Quarterly financial report for the quarter ended September 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 September 30.

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

Significant Changes to Statement of Authorities

Authorities available for use:
This second quarterly report, ending September 30, 2014, reflects the authorities that were approved for this period. For the period ending September 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 September 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.

This $6.2 million change in authorities is a result of increases totaling $40.7 million which are offset by decreases totaling $46.9 million. The increases are mainly attributable to $19.6 million to develop and operate Rouge National Urban Park, $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, $5.0 million announced in Budget 2013 for increased investments in dams and locks along the Trent-Severn Waterway and in historic canals, $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, a $5.0 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 second quarter of 2014-2015, total budgetary expenditures were $199.6 million compared to $196.8 million reported in the same period of 2013-2014, indicating a $2.8 million increase for this period.

Authorities used in Vote 1 – Program expenditures during the second quarter of 2014-2015 increased by $1.8 million compared to the same quarter last year.

Statutory Authorities used during the second quarter of 2014-2015 show a $0.5 million decrease in Contributions to Employee Benefit Plans and an increase of $1.5 million in expenditures equivalent to revenues.

Year to date used:
The year to date total budgetary expenditures were $321.9 million compared to $298.8 million reported at the same time last year, indicating a $23.2 million (7.8%) increase. This variance is mostly due to a one-time transition accounting treatment of $10.0 million for implementing salary payment in arrears by the Government of Canada. In addition, an increase of $10.5 million in expenditures equivalent to revenues which is mostly due to the timing delays in the recording of revenues from last year due to the implementation of Parks Canada’s new Campground Reservation System.

Significant Changes to Budgetary Expenditures by Standard Object

Expended:
As per the Budgetary Expenditures by Standard Object Table, the total expended in the second quarter ending September 30, 2014 is $2.8 million higher compared to the previous year, from $196.8 million to $199.6 million. This represents a one-percent increase of recorded expenditures compared to the same period in 2013-2014. This overall increase can be explained by the following:

Acquisition of Land, Buildings and Works expenditures have increased in the second quarter by $20.5 million, compared to the previous year, and the year to date expenditures have increased by $22.0 million. This increase is consistent with the significant new funding announced in the 2014 federal budget to improve the condition of bridges, highways and dams in national parks and along historic canals.

Expenditures related to Other Subsidies and Payments have continued to increase in the second quarter by $2.9 million when compared to the previous year and the year to date expenditures have increased by $15.3 million. 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 $3.2 million related to the Establishment of Nááts'ihch'oh National Park Reserve located in the South Nahanni River watershed in the Northwest Territories.

These increases are offset by the following decreases:

The majority of the decrease relates to Personnel expenditures which is $15.6 million lower compared to the previous year and the year to date expenditures have decreased by $11.0 million. This is mainly attributable to lower costs for non-recurring salary benefits.

Repair and Maintenance expenditures have decreased in the second quarter by $9.2 million when compared to the previous year and the year to date expenditures have decreased by $8.2 million. The repairs and maintenance expenditures in 2013 were elevated due to the June 2013 flooding that washed out Parks Canada's administered highways, secondary roads, bridges and trails.

All other expenditures are consistent with prior year spending trends.

Planned:
As per the Budgetary Expenditures by Standard Object Table, the total planned expenditures as of the second quarter ending September 30, 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. There is no change from the previous quarter financial report.

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 fire season in Northern Canada was hotter and drier than normal. Wood Buffalo National Park (WBNP) had a significant season with 36 fires, totaling 261,850 hectares burned (compared to 36,000 hectares burned in 2013). Three large fires in WBNP were multi-jurisdictional and jointly managed with the Northwest Territories.

Significant Changes in Relation to Operations, Personnel and Programs

There are no significant changes in relation to operations, personnel and programs to report during this quarter.

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
November 21, 2014
Lianne Wright
Acting Chief Financial Officer, Parks Canada
November 17, 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 September 30, 2014 Year to date used at quarter end
- Vote 1 - Program expenditures 576,430 140,928 223,969
- 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 23,292
- Expenditures equivalent to revenues resulting from the conduct of operations pursuant to section 20 of the Parks Canada Agency Act 111,000 47,033 74,677
Total Budgetary Authorities 737,514 199,607 321,938
* 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 September 30, 2013 Year to date used at quarter end
- Vote 20 - Program expenditures 583,600 139,111 209,273
- 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 24,296
- Expenditures equivalent to revenues resulting from the conduct of operations pursuant to section 20 of the Parks Canada Agency Act 111,000 45,509 65,199
Total Budgetary Authorities 743,693 196,768 298,768
* 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 September 30, 2014 Year to date used at quarter end
Expenditures:
Personnel 328,909 103,535 184,705
Transportation and communications 19,030 4,564 7,054
Information 13,945 1,849 2,867
Professional and special services 134,874 20,103 26,367
Rentals 21,418 8,459 10,940
Repair and maintenance 66,567 12,153 15,856
Utilities, materials and supplies 49,348 12,106 17,873
Acquisition of land, buildings and works 37,806 21,542 23,202
Acquisition of machinery and equipment 25,370 4,816 7,722
Transfer payments 20,638 1,302 1,863
Other subsidies and payments 19,609 9,177 23,488
Total budgetary expenditures 737,514 199,607 321,938
* 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 September 30, 2013 Year to date used at quarter end
Expenditures:
Personnel 327,860 119,115 195,728
Transportation and communications 19,000 3,986 6,390
Information 13,009 1,571 2,777
Professional and special services 122,122 22,959 29,666
Rentals 19,815 5,481 7,300
Repair and maintenance 97,080 21,376 24,031
Utilities, materials and supplies 47,655 9,600 15,327
Acquisition of land, buildings and works 21,514 1,003 1,213
Acquisition of machinery and equipment 31,857 4,003 5,944
Transfer payments 10,093 1,365 2,185
Other subsidies and payments 33,688 6,309 8,206
Total budgetary expenditures 743,693 196,768 298,768
* 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.