Quarterly financial report for the quarter ended December 31, 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, to the net decrease in actual expenditures for the third quarter ended December 31 and to the net increase in the Year to date actual expenditures.

The above chart outlines the total authorities available within the Agency as of December 31 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 third quarterly report, ending December 31, 2014, reflects the authorities that were approved for this period. For the period ending December 31, 2014, the funding available for use includes the 2014-2015 Main Estimates, the 2013-2014 unused spending authority1, the 2014-2015 Supplementary Estimates “B”, and additional compensation adjustments. The authorities at the same time last year consisted of the 2013-2014 Main Estimates, the 2012-2013 unused spending authority and the 2013-2014 Supplementary Estimates “B”.

As per the Statement of Authorities Table, at December 31, 2014, Parks Canada’s authorities “total available for use for the year ending March 31, 2015” are $16.1 million lower ($816.2M – $800.1M) when compared to the same quarter of the previous year.

This $16.1 million change in authorities is a result of increases totaling $95.3 million which are offset by decreases totaling $111.4 million. The increases are mainly attributable to $57.7 million for improvements to highways, bridges and dams located in national parks and along our historic canals, increases totaling $33.6 million as described in the PCA Quarterly Financial Report for the quarter ended September 30, 2014, and a number of other small increases amounting to $4.0 million. The decreases are mainly attributable to the payment of $46.8 million for non-recurring salary benefits made during the third quarter of 2013-2014, $18.9 million for urgent improvements to highways and bridges obtained through Budget 2013, decreases totaling $34.1 million as described in the PCA Quarterly Financial Report for the quarter ended September 30, 2014, and a number of small decreases amounting to $11.6 million.

Authorities used during the quarter:
In the third quarter of 2014-2015, total budgetary expenditures were $179.7 million compared to $186.5 million reported in the same period of 2013-2014, indicating a $6.8 million decrease for this period.

Authorities used in Vote 1 – Program expenditures during the third quarter of 2014-2015 decreased by $3.8 million compared to the same quarter last year.

Statutory Authorities used during the third quarter of 2014-2015 show a $4.5 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 $501.8 million compared to $485.3 million reported at the same time last year, indicating a $16.5 million (3.4%) increase. This increase is attributable to 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, and to a one-time transition accounting treatment for implementing salary payment in arrears by the Government of Canada. This is partially offset by the payment of non-recurring salary benefits made last year and the repairs of extensive damage to infrastructure undertaken last year due to the June 2013 flooding that occurred in southern Alberta.

Significant Changes to Budgetary Expenditures by Standard Object

Expended:
As per the Budgetary Expenditures by Standard Object Table, the total expended in the third quarter ending December 31, 2014 is $6.8 million (3.7%) lower compared to the previous year, from $186.5 million to $179.7 million. However the year to date expenditures as of December 31, 2014 are $16.5 million (3.4%) higher compared to the same period last year. These overall variances can be explained by the following:

Acquisition of land, buildings and works expenditures have increased in the third quarter by $32.6 million, compared to the previous year, and the year to date expenditures have increased by $54.6 million. This increase is attributable to 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 transfer payments have increased in the third quarter and in the year to date when compared to the previous year by $4.1 million and $3.8 million respectively. This increase is primarily due to earlier payments compared to the previous year to support the Trans Canada Trail Foundation’s Fundraising efforts to complete the Trans Canada Trail by 2017.

These increases are offset by the following decreases:

The majority of the decrease relates to personnel expenditures which is $21.4 million lower compared to the previous year and the year to date expenditures have decreased by $32.4 million. This is mainly attributable to non-recurring salary benefits paid out in 2013-2014 and to the timing difference in the recording of employee benefit plans invoices.

Repair and maintenance expenditures have decreased in the third quarter and in the year to date when compared to the previous year by $12.6 million and $20.8 million respectively. This is mainly attributable to the repairs of extensive damage to infrastructure undertaken last year, as a result of heavy rains flood that occurred in southern Alberta, and to expenditures in high risk assets also completed in 2013-2014 as part of Budget 2013.

Other subsidies and payments expenditures have decreased by a total of $7.8 million in the third quarter of 2014-2015 when compared to the same quarter of 2013-2014. This is mainly due to the timing of interdepartmental settlement transactions. However the year to date expenditures have increased by $7.7 million. This increase is mainly due to a one-time transition accounting treatment in the current fiscal year of $10.3 million for implementing salary payment in arrears by the Government of Canada, which is partially offset by expenditures related to the establishment of Nááts'ihch'oh National Park Reserve and the expansion of the Nahanni National Park Reserve located in the Southwest corner of 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 in the third quarter ending December 31, 2014 are $16.1 million lower compared to the previous year, from $816.2 million to $800.1 million. This is the net result of increases and decreases detailed in the above section but overall it represents a 2-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 impacted by both competition from other parks and cultural attractions, and by weather conditions.

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
February 20, 2015
Lianne Wright
Acting Chief Financial Officer, Parks Canada
February 20, 2015



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 December 31, 2014 Year to date used at quarter end
- Vote 1 - Program expenditures 638,853 135,452 359,574
- Vote 5 - Payments to the New Parks and Historic Sites Account 3,500 0 0
Budgetary statutory authorities
- Contributions to Employee Benefit Plans 46,754 11,646 34,938
- Expenditures equivalent to revenues resulting from the conduct of operations pursuant to section 20 of the Parks Canada Agency Act 111,000 32,610 107,287
Total Budgetary Authorities 800,107 179,708 501,799
* 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 December 31, 2013 Year to date used at quarter end
- Vote 20 - Program expenditures 655,685 139,252 348,526
- Vote 25 - Payments to the New Parks and Historic Sites Account 500 0 0
Budgetary statutory authorities
- Contributions to Employee Benefit Plans 48,987 16,198 40,494
- Expenditures equivalent to revenues resulting from the conduct of operations pursuant to section 20 of the Parks Canada Agency Act 111,000 31,084 96,283
Total Budgetary Authorities 816,172 186,534 485,303
* 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 December 31, 2014 Year to date used at quarter end
Expenditures:
Personnel 330,104 79,022 263,727
Transportation and communications 19,227 3,582 10,636
Information 14,047 1,659 4,526
Professional and special services 138,795 21,599 47,966
Rentals 21,422 3,660 14,600
Repair and maintenance 66,567 13,989 29,846
Utilities, materials and supplies 49,352 11,231 29,104
Acquisition of land, buildings and works 94,829 35,978 59,180
Acquisition of machinery and equipment 25,423 4,886 12,608
Transfer payments 20,733 5,214 7,077
Other subsidies and payments 19,609 -1,112 22,528
Total budgetary expenditures 800,107 179,708 501,799
* Includes only authorities available for use and granted by Parliament at quarter-end. Totals may differ within and between tables due to rounding of figures.


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 December 31, 2013 Year to date used at quarter end
Expenditures:
Personnel 377,060 100,417 296,145
Transportation and communications 19,546 3,592 9,982
Information 13,467 1,079 3,856
Professional and special services 126,168 26,472 56,139
Rentals 20,760 3,072 10,373
Repair and maintenance 91,305 26,591 50,621
Utilities, materials and supplies 48,530 9,655 24,981
Acquisition of land, buildings and works 44,367 3,416 4,629
Acquisition of machinery and equipment 31,046 4,495 10,439
Transfer payments 10,394 1,074 3,260
Other subsidies and payments 33,529 6,671 14,878
Total budgetary expenditures 816,172 186,534 485,303
* Includes only authorities available for use and granted by Parliament at quarter-end. Totals may differ within and between tables due to rounding of figures.

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.