Quarterly financial report for the quarter ended June 30, 2015 (Revised)

Erratum

Date: September 24, 2015
Location: Statement of Authorities (unaudited), Year to date used at quarter end of Fiscal Year 2015-2016, Vote 1 ‐ Program expenditures.
Revision: "Vote 1 ‐ Program expenditures $95,415 thousands" replaces "Vote 1 – Program expenditures $94,415 thousands".
Rationale for the revision: A transcription error occurred during the HTML conversion process.

Introduction

This quarterly 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. 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 and a detailed description in Part III – Report on Plans and Priorities.

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

This quarterly 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 2015-2016 fiscal year. This quarterly 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.

When Parliament is dissolved for the purposes of a general election, section 30 of the Financial Administration Act authorizes the Governor General, under certain conditions, to issue a special warrant authorizing the Government to withdraw funds from the Consolidated Revenue Fund. A special warrant is deemed to be an appropriation for the fiscal year in which it is issued.

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

Quarterly financial report for the quarter ended June 30, 2015

The above chart outlines the total authorities available within the Agency as of June 30 of each year as well as the expenditures during the first quarter. Significant changes to authorities and to expenditure patterns are outlined in the following sections.

Statement of Authorities (Table 1)

Authorities available for use:
This quarterly report reflects the funding available for use from the 2015-2016 Main Estimates, the 2014-2015 unused spending authority and the 2015-2016 Supplementary Estimates A. The authorities at the same time last year consisted of the 2014-2015 Main Estimates and the 2013-2014 unused spending authority 1.

As per Table 1 (Statement of Authorities), at June 30, 2015, Parks Canada's authorities "total available for use for the year ending March 31, 2016" are $420.2 million or 57-percent higher when compared to the same quarter of the previous year (from $737.5M to $1,157.7M). This net increase is attributable mainly to the following items:

  • $350.4 million increase for new funding for Federal Infrastructure Investments;
  • $120.6 million increase for improvements to highways, bridges and dams located in national parks and along historic canals (Economic Action Plan 2014);
  • $17.7 million increase in Budgetary statutory authorities related to expenditures equivalent to revenues; and
  • $6.5 million increase related to the establishment of new national parks and national marine conservation areas.

Offset by:

  • $69.5 million decrease for the 2014-2015 unused spending authority; and
  • $5.5 million net decrease from other adjustments.

Authorities used during the quarter:
In the first quarter of 2015-2016, total net budgetary expenditures were $140.1 million compared to $122.3 million reported for the same period in 2014-2015, resulting in an increase of $17.8 million or 15-percent. The increase is mainly due to the new funding for Federal Infrastructure Investments as well as funding for improvements to highways, bridges and dams located in national parks and along historic canals (Economic Action Plan 2014). This is partially offset by the one-time transition accounting treatment of $10 million for implementing salary payment in arrears by the Government of Canada made in the first quarter of 2014-2015.

Budgetary Expenditures by Standard Object (Table 2)

Planned by Standard Object
Total planned expenditures in the first quarter of 2015-2016 are $420.2 million higher compared to the previous year. This variance is due to the planned spending for both Acquisition of land buildings and works2 ($300.1 million) and to Personnel ($46.1 million). These increases are consistent with the Agency’s Infrastructure Investments Programs.

Expended by Standard Object
As per Table 2 (Budgetary Expenditures by Standard Object), the total expended in the first quarter ending June 30, 2015 is $17.8 million (15%) higher compared to the previous year. The overall variance can be explained by the following:

Professional and special services expenditures have increased by $6.4 million and the Acquisition of land buildings and works expenditures have increased by $14.8 million compared to the same quarter last year. This is mainly due to the increase in funding for the Agency's Infrastructure Investments Programs.

Transfer payments expenditures have increased by $2.9 million compared to the same quarter last year. This is mainly due to a new grant to the Quikiqtani Inuit Association to support the Inuit entrepreneurs as part of the establishment of the Qausuittuq National Park of Canada in Bathurst, Nunavut.

Other subsidies and payments have decreased by $13.5 million compared to the same quarter last year. This is mainly due to the one-time transition accounting treatment for implementing salary payment in arrears by the Government of Canada done in the first quarter of 2014-2015 and to a one-time expense related to the establishment of Nááts'ihch'oh National Park Reserve also paid in the first quarter of 2014-2015.

All other expenditures are consistent with prior year spending trends.

Risks and Uncertainties

Parks Canada's objectives and Strategic Outcome are influenced by various internal and external factors. The Agency undertakes a risk assessment every year to support decision-making related to priority setting and resource allocation. The risk assessment identifies key risks that have the greatest impact on the Agency's ability to achieve its Strategic Outcome and expected results. The Agency has identified Asset Condition, Competitive Position, Natural Disasters and External Development Forces as its key corporate risks for 2015-20163. The following are examples of some of the mitigation strategies that Parks Canada is undertaking in order to address these risks:

  • investing resources to address the backlog of deferred work and restore the condition of built heritage, visitor experience and townsite assets, as well as highway and canal infrastructure;
  • targeting investments in demand-driven opportunities for visitors (e.g. diversified accommodations, recreational activities and new media technologies in support of on-site learning); and
  • continuing to undertake priority natural resource conservation and restoration actions, including recovery of priority species at risk and their habitat, in order to build ecosystem resilience.

Risks to the successful delivery of all infrastructure investments in the current fiscal year include: the ability to recruit employees on a timely basis to build capacity both within the Parks Canada Agency and Public Works and Government Services Canada; and industry capacity and interest to undertake the rehabilitation projects associated with increase in the Government's investment in infrastructure.

Significant Changes in Relation to Operations, Personnel and Programs

On July 3rd, 2015, the Prime Minister announced that Daniel Watson will be appointed Chief Executive Officer of the Parks Canada Agency, effective August 7, 2015.

On November 24th, 2014, the Prime Minister announced the largest infrastructure investment in Parks Canada sites across Canada in the Agency's 104-year history. This investment of $2.6 billion will support infrastructure improvements to heritage, visitor, waterway and highway assets located within national historic sites, national parks, and national marine conservation areas across Canada. This is part of a new $5.8 billion federal infrastructure program, and represents an investment in the Agency of $350.4 million in 2015-2016.

In addition to these new investments, Parks Canada Agency's budget has also increased by $120.6 million for improvements to highways, bridges and dams located in national parks and along historic canals, as announced in Budget 2014.

To support the planning, reporting and project delivery of these new investments, the Agency has created two new organizations: Investment Planning and Reporting Directorate, and Asset Management and Project Delivery Branch.

Approval by Senior Officials

Approved by:

Original signed by
Daniel Watson
Chief Executive Officer, Parks Canada
Original signed by
Ghislaine Lalonde
Acting Chief Financial Officer, Parks Canada


Gatineau, Canada
August 18, 2015


Statement of Authorities - Table 1 (Unaudited)
(in thousands of dollars) Fiscal Year 2015-2016
Total available for use for the year ending March 31, 2016* Used during the quarter ended June 30, 2015 Year to date used at quarter end
- Vote 1 - Program expenditures 976,161 95,415 95,415
- Vote 5 - Payments to the New Parks and Historic Sites Account 500 0 0
Budgetary statutory authorities
- Contributions to Employee Benefit Plans 52,318 11,909 11,909
- Expenditures equivalent to revenues resulting from the conduct of operations pursuant to section 20 of the Parks Canada Agency Act 128,678 32,730 32,730
Total Budgetary Authorities 1,157,657 140,054 140,054
* Includes only authorities available for use and granted by Parliament at quarter-end


Statement of Authorities - Table 1 (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


Budgetary Expenditures by Standard Object - Table 2 (Unaudited)
(in thousands of dollars) Fiscal Year 2015-2016
Planned expenditures for the year ending March 31, 2016* Expended during the quarter ended June 30, 2015 Year to date used at quarter end
Expenditures:
Personnel 374,973 88,413 88,413
Transportation and communications 18,655 2,655 2,655
Information 10,341 1,064 1,064
Professional and special services 155,764 12,659 12,659
Rentals 23,134 2,277 2,277
Repair and maintenance 102,420 2,921 2,921
Utilities, materials and supplies 57,393 5,976 5,976
Acquisition of land, buildings and works 337,931 16,422 16,422
Acquisition of machinery and equipment 41,178 3,481 3,481
Transfer payments 19,058 3,415 3,415
Other subsidies and payments 16,810 771 771
Total budgetary expenditures 1,157,657 140,054 140,054
* Includes only authorities available for use and granted by Parliament at quarter-end


Budgetary Expenditures by Standard Object - Table 2 (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

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 spent 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.

2 As per the Government wide chart of Accounts Acquisition of land buildings and works includes improvements involving additions or changes of a structural nature and reconstructions of physical assets.

3 The complete list of Corporate risks identified by Parks Canada Agency can be found in Part III – Report on Plans and Priorities.