Quarterly financial report for the quarter ended September 30, 2015

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 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.

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 September 30, 2015
The above chart outlines the total authorities available within the Agency as of September 30 of each year, the expenditures during the second quarter as well as the year to date expenditures. 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 authorityi 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.

As per Table 1 (Statement of Authorities), at September 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 consistent with the increase reported in the first quarter and is attributable mainly to the following elements:

  • $350.4 million increase for new funding from the Federal Infrastructure Initiative;
  • $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;
  • $6.5 million increase related to the establishment of new national parks and national marine conservation areas;
  • $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 second quarter of 2015-2016, total net budgetary expenditures were $262.4 million compared to $199.6 million reported for the same period in 2014-2015, resulting in an increase of $62.8 million or 31-percent. The increase is mainly due to expenditures under the Agency's Asset Investment Program as a result of significant new funding to rehabilitate the Agency's built assets.

Year to date used
The year to date total budgetary expenditures were $402.4 million compared to $321.9 million reported at the same time last year, indicating an $80.5 million (25%) increase. The increase is mainly due to expenditures in support of the Asset Investment Program. 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 second quarter of 2015-2016 are $420.2 million higher compared to the previous year. This variance is due to the increase in planned spending for Acquisition of land, buildings and worksii ($300.1 million), Repairs and Maintenance ($35.9 million) and Personnel ($46.1 million). These increases are consistent with the additional funding received under the Agency's Asset Investment Program.

Expended by Standard Object
As per Table 2 (Budgetary Expenditures by Standard Object), the total expended in the second quarter ending September 30, 2015 is $62.8 million (31%) higher, compared to the previous year, and the year to date expenditures have increased by $80.5 million (25%). The overall variance can be explained by the following:

Professional and special services expenditures have increased in the second quarter by $12.5 million, compared to the previous year, and the year to date expenditures have increased by $18.9 million. The increases are in areas such as engineering consulting services and architectural services.

Acquisition of land, buildings and works expenditures have increased in the second quarter by $45.7 million, compared to the previous year, and the year to date expenditures have increased by $60.5 million. The majority of the increases are investments in highways and bridges.

These increases in expenditures are in support of the Agency's Asset Investment Program.

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 priority setting and resource allocation decisions. 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 2015-2016iii. The following are examples of some of the mitigation strategies that Parks Canada is undertaking in order to address these risks:

  • investing funding 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 strengthen ecosystem resilience.

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.

Approval by Senior Officials

Approved by:

Original Signed by
Daniel Watson
Chief Executive Officer, Parks Canada
Original Signed by
Sylvain Michaud
Chief Financial Officer, Parks Canada

Gatineau, Canada
November 20, 2015


Parks Canada Agency
For the quarter ended September 30, 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 September 30, 2015 Year to date used at quarter end
- Vote 1 - Program expenditures 976,161 195,983 291,398
- Vote 5 - Payments to the New Parks and Historic Sites Account 500 0 0
Budgetary statutory authorities
- Contributions to employee benefit plans 52,318 11,910 23,819
- Expenditures equivalent to revenues resulting from the conduct of operations pursuant to section 20 of the Parks Canada Agency Act 128,678 54,474 87,204
Total Budgetary authorities 1,157,657 262,367 402,421


(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

Parks Canada Agency
For the quarter ended September 30, 2015
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 September 30, 2015 Year to date used at quarter end
Expenditures:
Personnel 374,973 109,065 197,478
Transportation and communications 18,655 4,196 6,851
Information 10,341 1,886 2,950
Professional and special services 155,764 32,581 45,240
Rentals 23,134 10,121 12,398
Repair and maintenance 102,420 8,867 11,788
Utilities, materials and supplies 57,393 12,481 18,457
Acquisition of land, buildings and works 337,931 67,252 83,674
Acquisition of machinery and equipment 41,178 4,881 8,362
Transfer payments 19,058 790 4,205
Other subsidies and payments 16,810 10,247 11,018
Total budgetary expenditures 1,157,657 262,367 402,421

(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 9,178 23,489
Total budgetary expenditures 737,514 199,607 321,938
* Includes only Authorities available for use and granted by Parliament at quarter-end

i 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.

ii 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.

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