Quarterly Financial Report

Quarterly financial report for the quarter ended September 30, 2012

Introduction

This quarterly financial report has been prepared by management as required by section 65.1 of the Financial Administration Act and in the form and manner prescribed by the Treasury Board.

The report should be read in conjunction with the Main Estimates and Supplementary Estimates.

A summary description of the Parks Canada Agency’s program activities can be found in Part II of the Main Estimates.

Basis of Presentation

This quarterly financial report has been prepared using an expenditure basis of accounting. The accompanying Statement of Authorities includes the Parks Canada Agency’s spending authorities granted by Parliament and those used by the Agency, consistent with the Main Estimates and Supplementary Estimates for the 2012-13 fiscal year. This quarterly financial report has been prepared using a special purpose financial reporting framework designed to meet financial information needs with respect to the use of spending authorities.

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

As Part of the Parliamentary business of supply, the Main Estimates must be tabled in Parliament on or before March 1 preceding the new fiscal year. Budget 2012 was tabled on March 29, after the tabling of the Main Estimates on February 28, 2012. As a result the measures announced in the Budget 2012 could not be reflected in the 2012-13 Main Estimates.

In fiscal 2012-13, frozen allotments will be established by Treasury Board authority in departmental votes to prohibit the spending of funds already identified as savings measures in Budget 2012. In future years, the changes to departmental authorities will be implemented through the Annual Reference Level Update, as approved by Treasury Board, and reflected in the subsequent Main Estimates tabled in Parliament.

As part of the performance reporting process, the Parks Canada Agency prepares financial statements on a full accrual basis in accordance with Treasury Board accounting policies, which are based on Canadian Generally Accepted Accounting Principles (GAAP) for the public sector. However, the spending authorities voted by Parliament remain on an expenditure basis.

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

Highlights of fiscal quarter and fiscal year to date (YTD) results

This section highlights the significant items that contributed to the net increase in resources available for the year and net decrease in actual expenditures for the quarter ended September 30.

The above chart outlines the total authorities available within the Agency as of September 30 of each year, the year to date expenditures as well as the expenditures during the quarter.

Significant Changes to Authorities

As of September 30, 2012, total authorities available for the year are $14.1 million higher compared to the same quarter of the previous year.

The differences are primarily attributable to the following:

• $55 million increase in authorities available for use from the prior fiscal year
• $7.5 million increase for emergency response to natural disasters, and unanticipated health- and safety-related capital repairs
• $5.9 million increase for the assessment, management and remediation of federal contaminated sites
• $4.5 million increase to support the building of the Trans-Canada Trail
• $45 million reduction in funding as a result of completing the Trans-Canada Highway from a two-lane undivided highway to a four-lane divided highway in Banff National Park (Canada’s Economic Action Plan and other)
• $15.7 million reduction for the transfer of e-mail, data center and telecommunications services to Shared Services Canada.

Significant Changes to Budgetary Expenditures

Expended:
As per the Budgetary Expenditures by Standard Object Table, the total expended in the second quarter ending September 30, 2012 decreased by $5.7 million compared to the previous year, from $203.3 million to $197.6 million. This represents a 3-percent decrease of recorded expenditures compared to the same period in 2011-12. The majority of the decrease between 2011-12 and 2012-13 relates to expenditures in transportation and communications, and professional and special services. These decreases are mainly attributable to the transfer made to Shared Services Canada for e-mail, data centre and telecommunications services, as well as lower expenditures recorded for the Trans-Canada Highway compared to the same period in 2011-12. With the exception of increases to personnel costs, all other expenditures are consistent with prior year spending trends.

Planned:
As per the Budgetary Expenditures by Standard Object Table, the total planned expenditures as of the second quarter ending September 30, 2012, increased by $14.1 million compared to the previous year, from $735 million to $749.1 million. This represents a 2-percent increase in planned expenditures compared to the same period in 2011-12. The increase in planned personnel expenditures is mostly attributable to the adjustment made to the Agency’s reference levels for personnel in order to reflect historical spending patterns. The majority of the increase to the transfer payment standard object is for the renewal of the Agency’s General Class Contribution Program. The other subsidies and payments standard object has also increased as the Agency is planning on investing for the establishment and expansion of national parks and marine conservation areas. The decreases in standard object planned expenditures mostly relate to the transfer made to Shared Services Canada for e-mail, data centre and telecommunications services and the decrease in the Trans-Canada Highway funding as a result of nearing completion of the project.

Risks and Uncertainties

Parks Canada Agency is primarily funded through voted parliamentary spending authorities appropriated over a two-year period for program expenditures, including capital expenditures and transfer payments. Also, Parks Canada is partially funded through respendable revenue which originates mainly from entrance and camping fees. These revenues are impacted by economic fluctuations, competition from other parks and cultural attractions and weather conditions. At the end of the second quarter, the Agency’s operational revenues (also referred to as expenditures equivalent to the revenues in the Statement of Authorities Table) were consistent with prior year’s collections.

The Agency is reviewing dams on canals to determine their status, short term remedial measures to reduce risks, and recapitalization requirements to ensure compliance with industry standards. As part of ongoing due diligence in operations and maintenance of the dams, the Agency plans to complete dam safety reviews for 39 high risk dams at a cost of approximately $15.6 million. This work began in 2011-12 and will be completed in 2015.

Budget 2012 Implementation

This section provides an overview of the savings measures announced in Budget 2012 that will be implemented in order to refocus government and programs; make it easier for Canadians and business to deal with their government; and modernize and reduce the back office.

Parks Canada will achieve Budget 2012 savings of $29.2 million by fiscal year 2014-15 through both reductions and restraint to streamline and focus operations while ensuring continued quality delivery to Canadians on its important mandate.

The following are the major elements to implement:

• Streamlining and consolidating technical and professional services.
  
• Aligning the seasonality of our workforce to the work requirements.
  
• Aligning the length of its season, hours of operation, and personal service at locks on the canals it operates to focus investments on the periods of highest requirements.
  

On October 18, 2013, the government announced the navigation season on canals for 2013 to provide a workable schedule going forward that is affordable while minimizing the impact on the local economies and visitors.

As a result of the Budget 2012 implementation, personnel costs for this quarter increased compared to the same period in 2011-12. This is mainly due to compensation costs incurred by the Agency, resulting from the reduction to its workforce.

The 2012-13 Budget 2012 savings will be reflected later in the fiscal year.

Significant Changes in Relation to Operations, Personnel and Programs

On November 15, 2011, along with 43 other departments and agencies, Parks Canada’s Information Technology (IT) services in the domains of e-mail, data centres, network and telecommunications support were transferred to Shared Services Canada. This represents a reduction to the Agency’s 2012-13 Authorities of $15.7 million.

Approval by Senior Officials

Approved by:

Statement of Authorities (Unaudited)
(in thousands of dollars)	Fiscal Year 2012-2013			Fiscal Year 2011-2012
	Total available for use for the year ending March 31, 2013*	Used during the quarter ended September 30, 2012	Year to date used at quarter end	Total available for use for the year ending March 31, 2012*	Used during the quarter ended September 30, 2011	Year to date used at quarter end
- Vote 25 - Program expenditures	585,879	139,854	220,622	575,531	142,755	244,348
- Vote 30 - Payments to the New Parks and Historic Sites Account	500	0	0	500	0	0
Budgetory statutory authorities
- Employee benefit plans	51,763	12,941	25,882	47,942	11,986	23,972
- Expenditures equivalent to revenues resulting from the conduct of operations pursuant to section 20 of the Parks Canada Agency Act	111,000	44,781	71,644	111,000	48,569	71,319
Total Budgetary Authorities	749,142	197,576	318,148	734,973	203,310	339,639
* Includes authorities available for use and granted by Parliament at quarter-end

Budgetary Expenditures by Standard Object (Unaudited)
(in thousands of dollars)	Fiscal Year 2012-2013			Fiscal Year 2011-2012
	Planned expenditures for the year ending March 31, 2013*	Expended during the quarter ended September 30, 2012	Year to date used at quarter end	Planned expenditures for the year ending March 31, 2012*	Expended during the quarter ended September 30, 2011	Year to date used at quarter end
Expenditures:
Personnel	376,286	122,315	213,168	338,000	111,282	203,752
Transportation and communications	19,000	3,142	5,183	41,000	6,957	11,185
Information	12,000	1,712	3,259	11,000	2,670	4,172
Professional and special services	103,036	16,765	23,315	149,985	22,718	35,057
Rentals	15,000	7,185	9,418	19,000	5,681	8,270
Purchased Repair and maintenance	94,000	21,282	27,063	50,000	24,277	32,269
Utilities, materials and supplies	44,000	9,255	15,036	72,000	10,545	16,560
Acquisition of land, buildings and works	23,000	560	927	22,726	2,505	3,731
Acquisition of machinery and equipment	23,000	2,509	4,492	13,000	3,761	6,232
Transfer payments	13,820	3,048	5,371	3,262	3,201	4,957
Other subsidies and payments	26,000	9,803	10,916	15,000	9,713	13,454
Total gross budgetary expenditures	749,142	197,576	318,148	734,973	203,310	339,639
* Includes authorities available for use and granted by Parliament at quarter-end