Quarterly financial report for the quarter ended December 31, 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

Budgetary Authorities and Expenditures for the third quarter of 2015-16 and 2014-15 ending December 31

The above chart outlines the total authorities available within the Agency as of December 31 of each year, the expenditures during the third 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, the 2013-2014 unused spending authority, the 2014-2015 Supplementary Estimates B and additional compensation adjustments.

As per Table 1 (Statement of Authorities), at December 31, 2015, Parks Canada’s authorities “total available for use for the year ending March 31, 2016” are $357.6 million or 45-percent higher when compared to the same quarter of the previous year (from $800.1M to $1,157.7M). This net increase is attributable mainly to the following:

  • $350.4 million increase in new funding under the Federal Infrastructure Initiative;
  • $62.9 million increase in year over year funding 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
  • $10.4 million net decrease from a number of small adjustments.

Authorities used during the quarter
In the third quarter of 2015-2016, total net budgetary expenditures were $284.1 million compared to $179.7 million reported for the same period in 2014-2015, resulting in an increase of $104.4 million or 58-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 $686.5 million compared to $501.8 million reported at the same time last year, indicating an $184.7 million (37%) 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 third quarter of 2015-2016 are $357.6 million higher compared to the previous year. This variance is due to the increase in planned spending for Acquisition of land, buildings and worksii ($243.1 million), Repair and Maintenance ($35.9 million), Professional and special services ($17.0 million) and Personnel ($44.9 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 third quarter ending December 31, 2015 is $104.4 million (58%) higher, compared to the previous year, and the year to date expenditures have increased by $184.7 million (37%). The overall increase can be explained by the following:

Professional and special services expenditures have increased in the third quarter by $28.3 million, compared to the previous year, and the year to date expenditures have increased by $47.2 million. The increases are primarily in areas such as engineering and architectural consulting services associated with the Asset Investment Program.

Acquisition of land, buildings and works expenditures have increased in the third quarter by $72.4 million, compared to the previous year, and the year to date expenditures have increased by $132.8 million. The majority of the increases reflect investments in highways, bridges and canals under the 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

On November 4th, 2015, the Right Honourable Justin Trudeau, Prime Minister of Canada, announced that Parks Canada will be reporting to the Honourable Catherine McKenna, the new Minister of the Environment and Climate Change.

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
February 16, 2016


Parks Canada Agency
For the quarter ended December 31, 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 December 31, 2015 Year to date used at quarter end
- Vote 1 - Program expenditures 976,161 240,731 532,129
- 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 35,728
- Expenditures equivalent to revenues resulting from the conduct of operations pursuant to section 20 of the Parks Canada Agency Act 128,678 31,431 118,635
Total Budgetary authorities 1,157,657 284,071 686,492


(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

Parks Canada Agency
For the quarter ended December 31, 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 December 31, 2015 Year to date used at quarter end
Expenditures:
Personnel 374,973 86,262 283,740
Transportation and communications 18,655 4,665 11,516
Information 10,341 1,267 4,217
Professional and special services 155,764 49,877 95,117
Rentals 23,134 6,093 18,492
Repair and maintenance 102,420 7,156 18,943
Utilities, materials and supplies 57,393 11,545 30,001
Acquisition of land, buildings and works 337,931 108,328 192,002
Acquisition of machinery and equipment 41,178 6,330 14,692
Transfer payments 19,058 881 5,087
Other subsidies and payments 16,810 1,667 12,685
Total budgetary expenditures 1,157,657 284,071 686,492

(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

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.