Parks Canada Financial Statements

Statement of Management Responsibility

Responsibility for the integrity and objectivity of the accompanying financial statements for the year ended March 31, 2016, and all information contained in these statements rests with the management of the Parks Canada Agency. These financial statements have been prepared by management using the Government's accounting policies, which are based on Canadian Public Sector Accounting Standards. They have been presented to the Audit Committee of the Agency.

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 Agency's financial transactions. Financial information submitted in the preparation of the Public Accounts of Canada, and included in the Agency's Departmental Performance Report, is consistent with these financial statements.

Management is also responsible for maintaining an effective system of internal control over financial reporting designed to provide reasonable assurance that financial information is reliable, that assets are safeguarded and that transactions are properly authorized and recorded in accordance with the Financial Administration Act and other applicable legislation, regulations, authorities and policies.

Management seeks to ensure the objectivity and integrity of data in its financial statements through careful selection, training and development of qualified staff; through organizational arrangements that provide appropriate divisions of responsibility; through communication programs aimed at ensuring that regulations, policies, standards, and managerial authorities are understood throughout the Agency; and through conducting an annual risk-based assessment of the effectiveness of the system of internal control over financial reporting.

The system of internal control over financial reporting is designed to mitigate risks to a reasonable level based on an ongoing process to identify key risks, to assess effectiveness of associated key controls, and to make any necessary adjustments.

A risk-based assessment of the system of internal control over financial reporting for the year ended March 31, 2016 was completed in accordance with the Treasury Board Policy on Internal Control and the results and action plans are summarized in the annex.

The effectiveness and adequacy of the Agency's system of internal control is reviewed by the work of internal audit staff, who conduct periodic audits of different areas of the Agency's operations, and by the Audit Committee, which oversees management's responsibilities for maintaining adequate control systems and the quality of financial reporting, and which recommends the financial statements to the Chief Executive Officer.

The financial statements of the Agency have not been audited.

Original signed by Jane Pearse for
Daniel Watson,
Chief Executive Officer

Gatineau, Canada
August 31, 2016

Original signed by
Sylvain Michaud
,
Chief Financial Officer

Gatineau, Canada
August 31, 2016




Statement of Financial Position (Unaudited)

Statement of Financial Position (Unaudited)
As at March 31
(in thousands of dollars)20162015
Liabilities
Accounts payable and accrued liabilities (Note 3) 150,619 92,447
Deferred revenue (Note 4) 30,244 19,068
Lease obligation for tangible capital assets (Note 5) 3,184 3,518
Employee future benefits (Note 6) 11,347 11,367
Environmental liability (Note 7) 37,237 24,172
Total liabilities 232,631 150,572
Financial assets
Due from the Consolidated Revenue Fund (Note 8) 164,779 104,165
Accounts receivable and advances (Note 9) 13,079 8,124
Total financial assets 177,868 112,289
Net debt 54,773 38,283
Non-financial assets
Prepaid expenses 2,995  2,598
Inventory (Note 10) 8,724 8,339
Tangible capital assets (Note 11) 2,312,427 1,939,778
Collections and archaeological sites (Note 12) 1 1
Total non-financial assets 2,324,147 1,950,716
Net financial position (Note 13) 2,269,374 1,912,433
Contingent liabilities and contractual obligations (Notes 14 and 15)


Statement of Operations and Net Financial Position (Unaudited)

Statement of Operations and Net Financial Position (Unaudited)
For the year ended March 31
(in thousands of dollars)2016 Planned Results20162015
Expenses
Parks Canada Programs
Heritage Places Establishment 27,804  17,048 17,051
Heritage Resources Conservation 176,222 154,766 146,052
Heritage Places Promotion and Public Support 40,692 45,204 47,012
Visitor Experience 285,369 278,411  279,944
Heritage Canals, Highways and Townsite Management 82,484 79,025 78,186
Internal Services 123,656 152,282 100,228
Total expenses 736,227 726,736 668,473
Revenues
Entrance fees 61,195 69,737 61,921
Recreational fees 25,399 29,128  26,097
Rentals and concessions 23,095 25,552 25,653
Other operating revenues 6,159 8,460 6,288
Townsites revenues 3,132 3,345 2,880
Staff housing 3,198 3,253  3,190
Revenues earned on behalf of Government (52) (83)  (72)
Total revenues 122,126 139,392 125,957
Net cost from continuing operations 614,101 587,344 542,516
Government funding and transfers
Net cash provided by Government 832,026  578,446
Change in due from Consolidated Revenue Fund 60,614 14,376
Services provided without charge by other government departments (Note 16a) 46,367 43,272
Transfer of the transition payments for implementing salary payments in arrears (Note 18) (111) (10,385)
Transfer of assets and liabilities from (to) other government departments 5,389 (21)
Total government funding and transfers 944,285 625,688
Net cost of operations after government funding and transfers (356,941) (83,172)
Net financial position - Beginning of year 1,912,433 1,829,261
Net financial position - End of year 2,269,374 1,912,433
Segmented information (Note 19)


Statement of Change in Net Debt (Unaudited)

Statement of Change in Net Debt (Unaudited)
As at March 31
(in thousands of dollars)20162015
Net cost of operations after government funding and transfers (356,941) (83,172)
Change due to tangible capital assets
Acquisitions and improvements to tangible capital assets 458,630  168,889
Amortization of tangible capital assets (85,238)  (81,684)
Proceeds from disposal of tangible capital assets (956) (1,342)
Net loss on disposal of tangible capital assets including adjustments (5,176) (2,292)
Transfer from (to) other government departments 5,389 (21)
Total change due to tangible capital assets 372,649 83,550
Change due to inventory 385 53
Change due to prepaid expenses 397  45
Net increase in net debt 16,490 476
Net debt - Beginning of year 38,283 37,807
Net debt - End of year 54,773 38,283



Statement of Cash Flows (Unaudited)

Statement of Cash Flows (Unaudited)
For the year ended March 31
(in thousands of dollars)20162015
Operating activities
Net cost of operations before government funding and transfers 587,344 542,516
Non-cash items:
Amortization of tangible capital assets (85,238) (81,684)
Net loss on disposal of tangible capital assets including adjustments (5,176) (2,292)
Services provided without charge by other government departments (Note 16a) (46,367) (43,272)
Transition payments for implementing salary payments in arrears (Note 18) 111 10,385
Variations in Statement of Financial Position:
Increase (decrease) in accounts receivable and advances 4,955  (661)
Increase  in prepaid expenses 397 45
Increase in inventory 385 53
Increase in accounts payable and accrued liabilities (58,172)  (10,472)
Increase in deferred revenue (11,176) (2,815)
Decrease in employee future benefits 20 2,194
Increase in environmental liability (13,065) (3,411)
Cash used in operating activities 374,018 410,586
Capital investing activities
Acquisitions and improvements to tangible capital assets 458,630 168,889
Proceeds from disposal of tangible capital assets (956) (1,342)
Cash used in capital investing activities 457,674 167,547
Financing activities
Lease payments for tangible capital assets 334 313
Cash used in financing activities 334 313
Net cash provided by Government of Canada 832,026 578,446




Notes to the Financial Statements (Unaudited)

For the year ended March 31

1. Authority and objectives

In December 1998, Parks Canada Agency (the Agency) was established under the Parks Canada Agency Act as a departmental corporation and acts as an agent of Her Majesty in Right of Canada. The Parks Canada Agency is a separate entity listed under Schedule II of the Financial Administration Act and reports to the Minister of the Environment. The Agency is not subject to the provisions of the Income Tax Act.

The Agency's mandate is to protect and present nationally significant examples of Canada's natural and cultural heritage, and foster public understanding, appreciation and enjoyment in ways that ensure the ecological and commemorative integrity of these places for present and future generations. In carrying out its mandate, the Agency delivers the programs set out in the Agency's legislation and authorities.

The authorities for the programs for which Parks Canada is responsible are mainly derived from the Parks Canada Agency Act, the Canada National Parks Act, the Historic Sites and Monuments Act, the Canada National Marine Conservation Areas Act, the Department of Transport Act, the Heritage Railway Stations Protection Act, the Heritage Lighthouse Protection Act, and the Species at Risk Act.

The programs include:

Heritage Places Establisment: This program aims to establish heritage places in order to conserve Canada's natural and cultural heritage and make it available to Canadians for their benefit and enjoyment, thus fostering a strong sense of connection to our natural heritage and history. This program also supports Canada's involvement in the internationally shared objective of protecting and commemorating the best of the world's natural and cultural heritage. By establishing national parks and national marine conservation areas in each of Canada's natural terrestrial and marine regions, this program ensures the protection of representative examples of Canada's natural diversity. Likewise, the designation and commemoration of historic places, persons and events in communities across Canada ensures our history remains a living legacy for all Canadians. Establishment or designation is achieved through feasibility studies, public nominations, research, consulting with Indigenous peoples, stakeholders and the general public, negotiating with other governments and Indigenous organizations, recommendations from advisory bodies and fulfilling legislative requirements. This process results in established national parks and national marine conservation areas and designated national historic sites, persons and events of Canada and other heritage places.

Heritage Places Conservation: This program aims to protect and conserve the natural and cultural resources of heritage places managed by Parks Canada and to fulfill responsibilities assigned to Parks Canada under federal legislation. Protection and conservation activities in a national urban park, national parks, national marine conservation areas, heritage canals and Parks Canada administered national historic sites ensure that these heritage places are maintained and used in ways that leave them unimpaired for the benefit and enjoyment of present and future generations.

Heritage Places Promotion and Public Support: This program aims to nurture a sense of pride in and support for Parks Canada administered places by increasing Canadians' awareness, appreciation of their value and the various ways to experience them. This is achieved through relevant and effective heritage places promotion initiatives delivered to Canadians, reaching them in their daily lives. Some of these promotion activities are done in collaboration with stakeholders and partners to reach and engage more Canadians.

Visitor Experience: This program fosters opportunities for Canadians and international visitors to discover, experience, enjoy and develop a sense of personal connection to Canada's national urban park, national parks, national historic sites administered by Parks Canada, national marine conservation areas, and heritage canals. This program includes a range of activities, services and products associated with pre-visit planning, the on-site visit, and post visit communications. It includes tourism marketing, trip planning information, reception, orientation, interpretation, recreation, special events, merchandise, compliance and visitor safety services, and visitor facilities. The program is supported by market and visitor analytics, trend analysis, and performance measurement.

Heritage Canals, Highways and Townsites Management: This program involves the management of infrastructure for Canadians and provides opportunities for socio-economic benefits to adjacent communities. It is related to the operation, maintenance and improvement of the Trans-Canada and provincially numbered highways within national parks and a national historic site; the water management of certain heritage canals; and, the provision of municipal services to certain national park townsites.

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; and Materiel Services; Acquisition Services. Internal Services include only those activities and resources that apply across an organization and not to those provided specifically to a program.

2. Summary of significant accounting policies

These financial statements have been prepared using the Government's accounting policies stated below, which are based on Canadian Public Sector Accounting Standards. The presentation and results using the stated accounting policies do not result in any significant differences from Canadian Public Sector Accounting Standards.

Significant accounting policies are as follows:

(a) Parliamentary authorities
The Agency is financed by the Government of Canada through Parliamentary authorities. Financial reporting of authorities provided to the Agency do not parallel financial reporting according to Canadian generally accepted accounting principles since authorities are primarily based on cash flow requirements. Consequently, items recognized in the Statement of Operations and Net Financial Position and in the Statement of Financial Position are not necessarily the same as those provided through authorities from Parliament. Note 17 provides a reconciliation between the bases of reporting. The planned results amounts in the “Expenses” and “Revenues” sections of the Statement of Operations and Net Financial Position are the amounts reported in the Future-oriented Statement of Operations included in the 2015-2016 Report on Plans and Priorities. Planned results are not presented in the “Government funding and transfers” section of the Statement of Operations and Net Financial Position and in the Statement of Change in Net Debt because these amounts were not included in the 2015-2016 Report on Plans and Priorities.

b) Net cash provided by Government
The Agency operates within the Consolidated Revenue Fund (CRF), which is administered by the Receiver General for Canada. All cash received by the Agency is deposited to the CRF, and all cash disbursements made by the Agency 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 Government.

(c) Due from the CRF
Amounts due from or to the CRF are the result of timing differences at year-end between when a transaction affects authorities and when it is processed through the CRF. Amounts due from the CRF represent the net amount of cash that the Agency is entitled to draw from the CRF without further authorities to discharge its liabilities.

(d) Inventory
Inventory consists of consumable supplies. Inventory is valued at cost using the average cost method. If there is no longer any service potential, inventory is valued at the lower of cost or net realizable value.

(e) Tangible capital assets

(i) Tangible capital assets (excluding land)
All tangible capital assets and leasehold improvements having an initial cost of $10,000 or more are recorded at their acquisition cost. Intangible assets are not capitalized.

Amortization of tangible capital assets is done on a straight-line basis over the estimated useful life of the asset as follows:

Tangible capital assets
Capital Assets ClassAmortization Period
Buildings 25-50 years
Fortifications 50-100 years
Leasehold improvements Lesser of the remaining term of the lease or useful life of the improvement
Leased tangible capital assets Term of lease or economic life of the property if the lease contains a bargain purchase option
Improved grounds 10-40 years
Roads 40 years
Bridges 25-50 years
Canals and marine facilities 25-80 years
Utilities 20-40 years
Vehicles and equipment 3-15 years
Exhibits 5-10 years

Assets under construction are recorded in the applicable capital asset class in the year that they become available for use and are not amortized until they become available for use.

(ii) Land
Acquired lands are recorded at historical cost. Crown lands acquired as a result of Confederation or the subsequent joining of a province or territory are recorded at a nominal value. Donated lands are recorded at their estimated market value at time of acquisition.

(f) Collections and archaeological sites
Collections and archaeological sites are recorded at nominal value.

(g) Employee future benefits

  • Pension benefits: Eligible employees participate in the Public Service Pension Plan, a multiemployer pension plan administered by the Government. The Agency's contributions to the Plan are charged to expenses in the year incurred and represent the total obligation to the Plan. Current legislation does not require the Agency to make contributions for any actuarial deficiencies of the Plan.

  • Severance benefits: Employees entitled to severance benefits under labour contracts or conditions of employment earn these benefits as services necessary to earn them are rendered. 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.

(h) Expenses
Expenses are recorded on an accrual basis:

  • Transfer payments are recorded as expenses when authorization for the payment exists and the recipient has met the eligibility criteria or the entitlements established for the transfer payment program. In situations where payments do not form part of an existing program, transfer payments are recorded as expenses 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. Transfer payments that become repayable as a result of conditions specified in the contribution agreement that have come into being are recorded as a reduction to transfer payment expense and as a receivable.

  • Services received without charge by other government departments for accommodation, employer contributions to the health and dental insurance plans, legal services and workers' compensation are recorded as operating expenses at their estimated cost. A corresponding amount is credited directly to the Net financial position. 

  • Vacation pay and compensatory leave are accrued as the benefits are earned by employees under their respective terms of employment.

(i) Accounts receivable
Accounts receivable are stated at the lower of cost and net recoverable value. A valuation allowance is recorded for accounts receivable where recovery is considered uncertain.

(j) 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 if an amount cannot be reasonably estimated, the contingency is disclosed in the notes to the financial statements.

(k) Environmental liability
Environmental liabilities consist of estimated costs related to the remediation of contaminated sites as well as estimated costs related to obligations associated with the retirement of tangible capital assets and other environmental liabilities.

Contaminated Sites:
A liability for remediation of contaminated sites is recognized when all of the following criteria are satisfied: an environmental standard exists, contamination exceeds the environmental standard, the government is directly responsible or accepts responsibility, it is expected that future economic benefits will be given up and a reasonable estimate of the amount can be made. The liability reflects the Government’s best estimate of the amount required to remediate the sites to the current minimum standard for its use prior to contamination. When the cash flows required to settle or otherwise extinguish a liability are expected to occur over extended future periods, a present value technique is used. The discount rate applied is taken from the government’s consolidated revenue fund monthly lending rates for periods of one year and over. The discount rates used are based on the term rate associated with the estimated number of years to complete remediation. For remediation costs with estimated future cash flows spanning more than 25 years, the 25 year Government of Canada lending rate is used as the discount rate.

The recorded environmental liabilities are adjusted each year, as required, for present value adjustments, inflation, new obligations, changes in management estimates and actual costs incurred.

If the likelihood of the Department’s responsibility is not determinable, a contingent liability is disclosed in the notes to the financial statements. If measurement uncertainty exists, it is also disclosed in the notes to the financial statements.


(l) Revenues
Entrance fees, recreational fees, rental and concessions, townsites, staff housing and other operating revenues are recognized in the year in which the goods or services are provided by the Agency.

Funds received from external parties for specified purposes are recorded upon receipt as deferred revenue. These revenues are recognized in the period in which the related expenses are incurred.

Funds that have been received are recorded as deferred revenue, provided the Agency has an obligation to other parties for the provision of goods, services or the use of assets in the future.

Other revenues are accounted for in the period in which the underlying transaction or event that gave rise to the revenue takes place.

Revenues that are non-respendable are not available to discharge the Agency's liabilities. While the Agency is expected to maintain accounting control, it has no authority regarding the disposition of non-respendable revenues. As a result, non-respendable revenues are considered to be earned on behalf of the Government of Canada and are therefore presented in reduction of the Agency's gross revenues.

(m) Measurement uncertainty
The preparation of these financial statements in accordance with Canadian generally accepted accounting principles requires management to make estimates and assumptions that 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 contingent liabilities, environmental liabilities, the liability for employee future benefits, the useful life of tangible capital assets and the lease obligation for tangible capital assets. Actual results could significantly differ 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. Accounts payable and accrued liabilities

The following table presents details of the Agency’s accounts payable and accrued liabilities:

Accounts payable and accrued liabilities
(in thousands of dollars)20162015
Accounts payable - Other government departments and agencies 31,736  14,506
Accounts payable - External parties 97,506 60,803
Total accounts payable 129,242 75,309
Accrued liabilities 21,377 17,138
Total accounts payable and accrued liabilities 150,619 92,447

In Canada's Economic Action Plan 2012, the Government announced savings measures to be implemented by departments over the next three fiscal years starting in 2012-2013. As a result, the Agency has recorded at March 31, 2016, an obligation for termination benefits for an amount of $0 ($149,214 in 2014-2015) as part of accrued liabilities to reflect the estimated workforce adjustment costs.

4. Deferred Revenue

Deferred revenue represents the balance at year-end of unearned revenues stemming from amounts received from external parties that are restricted in order to fund the expenditures related to specific research projects and stemming from amounts received for fees prior to services being performed. Revenue is recognized in the period in which these expenditures are incurred or in which the service is performed. Details of the transactions related to this account are as follows:

Deferred Revenue
(in thousands of dollars)20162015
Deferred revenue - Beginning of year 19,068  16,253
Amounts received 29,154  15,581
Revenue recognized (17,978) (12,766)
Deferred revenue - End of year 30,244 19,068

5. Lease obligation for tangible capital assets

The Agency has entered into agreements to lease commercial and office space under capital leases with a cost of $21,171,904 and accumulated amortization of $7,030,065 as at March 31, 2016 ($21,171,904 and $6,334,837 respectively as at March 31, 2015). The obligations related to the upcoming years include the following:

Lease obligation for tangible capital assets
(in thousands of dollars)20162015
2015-16 - 544
2016-17 544 544
2017-18 544 544
2018-19 544 544
2019-20 509 509
2020-21 and thereafter 1,985 1,973
Total future minimum lease payment 4,126 4,658
Less: imputed interest (6.3%) 942 1,140
Balance of obligations under leased tangible capital assets 3,184 3,518

6. Employee future benefits

(a) Pension benefits
The Agency'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 2 percent per year of pensionable service, times the average of the best five consecutive years of earnings. The benefits are integrated with Canada/Québec Pension Plan benefits and they are indexed to inflation.

Both the employees and the Agency contribute to the cost of the Plan. Due to the amendment of the Public Service Superannuation Act following the implementation of provisions related to Economic Action Plan 2012, employee contributors have been divided into two groups – Group 1 relates to existing plan members as of December 31, 2012 and Group 2 relates to members joining the Plan as of January 1, 2013. Each group has a distinct contribution rate.

The 2015-2016 expense amounts to $34,601,585 ($32,292,719 in 2014-2015). For Group 1 members, the expense represents approximately 1.25 times (1.41 times in 2014-2015) the employee contributions and, for Group 2 members, approximately 1.24 times (1.39 times in 2014-2015) the employee contributions.

The Agency'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 Agency provided severance benefits to its employees based on eligibility, years of service and salary at termination of employment. These severance benefits are not pre-funded. Benefits will be paid from future authorities. Information about the severance benefits, measured as at March 31, is as follows:

As part of collective agreement negotiations, the accumulation of severance benefits under the employee severance pay program ceased commencing in 2012. Employees have been given the option to be immediately paid the full or partial value of benefits earned to date or collect the full or remaining value of benefits on termination from the public service. These changes have been reflected in the calculation of the outstanding severance benefit obligation.

Employee future benefits
(in thousands of dollars)20162015
Accrued benefit obligation - Beginning of year 11,367 13,561
Expense for the year 2,626 1,286
Benefits paid during the year (2,646) (3,480)
Accrued benefit obligation - End of year 11,347 11,367

7. Environmental liability

The government has developed a “Federal Approach to Contaminated Sites", which incorporates a risk-based approach to the management of contaminated sites. Under this approach the Government has inventoried the contaminated sites on federal lands that have been identified, allowing them to be classified, managed and recorded in a consistent manner. This systematic approach aides in the identification of the high risk sites in order to allocate limited resources to those sites which pose the highest risk to the environment and human health.

The Agency has identified a total of 475 sites (474 sites in 2014-2015) where contamination may exist and assessment, remediation and monitoring may be required. Of these, the Agency has assessed 87 sites (82 sites in 2014-2015) where action is possible and for which a net liability of $23,993,167 ($24,171,903 in 2014-2015) has been recorded. This liability estimate has been determined after the sites are assessed and is based on scientific/engineering contractors reviewing the results of site assessments, and proposing possible remediation solutions.

In 2016, a statistical model was developed to estimate the liability for unassessed sites based on historical costs incurred for contaminated sites with similar functions. As a result, there are 100 unassessed sites where a liability estimate of $13,243,359 has been recorded prospectively in 2016. This estimate will be refined in future years as sites are assessed and estimated costs are revised.

These two estimates combined represents management’s best estimate of the amount required to complete the remediation of the sites to the current minimum standard for its use prior to contamination, based on information available at the financial statement date. A net present value technique has been used for sites where the cash flows are expected to occur over extended future periods.

Of the remaining 288 sites, 240 sites were closed, as they were either remediated or assessed and found not to be contaminated. 48 sites are not considered a priority for action because information indicates there is likely no significant environmental impact or human health threats and there is likely no need for action unless new information becomes available indicating greater concerns, in which case, the site will be re-examined.

The following table presents the total estimated amounts of these liabilities by nature and source, the associated expected recoveries and the total undiscounted future expenditures as at March 31, 2016, and March 31, 2015. When the liability estimate is based on a future cash requirement, the amount is adjusted for inflation using a forecast CPI rate of 2%. Inflation is included in the undiscounted amount. The Government of Canada lending rate applicable to loans with similar terms to maturity has been used to discount the estimated future expenditures. The March 2016 rates range from 0.62% for 2 year term to 2.13% for a 25 or greater year term.

Environmental liability

Nature and Source
(in thousands of dollars)

Number of Sites 2016Estimated Liability 2016Estimated Total Undiscounted Expenditures 2016Number of Sites 2015Estimated Liability 2015Estimated Total Undiscounted Expenditures 2015
Radioactive Material(1) - - - - - -
Former Mineral Exploration Sites(2) 4 3,801,748 3,874,055 4 3,756,876 3,832,897
Military & Former Military Sites(3) 1 147,200 150,000 - - -
Fuel Related Pratices(4) 23 3,619,268 3,688,104 19 2,281,895  2,328,069
Landfill/Waste Sites(5) 102 13,234,040 13,485,743 23 6,548,508  6,681,017
Engineered Asset/Air & Land Transportation(6) 2 360,908 367,772 3 444,932 453,935
Marine Facilities/Aquatic Sites(7) 5 1,235,971 1,259,478 3 157,365 160,549
Parks & Protected Areas(8) - - - - - -
Office/Commercial/Industry Operations(9) 34 12,440,928 12,677,546 21 9,139,523 9,324,461
Other(10) 16 2,396,463 2,442,042 9 1,842,804 1,880,093
Totals 187 37,236,526 37,944,740 82 24,171,903 24,661,021

(1) Contamination associated with former nuclear operations, e.g. low-level radioactive waste, radioactive isotopes.

(2) Contamination associated with former mine activities, e.g. heavy metals, petroleum hydrocarbons, etc. Sites often have multiple sources of contamination.

(3) Contamination associated with the operations of military and former military sites where activities such as fuel handling and storage activities, waste sites, metals/PCB-based paint used on buildings resulted in former or accidental contamination, e.g. petroleum hydrocarbons, polychlorinated biphenyls (PCBs), heavy metals. Sites often have multiple sources of contamination.

(4) Contamination primarily associated with fuel storage and handling, e.g. accidental spills related to fuel storage tanks or former fuel handling practices, e.g. petroleum hydrocarbons, polyaromatic hydrocarbons as well as benzene, toluene, ethylbenzene, and xylenes (BTEX).

(5) Contamination associated with former landfill/waste site or leaching from materials deposited in the landfill/waste site, e.g. metals, petroleum hydrocarbons, polyaromatic hydrocarbons, BTEX, other organic contaminants, etc.

(6) Contamination associated with the operations of engineered assets such as airports, railways and roads where activities such as, fuel storage/handling, waste sites, firefighting training facilities and chemical storage areas resulted in former or accidental contamination, e.g. metals, petroleum hydrocarbons, polyaromatic hydrocarbons, and other organic contaminants. Sites often have multiple sources of contamination.

(7) Contamination associated with the operations of marine assets, e.g. port facilities, harbours, navigation systems, light stations, hydrometric, where activities such as fuel storage/handling, use of metal based paint (e.g. on light stations) resulted in former or accidental contamination, e.g. metals, petroleum hydrocarbons, polyaromatic hydrocarbons and other organic contaminants. Sites often have multiple sources of contamination.

(8) Contamination associated with the operations and maintenance of parks and protected areas where activities such as fuel storage/handling, waste sites and use of metal based paint resulted in former or accidental contamination, e.g. metals, petroleum hydrocarbons, polyaromatic hydrocarbons, PCBs and other organic contaminants. Sites often have multiple sources of contamination.

(9) Contamination associated with the operations of the office/commercial/industrial facilities where activities such as fuel storage/handling. Waste sites and use of metal-based paint resulted in former or accidental contamination, e.g. metals, petroleum hydrocarbons, polyaromatic hydrocarbons, BTEX, etc. Sites often have multiple sources of contamination.

(10) Contamination from other sources, e.g. use of pesticides, herbicides, fertilizers at agricultural sites; use of polychlorinated biphenyls (PCB), firefighting training areas, firing ranges and training facilities, etc.

8. Due from Consolidated Revenue Fund

The Agency operates within the Consolidated Revenue Fund (CRF) which is administered by the Receiver General for Canada. All cash received by the Agency is deposited to the CRF and all cash disbursements made by the Agency are paid from the CRF.

The following table presents the details of Due from the Consolidated Revenue Fund:

Due from Consolidated Revenue Fund
(in thousands of dollars)20162015
General operations account 160,540 99,366
Other liabilities 4,239 4,799
Due from Consolidated Revenue Fund 164,779 104,165

Other liabilities represent money received from external organizations which must be used for the purposes for which they are received.

9. Accounts receivable and advances

The following table presents details of the Agency's accounts receivable and advances balances:

Accounts receivable and advances
(in thousands of dollars)20162015
Receivables - Other government departments and agencies 5,352 399
Receivables - External parties 9,104 9,085
Employee advances 273 217
Subtotal 14,729 9,701
Allowance for doubtful accounts on receivables from external parties (1,680) (1,577)
Total accounts receivable and advances 13,079 8,124

10. Inventory

The following table presents details of the Agency's inventory of consumable supplies, measured at cost using the average cost method:

Inventory
(in thousands of dollars)20162015
Stationery, office and miscellaneous supplies 2,329 1,768
Equipment, materials and supplies 1,664 1,539
Top soil, sand, gravel and other crude material 1,238 1,210
Safety equipment 896 895
Fuel and other petroleum products 800 1,031
Fabricated wood and metal products 707 839
Construction material and supplies 441 388
Printed books, publications and maps 352 407
Uniforms and protective clothing 297 262
Total inventory 8,724 8,339

The cost of consumed inventory recognized as an expense in the Statement of Operations and Net Financial Position is $41,888,503 in 2015-2016 ($38,361,607 in 2014-2015).

11. Tangible capital assets

Tangible capital assets
(in thousands of dollars)Cost
Opening BalanceAcquisitionsAdjustments(1)Disposals and Write-offsClosing Balance
Tangible capital assets
Land 178,389  1,362  4,371  19 184,103 
Buildings, fortifications and leasehold improvements 940,123 19,875 23,954 8,853 975,099
Improved grounds 667,129 4,391 257  3,857 667,920
Roads 1,248,828 59,399 17,393 8,174 1,317,446
Bridges 368,219 20,042 12,335 5,004 395,592
Canal and marine facilities 589,874 15,638 21,126 598 626,040
Utilities 252,840 6,809 8,428 900 267,177
Vehicles and equipment 142,476 18,230 7,964  4,905 163,765
Exhibits 103,828 981 960  2,225 103,544
4,491,706 146,727 96,788 34,535 4,700,686
Assets under construction
Buildings, fortifications and leasehold improvements 38,264   43,524 (25,068)  1,313  55,407
Improved grounds 10,105 19,756  (6,594) 254 23,013
Roads 54,669 138,152 (13,022) 23 179,776
Bridges 20,199 43,798 (5,547) 52 58,398
Canal and marine facilities 33,266 37,153 (20,547) 13 49,859
Utilities 15,226 19,546 (7,628) 3 27,141
Vehicles and equipment 10,114 7,551 (7,148) 83 10,434
Exhibits 1,540 2,423 (1,354) 197 2,412
183,383 311,903 (86,908) 1,938 406,440
Leased tangible capital assets
Buildings, fortifications and leasehold improvements 20,968 - - - 20,968
Vehicles and equipment 204 - - - 204
21,172 - - - 21,172
Total 4,696,261 458,630 9,880 36,473 5,128,298
(1) Adjustments include assets under construction of $88,814,813 that were transferred to the other categories upon completion of the assets.
Accumulated Amortization
(in thousands of dollars)Opening BalanceAmortizationAdjustmentsDisposals and Write-offsClosing BalanceNet Book Value
20162015
Tangible capital assets
Land - - - - - 184,103 178,389
Buildings, fortifications and leasehold improvements 630,038 19,757 582 7,490 642,887  332,212 310,085
Improved grounds 572,210  7,835 (574) 1,875 577,596 90,324 94,919
Roads 776,539 25,043 518 6,781 795,319 522,127 472,289
Bridges 124,759 7,264 1,187 3,273 129,937 265,655 243,460 
Canal and marine facilities 332,699 7,124 (808) 388 338,627 287,413 257,175
Utilities 127,923 5,736 7 802 132,864 134,313 124,917
Vehicles and equipment 96,358 9,106 234 4,593 101,105 62,660 46,118
Exhibits 89,622 2,678 - 1,794 90,506 13,038 14,206
2,750,148 84,543 1,146 26,996 2,808,841 1,891,845 1,741,558
Assets under construction
Buildings, fortifications and leasehold improvements 55,407 38,264 
Improved grounds 23,013 10,105
Roads 179,776 54,669
Bridges 58,398 20,199
Canal and marine facilities 49,859 33,266 
Utilities 27,141 15,226
Vehicles and equipment 10,434 10,114
Exhibits 2,412 1,540
406,440 183,383
Leased tangible capital assets
Buildings, fortifications and leasehold improvements 6,131 695 - - 6,826 14,142 14,837
Vehicles and equipment 204 - - - 204 - -
6,335 695 - - 7,030 14,142 14,837
Total 2,756,483 85,238 1,146 26,996 2,815,871 2,312,427 1,939,778

During 2015-2016, the Agency transferred a vehicle with a net book value of $24,058 from Treasury Board of Canada Secretariat, as well as, land, buildings and works with a net book value of $5,364,485 from Transport Canada. These transfers are included in the adjustments column.

12. Collections and Archaeological Sites

Core to the Agency's mandate to protect and present nationally significant examples of our cultural heritage is the management of collections and archaeological sites. Although not capitalized like other cultural assets such as buildings or fortifications, these treasures have inestimable cultural value.

(a) Collections
The Agency manages collections that are made up of archaeological and historical objects.

The collection of archaeological objects includes specimens and records that represent a cross-section of human habitation and activities. These holdings consist of a range of functional groups of artifacts that represent domestic activities to industrial processes and includes tools, ships' fittings, as well as soil and botanical samples.

The collection of historic objects dates from the 10th century to the present day. They encompass ethnographic material, civilian, military and fur trade items, furniture and furnishings, tools and documents.

In addition, the Agency manages a collection of reproductions including period costumes, tools and furniture that have been copied from original objects or made based on historical data.

(b) Archaeological sites
An archaeological site encompasses surface, subsurface, or submerged remains of human activity. Archaeologists define a site by identifying the different activities that were conducted within an area. There are many archaeological sites identified within Parks Canada's 168 national historic sites, 46 national parks, and 4 marine conservation areas. The types of sites vary greatly, from Indigenous villages, hunting camps, observation areas, and animal processing areas, to European fur trade and military posts, battlefields, shipwrecks, homesteads, and transportation and industrial sites.

13. Net financial position

A portion of the Net financial position is used for a specific purpose. Related revenues and expenses are included in the Statement of Operations and Net Financial Position.

The New Parks and Historic Sites Account was established pursuant to the Parks Canada Agency Act. Funds are provided to the New Parks and Historic Sites Account by voted authorities, proceeds from the sale of lands and buildings that are surplus to operational requirements and all general donations. Furthermore, the Minister of Finance may, on the request of the Minister of the Environment, authorize the making of advances of up to $10 million to the New Parks and Historic Sites Account. All amounts received remain in this account until eligible capital expenditures are made for the purpose of establishing or developing new parks or historic sites and heritage areas, in compliance with the terms and conditions set out in the Parks Canada Agency Act and related Treasury Board directives. The balance of the account is to be used to acquire lands or property required to establish any national park, national historic site or other protected heritage area that has not yet attained full operation status, and to make any related contributions. Activity in the account is as follows:

Net financial position
(in thousands of dollars)20162015
Restricted - New Parks and Historic Sites Account
Restricted - Available at beginning of year 13,708 10,336
Reclassification of donated funds  1,375
Receipts:
Parliamentary authorities 500 3,500
Proceeds on disposal of tangible capital assets 1,521 924
Donations 4 26
2,025 4,450
Expenditures:
Capital expenditures 2,389  1,078
2,389  1,078
Restricted - Available at end of year 14,718  13,708
Unrestricted 2,254,656  1,898,725
Net financial position at year end 2,269,374 1,912,433

14. Contingent Liabilities

Contingent liabilities arise in the normal course of operations and their ultimate disposition is unknown.

Claims have been made against the Agency in the normal course of operations. These claims include items with pleading amounts and other for which no amount is specified. While the total amount claimed in these actions is significant, their outcomes are not determinable. Claims and litigations for which the outcome is not determinable and a reasonable estimate can be made by management amount to approximately $42,790,000 at March 31, 2016 ($24,260,000 in 2014-2015).

15. Contractual obligations

The nature of the Agency's activities can result in some large multi-year contracts and obligations whereby the Agency will be obligated to make future payments in order to carry out its transfer payment programs or when the services/goods are received. Significant contractual obligations that can be reasonably estimated are summarized as follows:

Contractual obligations
(in thousands of dollars)2016-172017-182018-192019-20202020-21
and thereafter
Total
Operating leases 1,308 646 547 239 1,170 3,910
Purchases and transfer payments 290,125 126,150 219,028 5,657 718 641,678
Total 291,433 126,796 219,575 5,896 1,888 645,588

16. Related party transactions

The Agency is related as a result of common ownership to all government departments, agencies, and Crown corporations. The Agency enters into transactions with these entities in the normal course of business and on normal trade terms. During the year, the Agency received common services which were obtained without charge from other government departments as disclosed below.

a) Common services provided without charge by other government departments
During the year, the Agency received services without charge from certain common service organizations, related to accommodation, legal services, the employer's contribution to the health and dental insurance plans and workers' compensation coverage. These services provided without charge have been recorded in the Agency's Statement of Operations and Net Financial Position as follows:

Common services provided without charge by other government departments
(in thousands of dollars)20162015
Employer's contribution to the health and dental insurance plans 27,260  24,004
Accommodation 17,925 18,333
Legal services 1,106 882
Workers' compensation 76 53
Total 46,367 43,272

The Government has centralized some of its administrative activities for efficiency, cost-effectiveness purposes and economic delivery of programs to the public. As a result, the Government uses central agencies and common service organizations so that one department performs services for all other departments and agencies without charge. The costs of these services, such as the payroll and cheque issuance services provided by Public Works and Government Services Canada as well as the email, network and data centre services and the workplace technology devices provided by Shared Services Canada are not included in the Statement of Operations and Net Financial Position.

(b) Other transactions with related parties

Other transactions with related parties
(in thousands of dollars)20162015
Accounts receivable - Other government departments and agencies 5,352 1,588
Accounts payable - Other government departments and agencies 31,736 8,237
Expenses - Other Government departments and agencies 221,699 99,664
Revenues - Other Government departments and agencies 576 678

Expenses and revenues disclosed in (b) exclude common services provided without charge, which are already disclosed in (a).

17. Parliamentary authorities

The Agency receives most of its funding through annual parliamentary authorities. Items recognized in the Statement of Operations and Net Financial Position and the Statement of Financial Position in one year may be funded through parliamentary authorities in prior, current or future years. Accordingly, the Agency 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:

(a) Reconciliation of net cost of operations to current year authorities used

Reconciliation of net cost of operations to current year authorities used
(in thousands of dollars)20162015
Net cost of operations before government funding and transfers 587,344  542,516 
Revenues received pursuant to section 20 of the Parks Canada Agency Act 139,392 125,957
Adjustments for items affecting net cost of operations but not affecting authorities:
Amortization of tangible capital assets (85,238) (81,684)
Services provided without charge by other government departments (46,367) (43,272)
Net loss on disposal of tangible capital assets including adjustments (5,176) (2,292)
Increase in vacation pay and compensatory leave (472) (40)
Decrease in employee future benefits 20 2,194
Increase in environmental liability (13,065) (3,411)
Decrease (increase) in accrued liabilities not charged to authorities 323 (297)
Bad debt expense (210) (963)
Refund of prior years' expenditures 1,328 1,484
Increase (decrease) in New Parks and Historic Sites Account (365) 3,372
Other (285) (107)
Total items affecting net cost of operations but not affecting authorities (149,507) (125,016)
Adjustments for items not affecting net cost of operations but affecting authorities:
Acquisitions and improvements to tangible capital assets 458,630 168,889
Proceeds from disposal of tangible capital assets (956)  (1,342)
Decrease in lease obligation for tangible capital assets 334 313
Increase in inventory 385 53
Increase (decrease) in prepaid expenses 397 45
Transition payments for implementing salary payments in arrears 111 10,385
Total items not affecting net cost of operations but affecting authorities 458,901 178,343
Current year authorities used 1,036,130 721,800


(b) Authorities provided and used

Authorities provided and used
(in thousands of dollars)20162015
Authorities provided:
Vote 1 - Program expenditures 986,023 652,635
Vote 5 - New Parks and Historic Sites Account 500 3,500
Statutory amounts:
Expenditures equivalent to revenue received pursuant to section 20 of the Parks Canada Agency Act 163,136 128,678
Contributions to employee benefit plans 50,198 47,239
Total authorities 1,199,857 832,052
Less:
Authorities available for future years 160,995 66,271
Lapsed authorities 2,732 43,981
Current year authorities used 1,036,130 721,800

18. Transfer of the transition payments for implementing salary payments in arrears

The Government of Canada implemented salary payments in arrears in 2014-15. As a result, a one-time payment was issued to employees and will be recovered from them in the future. The transition to salary payments in arrears forms part of the transformation initiative that replaces the pay system and also streamlines and modernizes the pay processes. This change to the pay system had no impact on the expenses of the Agency. However, it did result in the use of additional spending authorities by the Agency. Prior to year end, the transition payments for implementing salary payments in arrears were transferred to a central account administered by Public Works and Government Services Canada, who is responsible for the administration of the Government pay system.

19. Segmented Information

Presentation by segment is based on the Agency's program alignment architecture. The presentation by segment is based on the same accounting policies as described in the Summary of significant accounting policies in Note 2. The following table presents the expenses incurred and revenues generated for the main programs, by major object of expenses and by major type of revenues. The segment results for the period are as follows:

Segmented Information
(in thousands of dollars)Heritage Places EstablishmentHeritage Places ConservationHeritage Places Promotion and Public SupportVisitor ExperienceHeritage Canals, Highways and Townsite ManagementInternal Services20162015
Salaries and employee benefits 4,033     80,155  30,049 141,563 21,962 105,033 382,795 356,109
Operating expenses
Amortization of tangible capital assets 12 6,827 378 45,659 28,744 3,618 85,238 81,684
Professional and special services 1,131 31,020 2,608 21,566 7,175 15,356 78,856 57,573
Utilities, materials and supplies 69 9,475 1,590 30,788 12,581 8,029 62,532 59,530
Rentals 36 10,278 700 4,934 144 3,893 19,985 18,048
Repairs and maintenance 1 1,870 42 10,481 5,531 938 18,863 21,432
Accommodation 182 3,739 1,362 6,780 1,103 4,760 17,926 18,333
Transportation and communications 372 4,954 2,151 3,116 420 5,198 16,211 14,353
Payments in lieu of taxes 140 2,863 1,043 5,193 845 3,645 13,729 14,331
Information 55 187 3,302 3,665 25 701 7,935 7,838
Miscellaneous expenses 1,153 620 28 4,182 483 1,111 7,577 7,243
Total Operating expenses 3,151 71,833 13,204 136,364 57,051 47,249 328,852 300,365
Grants and contributions 9,864 2,778 1,951 484 12 - 15,089 11,999
Total expenses 17,048 154,766 45,204 278,411 79,025 152,282 726,736 668,473
Revenues
Entrance fees - - - 69,737 - - 69,737 61,921
Recreational fees - - - 29,128 - - 29,128 26,097
Rentals and concessions - 524 - 13,778 3,023 8,227 25,552 25,653
Other operating revenues - 1,044 189 3,386 2,909 932 8,460 6,288
Townsites revenues - - - - 3,345 - 3,345 2,880
Staff housing - - - - - 3,253 3,253 3,190
Revenues earned on behalf of Government - - - - - (83) (83) (72)
Total revenues - 1,568 189 116,029 9,277 12,329 139,392 125,957
Net cost from continuing operations 17,048 153,198 45,015 162,382 69,748 139,953 587,344 542,516

 

Annex

Annex to the Statement of Management Responsibility including Internal Control over Financial Reporting - Fiscal Year 2015-16