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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 _____ | |
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Michelle d'Auray, Deputy Minister Ottawa, Canada February 10, 2009 |
Cal Hegge, Assistant Deputy Minister, Corporate Services |
For the Year Ended March 31
(in thousands of dollars)
Forecast 2010 |
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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 | ||
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Total Expenses | 1,889,561 | ||
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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 | ||
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Total Revenues | 96,095 | ||
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Net cost of operations | 1,793,466 | ||
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The accompanying notes form an integral part of these future-oriented financial statements.
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.
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.
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.
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 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.
These future-oriented statements have been prepared:
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.
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:
(c) Forecasted expenses – these are recorded when the underlying transaction or expense occurred subject to the following:
(d) Employee future benefits
(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:
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Asset Class | Amortization Period |
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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 | ** |
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* 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.
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.
Forecast 2010 |
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(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 | |||
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Total adjustments for items not affecting appropriations | (259,589) | |||
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Adjustments for items not affecting net cost of operations but affecting appropriations | ||||
Add (less): | ||||
Acquisitions of tangible capital assets | 325,001 | |||
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Total adjustments for items affecting appropriations | 65,412 | |||
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Appropriations available for use | 1,858,878 | |||
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The following table presents details of expenses by category.
Forecast 2010 |
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(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 | ||
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Total operating and administration | 1,778,924 | ||
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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 | ||
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Total transfer payments | 110,637 | ||
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Total expenses | 1,889,561 | ||
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The following table presents details of revenues by category.
Forecast 2010 |
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(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 | ||
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Total revenues | 96,095 | ||
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(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.
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.
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.
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 |
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(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 | |
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Total services provided without charge | 107,733 | |
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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.