Other expenses   16,055
 
  Total operating and administration   1,778,924
 
 
Transfer payments
  Non-profit organizations   97,647
  Individuals   10,874
  Other level of governments within Canada   1,363
  Industry   405
  Other countries and international organizations   348
 
  Total transfer payments   110,637
 
 
Total expenses   1,889,561
 

 

 

7. Forecast Revenues

The following table presents details of revenues by category.


  Forecast
2010
 
  (in thousands of dollars)
 
Revenue
 
  Sales of goods and services   87,054
  Gains on disposals of tangible capital assets   4,071
  Revenue from earmarked supplementary fish fines   274
  Other revenue   4,696
 
 
Total revenues   96,095
 

 

8. 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 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.

9. 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 has been estimated.

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 totaling approximately $370.6 million were still pending at December 31st, 2008. 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. No expense has been estimated for the purpose of the DFO's 2009-2010 future-oriented Statement of Operations.

10. 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 receives services which were obtained without charge from other Government departments as follows.

Services provided without charge by other government departments:

During the year, the DFO receives 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 Future-oriented Statement of Operations as follows:


Forecast
2010
 
(in thousand of dollars)
 
Employer's contribution to the health and dental insurance plans provided by Treasury Board Secretariat   60,223
Accommodation provided by Public Works and Government Services Canada   43,400
Legal services provided by Justice Canada   3,160
Administration costs and commissions paid to provincial workers' compensation boards by Social Development Canada.   950
 
 
Total services provided without charge   107,733
 

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 Future-oriented Statement of Operations.