Quarterly financial report for the quarter ended June 30, 2014

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 Secretariat. This report should be read in conjunction with the Main Estimates, the Supplementary Estimates and the previous Quarterly Financial Reports.

A summary description of the Parks Canada Agency's programs can be found in Part II of the Main Estimates.

This quarterly financial report has not been subject to an external audit. However, it has been reviewed by the Agency Audit Committee.

Basis of Presentation

The quarterly financial report has been prepared using an expenditure basis of accounting (modified cash 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 2014-2015 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 funds 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.

In accordance with Treasury Board accounting policies, the Agency uses the full accrual method of accounting to prepare and present its annual departmental financial statements that are part of the department performance reporting process. However, the spending authorities voted by Parliament remain on an expenditure basis.

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

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

Chart of budgetary authorities and expenditures for the first quarter of 2014-15 and 2013-14 ending June 30

The above chart outlines the total authorities available within the Agency as of June 30 of each year, the year to date expenditures as well as the expenditures during the quarter. Further analysis is provided below.

Significant Changes to Statement of Authorities

Authorities available for use:

This first quarterly report, ending June 30, 2014, reflects the authorities that were approved for this period. For the period ending June 30, 2014, the funding available for use includes the 2014-2015 Main Estimates and the 2013-2014 unused spending authority. The authorities at the same time last year consisted of the 2013-2014 Main Estimates and the 2012-2013 unused spending authority.

As per the Statement of Authorities Table, at June 30, 2014, Parks Canada's authorities "total available for use for the year ending March 31, 2015" are $6.2 million lower ($743.7M – $737.5M) when compared to the same quarter of the previous year.

These changes in Authorities are a result of increases totaling $40.7 million which are offset by decreases totaling $46.9 million. The increases are mainly attributable to a $19.6 million to develop and operate Rouge National Urban Park, a $6.3 million for providing a grant to the Trans-Canada Trail Foundation (TCTF) to match new non-federal  funding raised by the TCTF to complete the Trans Canada Trail, a $5.0 million announced in Budget 2013 for increased investments in dams and locks along the Trent-Severn Waterway and in historic canals, a $2.7 million for the continued implementation and development of new national parks and marine conservation areas and a number of other small increases amounting to $7.1 million. The decreases are mainly attributable to a decrease of $21.6 million from the unused 2013-2014 spending authority1, a $7.5 million decrease for savings identified as part of the Budget 2012 Spending Review, a $5 million decrease as a result of the completion of work related to the twinning of the Trans-Canada Highway and a number of small decreases amounting to $10.2 million.

Authorities used during the quarter:

In the first quarter of 2014-2015, total budgetary expenditures were $122.3 million compared to $102.0 million reported in the same period of 2013-2014, indicating a $20.3 million increase for this period.

Authorities used in Vote 1 – Program expenditures during the first quarter of 2014-2015 increased by $12.9 million compared to the same quarter last year. This variance is mostly due to a $10 million for the one-time transition accounting treatment for implementing salary payment in arrears by the Government of Canada. In addition, Parks Canada spent $4.8 million more in seasonal employee's compared to same time last year. 

Statutory Authorities used during the first quarter of 2014-2015 show a $0.5 million decrease in Contributions to Employee Benefit Plans and an increase of $8.0 million in expenditures equivalent to revenues. The latter is related to the timing delays in the recording of revenues from last year which was due to the implementation of Parks Canada's new Campground Reservation System. The first quarter of 2014-2015 revenues are comparable to the 2012-2013 level for the same period.

Significant Changes to Budgetary Expenditures by Standard Object

Expended:
As per the Budgetary Expenditures by Standard Object Table, the total expended in the first quarter ending June 30, 2014 is $20.3 million higher compared to the previous year, from $102.0 million to $122.3 million. This represents a twenty-percent increase of recorded expenditures compared to the same period in 2013-2014. This increase can be explained by the following:

Personnel expenditures have increased in the first quarter by $4.6 million compared to the previous year. This is attributable to a $4.8 million increase in seasonal employees compared to same time last year which is partially offset by $0.7 million in lower costs for non-recurring salary benefits.

Expenditures related to Other Subsidies and Payments have increased in the first quarter by $12.4 million compared to the previous year. The increase is mainly due to a one-time transition accounting treatment of $10.0 million for implementing salary payment in arrears by the Government of Canada, and $2.0 million related to the establishment of Nááts'ihch'oh National Park Reserve located in the South Nahanni River watershed in the Northwest Territories.

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 first quarter ending June 30, 2014 is $6.2 million lower compared to the previous year, from $743.7 million to $737.5 million. This is the net result of increases and decreases detailed in the above section but overall is less than a 1-percent decrease in planned expenditures as compared to the same period in 2013-2014.          

Risks and Uncertainties

Parks Canada Respendable revenue represents 15 percent of the total Parks Canada spending authorities. 19 percent of these revenues originate from Real Property and Business Fees which are impacted by economic fluctuations, and 62 percent of revenues originate from entrance and camping fees which are further impacted by competition from other parks and cultural attractions, and weather conditions.    

Parks Canada's built assets continue to deteriorate with the result that almost half of the Agency's built assets are classified as being in poor to very poor condition. Under the 2014 federal budget Parks Canada has obtained an allocation of $391 million over five years to make improvements to highways, bridges and dams located in national parks and along our historic canals. Based on an independent review of Parks Canada assets, the Agency has started a five year program for the targeted investments in priority assets in the portfolio to address health and safety and structural integrity.

The 2014-2015 has been a very active year for forest fires in western and northern Canada, and in particular in Wood Buffalo National Park. The weather forecasts suggest that these areas will continue to be hotter and drier than normal for the remainder of the fire season, which is approximately 6 to 8 more weeks.

Significant Changes in Relation to Operations, Personnel and Programs

The Parks Canada's Gatineau Office was relocated to a new building at 30 Victoria Street, Gatineau. As part of the relocation some corporate services (i.e. accommodation and facilities management services, stationery and forms management, disposal of Crown assets, and mail room operations) previously provided by the Department of Canadian Heritage (PCH) under a Letter of Agreement are now internally provided by the Office of the Chief Information and Real Property Officer Branch. In addition the Departmental Security Office has also been expanded to deliver security services including building access card issuance and building security management.

Budget 2012 Implementation

All Parks Canada Agency savings measures related to Budget 2012 have been implemented. 

Approval by Senior Officials

Approved by:

Alan Latourelle
Chief Executive Officer, Parks Canada
August 22, 2014
Maria Stevens
Chief Financial Officer, Parks Canada
August 22, 2014



Statement of Authorities (Unaudited)
(in thousands of dollars) Fiscal Year 2014-2015
Total available for use for the year ending March 31, 2015* Used during the quarter ended June 30, 2014 Year to date used at quarter end
- Vote 1 - Program expenditures 576,430 83,041 83,041
- Vote 5 - Payments to the New Parks and Historic Sites Account 3,500 0 0
Budgetary statutory authorities  
- Contributions to Employee Benefit Plans 46,584 11,646 11,646
- Expenditures equivalent to revenues resulting from the conduct of operations pursuant to section 20 of the Parks Canada Agency Act 111,000 27,644 27,644
Total Budgetary Authorities 737,514 122,331 122,331
* Includes only authorities available for use and granted by Parliament at quarter-end


Statement of Authorities (Unaudited)
(in thousands of dollars) Fiscal Year 2013-2014
Total available for use for the year ending March 31, 2014* Used during the quarter ended
June 30, 2013
Year to date used at quarter end
- Vote 20 - Program expenditures 583,600 70,162 70,162
- Vote 25 - Payments to the New Parks and Historic Sites Account 500 0 0
Budgetary statutory authorities  
- Contributions to Employee Benefit Plans 48,593 12,148 12,148
- Expenditures equivalent to revenues resulting from the conduct of operations pursuant to section 20 of the Parks Canada Agency Act 111,000 19,690 19,690
Total Budgetary Authorities 743,693 102,000 102,000
* Includes only authorities available for use and granted by Parliament at quarter-end


Budgetary Expenditures by Standard Object (Unaudited)
(in thousands of dollars) Fiscal Year 2014-2015
Planned expenditures for the year ending March 31, 2015* Expended during the quarter ended June 30, 2014 Year to date used at quarter end
Expenditures:
Personnel 328,909 81,170 81,170
Transportation and communications 19,030 2,490 2,490
Information 13,945 1,018 1,018
Professional and special services 134,874 6,264 6,264
Rentals 21,418 2,481 2,481
Repair and maintenance 66,567 3,703 3,703
Utilities, materials and supplies 49,348 5,767 5,767
Acquisition of land, buildings and works 37,806 1,660 1,660
Acquisition of machinery and equipment 25,370 2,906 2,906
Transfer payments 20,638 561 561
Other subsidies and payments 19,609 14,311 14,311
Total budgetary expenditures 737,514 122,331 122,331
* Includes only authorities available for use and granted by Parliament at quarter-end


Budgetary Expenditures by Standard Object (Unaudited)
(in thousands of dollars) Fiscal Year 2013-2014
Planned expenditures for the year ending March 31, 2014* Expended during the quarter ended June 30, 2013 Year to date used at quarter end
Expenditures:
Personnel 327,860 76,613 76,613
Transportation and communications 19,000 2,404 2,404
Information 13,009 1,206 1,206
Professional and special services 122,122 6,707 6,707
Rentals 19,815 1,819 1,819
Repair and maintenance 97,080 2,655 2,655
Utilities, materials and supplies 47,655 5,727 5,727
Acquisition of land, buildings and works 21,514 210 210
Acquisition of machinery and equipment 31,857 1,941 1,941
Transfer payments 10,093 820 820
Other subsidies and payments 33,688 1,897 1,897
Total budgetary expenditures 743,693 102,000 102,000
* Includes only authorities available for use and granted by Parliament at quarter-end

1 The Parks Canada Agency operates on the basis of a two-year appropriation, whereby any surplus amount reported at the end of a fiscal year is carried forward and is available to be used the following year. However, any portion of the unspent funds not spend at the end of the two years is lost. This process differs from that of other government departments as they can only claim five percent of their operating vote and twenty percent of their capital vote through the carry forward process each year.