Quarterly Financial Report

Quarterly financial report for the quarter ended December 31, 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 December 31.

The above chart outlines the total authorities available within the Agency as of December 31 of each year, the year to date expenditures as well as the expenditures during the quarter.

Significant Changes to Authorities

As of December 31, 2012, total authorities available for the year are $3 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
• $11 million increase to severance and maternity reimbursement for costs incurred to date
• $6.5 million advance for the move to a new building planned in 2013
• $3.1 million increase for the assessment, management and remediation of federal contaminated sites
• $1.5 million increase for the funding for Canada's fast start financing commitments under the Copenhagen Accord, which supports climate change adaptation and mitigation in developing countries. Additional funds will be sought through the Supplementary Estimates C
• $45 million reduction in funding as a result of completing sections of 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 centre and telecommunications services to Shared Services Canada
• $9.1 million reduction for emergency response to natural disasters, and unanticipated health- and safety-related capital repairs
• $4.5 million reduction in funding reflecting measures announced in Budget 2012. The remainder of the savings measures in Budget 2012 will be reflected in the Supplementary Estimates C

Significant Changes to Budgetary Expenditures

Expended:
As per the Budgetary Expenditures by Standard Object Table, the total expended in the third quarter ending December 31, 2012 decreased by $12.8 million compared to the previous year, from $159.8 million to $147 million. This represents an eight-percent decrease of recorded expenditures compared to the same period in 2011-12. Similarly, the year to date expenditures used at quarter end decreased by $34.2 million compared to the previous year, from $499.4 million to $465.2 million. This represents a seven-percent decrease of recorded expenditures compared to the same period in 2011-12. The majority of the decrease between 2011-12 and 2012-13 is related to our efforts to realign and streamline the operations in a transition period.

Planned:
As per the Budgetary Expenditures by Standard Object Table, the total planned expenditures as of the third quarter ending December 31, 2012, increased by $3 million compared to the previous year, from $764.3 million to $767.3 million. This represents less than a 1-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 as well as funding received for increased costs incurred in severance resulting from the reduction of its workforce. The majority of the increase to the transfer payment standard object is related to 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 in the establishment and expansion of national parks and marine conservation areas.

The decreases in standard object planned expenditures for transportation and communication and professional and special services 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 third quarter, the Agency's operational revenues (also referred to as expenditures equivalent to the revenues in the Statement of Authorities Table were consistent with the prior year's collections.

The Agency is reviewing dams on canals to determine their status, short term remedial measures needed 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 of $6.0 million for 2012-13, $19.7 million for 2013-14 and $29.2 million for 2014-15 and ongoing 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 being implemented:

• Streamlining and consolidating technical and professional services.

• Aligning the seasonality of our workforce to reflect changed work requirements.

On October 18, 2012, the government announced the navigation season on canals for 2013 to provide a workable schedule going forward while minimizing the impact on the local economies and visitors.

Consistent with the Government of Canada's efforts to reduce the deficit, streamline government activities and ensure value to Canadians, Parks Canada has implemented national human resources strategies to build strong internal networks and focus on attracting, retaining and engaging its workforce. This is aimed at ensuring that Parks Canada's highly professional and dedicated workforce continues to provide quality services and programs to Canadians.

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: