Departmental Performance Report 2012-13

Statement of Management Responsibility Including Internal Control Over Financial Reporting

Responsibility for the integrity and objectivity of the accompanying financial statements for the year ended March 31, 2013, and all information contained in these statements rests with the management of the Parks Canada Agency. These financial statements have been prepared by management using the Government's accounting policies, which are based on Canadian Public Sector Accounting Standards, they have been approved by the Executive Management Committee of the Agency and presented to the Audit Committee of the Agency.

Management is responsible for the integrity and objectivity of the information in these financial statements. Some of the information in the financial statements is based on management's best estimates and judgment, and gives due consideration to materiality. To fulfill its accounting and reporting responsibilities, management maintains a set of accounts that provides a centralized record of the Agency's financial transactions. Financial information submitted in the preparation of the Public Accounts of Canada, and included in this Performance Report,is consistent with these financial statements.

Management is also responsible for maintaining an effective system of internal control over financial reporting designed to provide reasonable assurance that financial information is reliable, that assets are safeguarded and that transactions are properly authorized and recorded in accordance with the Financial Administration Act and other applicable legislation, regulations, authorities and policies.

Management seeks to ensure the objectivity and integrity of data in its financial statements through careful selection, training, and development of qualified staff; through organizational arrangements that provide appropriate divisions of responsibility; through communication programs aimed at ensuring that regulations, policies, standards, and managerial authorities are understood throughout the Agency; and through conducting an annual risk-based assessment of the effectiveness of the system of internal control over financial reporting.

The system of internal control over financial reporting is designed to mitigate risks to a reasonable level based on an ongoing process to identify key risks, to assess effectiveness of associated key controls, and to make any necessary adjustments.

A risk-based assessment of the system of internal control over financial reporting for the year ended March 31, 2013 was completed in accordance with the Treasury Board Policy on Internal Control and the results and action plans are summarized in the annex.

The effectiveness and adequacy of the Agency's system of internal control is reviewed by the work of internal audit staff, who conduct periodic audits of different areas of the Agency's operations, and by the Audit Committee, which provide guidance to the Chief Executive Officer on the adequacy of the department's systems of internal control, financial reporting and financial disclosures.

The financial statements of the Agency have not been audited.

_________________________________
Alan Latourelle,
Chief Executive Officer

_________________________________
Maria Stevens
Chief Financial Officer

Gatineau, Canada
August 23, 2013

Statement of Financial Position as at March 31 (Unaudited)
(in thousands of dollars)
2013 2012
Restated
Note 15
Liabilities
Accounts payable and accrued liabilities
Federal government departments and agencies 9,456 15,184
Others 58,334 67,277
67,790 82,461
Deferred revenue (Note 3) 15,216 13,805
Lease obligation for tangible capital assets (Note 4) 4,140 4,499
Employee future benefits (Note 5) 54,342 64,754
Environmental liability (Note 6b) 20,704 17,343
Total net liabilities 162,192 182,862
Financial assets
Due from Consolidated Revenue Fund (Note 7)
General operations account 62,572 56,499
Specified purpose accounts 3,831 2,309
New parks and historic sites account 7,932 9,754
74,335 68,562
Accounts receivable 6,998 8,236
Total net financial assets 81,333 76,798
Net Debt 80,859 106,064
Non-financial assets
Prepaid expenses 3,089 2,613
Inventory of consumable supplies (Note 8) 7,272 5,814
Tangible capital assets (Note 9) 1,831,048 1,836,826
Collections and archaeological sites (Note 10) 1 1
Total non-financial assets 1,841,410 1,845,254
Net Financial Position 1,760,551 1,739,190

Contingent liabilities and contractual obligations (Notes 6a) and 13)

The accompanying notes form an integral part of these financial statements.

_________________________________
Alan Latourelle,
Chief Executive Officer

_________________________________
Maria Stevens
Chief Financial Officer

Gatineau, Canada
August 23, 2013

Statement of Operations and Net Financial Position for the Year Ended March 31 (Unaudited)
(in thousands of dollars)
2013
Planned
results
2013 2012
Restated
Note 15
Expenses
Parks Canada program
Heritage places establishment 14,410 12,845 14,614
Heritage resources conservation 167,058 147,135 163,845
Public appreciation and understanding 50,494 54,254 59,520
Visitor experience 227,799 218,158 245,721
Townsite and throughway infrastructure 60,449 51,307 46,537
Internal services 74,072 93,950 93,616
594,282 577,649 623,853
Amortization of tangible capital assets 104,059 78,173 99,408
Total expenses 698,341 655,822 723,261
Revenues
Entrance fees 56,974 58,468 56,292
Recreational fees 24,140 23,974 23,240
Rentals and concessions 21,592 21,816 21,369
Other operating revenues 6,641 4,924 6,873
Townsites revenues 3,104 3,272 3,247
Staff housing 3,155 3,029 3,197
Revenues earned on behalf of Government - (168) -
115,606 115,315 114,218
Net cost from continuing operations 582,735 540,507 609,043
Transferred operations
Expenses - - 9,034
Net cost of operations before government funding and transfers 582,735 540,507 618,077
Government funding and transfers
Net cash provided by Government 549,157 507,816 599,362
Change in Due from Consolidated Revenue Fund (1,922) 5,773 (39,067)
Services provided without charge by other government departments (Note 12a) 46,870 48,267 46,922
Transfer of assets and liabilities from (to) other governments departments (Note 16) - 12 (1,189)
Net cost of operations after government funding and transfers (11,370) (21,361) 12,049
Net financial position - Beginning of year 1,747,602 1,739,190 1,751,239
Net financial position - End of year 1,758,972 1,760,551 1,739,190

Segmented information (Note 14)

The accompanying notes form an integral part of these financial statements.

Statement of Change in Net Debt for the Year Ended March 31 (Unaudited)
(in thousands of dollars)
2013
Planned
results
2013 2012 Restated
Note 15
Net cost of operations after government funding and transfers (11,370) (21,361) 12,049
Change due to Tangible Capital Assets
Acquisition and improvements of tangible capital assets 112,385 78,315 126,908
Amortization of tangible capital assets (104,059) (78,173) (99,408)
Proceeds from disposal of tangible capital assets (372) (274) (517)
Net loss on disposal of tangible capital assets (2,609) (5,658) (1,712)
Transfer of assets from (to) other government departments - 12 (2,142)
Total change due to Tangible Capital Assets 5,345 (5,778) 23,129
Change due to Inventory of consumable supplies 191 1,458 (433)
Change due to Prepaid Expenses 625 476 (4,027)
Net increase (decrease) in Net Debt (5,209) (25,205) 30,718
Net Debt at Beginning of Year 81,546 106,064 75,346
Net Debt at End of Year 76,337 80,859 106,064

The accompanying notes form an integral part of these financial statements.

Statement of Cash Flow for the Year Ended March 31 (Unaudited)
(in thousands of dollars)
2013 2012 Restated
Note 15
Operating activities
Net cost of operations before government funding and transfers 540,507 618,077
Non-cash items:
Amortization of tangible capital assets (78,173) (99,408)
Net loss on disposal of tangible capital assets (5,658) (1,712)
Services provided without charge by other government departments (48,267) (46,922)
Variations in Statement of Financial Position:
Decrease in accounts receivable (1,238) (1,288)
Increase (decrease) in prepaid expenses 476 (4,027)
Increase (decrease) in inventory of consumable supplies 1,458 (433)
Decrease in accounts payable and accrued liabilities 14,671 11,759
(Increase) decrease in deferred revenue (1,411) 2,176
Decrease (increase) in employee future benefits 10,412 (2,266)
(Increase) decrease in environmental liability (3,361) 2,467
Transfer of liabilities to other government departments - (953)
Cash used in operating activities 429,416 477,470
Capital investing activities
Acquisitions and improvements to tangible capital assets 78,315 126,908
Proceeds from disposal of tangible capital assets (274) (517)
Cash used in capital investing activities 78,041 126,391
Financing activities
Lease obligation for tangible capital assets 359 (4,499)
Cash used in financing activities 359 (4,499)
Net cash provided by Government of Canada 507,816 599,362

The accompanying notes form an integral part of these financial statements.

Notes to Financial Statements for the Year Ended March 31, 2013 (Unaudited)

1. Authority and Objectives

In December 1998, Parks Canada Agency (the Agency) was established under the Parks Canada Agency Act as a departmental corporation and acts as an agent of Her Majesty in right of Canada. The Parks Canada Agency is a separate entity listed under Schedule II of the Financial Administration Act and reports to the Minister of the Environment. The Agency is not subject to the provisions of the Income Tax Act.

The Agency's mandate is to protect and present nationally significant examples of Canada's natural and cultural heritage, and foster public understanding, appreciation and enjoyment in ways that ensure the ecological and commemorative integrity of these places for present and future generations. In carrying out its mandate, the Agency delivers the programs set out in the Agency's legislation and authorities.

The authorities for the programs for which Parks Canada is responsible are mainly derived from the Parks Canada Agency Act, the Canada National Parks Act, the Historic Sites and Monuments Act, the Canada National Marine Conservation Areas Act, the Department of Transport Act, the Heritage Railway Stations Protection Act, the Heritage Lighthouse Protection Act, and the Species at Risk Act.

2. Summary of Significant Accounting Policies

These financial statements have been prepared in accordance with the Government's accounting policies stated below, which are based on Canadian public sector accounting standards. The presentation and results using the stated accounting policies do not result in any significant differences from Canadian public sector accounting standards.

a) Parliamentary authorities

The Agency is financed by the Government of Canada through Parliamentary authorities. Financial reporting of authorities provided to the Agency do not parallel financial reporting according to Canadian generally accepted accounting principles since authorities are primarily based on cash flow requirements. Consequently, items recognized in the Statement of Operations and Net Financial Position and in the Statement of Financial Position are not necessarily the same as those provided through authorities from Parliament. Note 11 provides a reconciliation between the bases of reporting. The planned results amounts in the Statement of Operations and Net Financial Position are the amounts reported in the future-oriented financial statements included in the 2012-2013 Corporate Plan.

b) Net cash provided by Government

The Agency operates within the Consolidated Revenue Fund (CRF), which is administered by the Receiver General for Canada. All cash received by the Agency is deposited to the CRF and all cash disbursements made by the Agency are paid from the CRF. The net cash provided by Government is the difference between all cash receipts and all cash disbursements including transactions between departments of the Government.

c) Deferred revenue

Deferred revenue includes revenues received in advance of the services to be provided and funds received from external parties for specified purposes. Deferred revenue is recognized as revenue when the services are provided.

d) Inventory of consumable supplies

Inventories consist of consumable supplies not intended for re-sale. They are valued at cost. If they no longer have service potential, they are valued at the lower of cost or net realizable value.

e) Tangible capital assets:
(i) Tangible capital assets (excluding land):

All tangible capital assets and leasehold improvements having an initial cost of $10,000 or more are recorded at their acquisition cost.

Tangible capital assets transferred to the Agency as at April 1, 1999 are recorded at their estimated historical cost, less accumulated amortization. The estimated historical cost of the assets was established by deflating the current replacement cost to the year of acquisition or construction using factors based on changes in price indices over time. This approach also took into consideration the overall asset condition and the cost of any improvements and major repairs since the original acquisition or construction of the tangible capital assets.

Tangible capital assets acquired after April 1, 1999 are recorded at their acquisition cost. Tangible capital assets acquired at nominal cost or by donation are recorded at market value at the time of acquisition and tangible capital assets transferred from/to other federal government entities are recorded at their net book value (historical cost and corresponding accumulated amortization) at the time of transfer. A corresponding amount is credited directly to the Net financial position. The tangible capital assets acquired with financial assistance from another government are recorded at their net cost. Improvements that extend the useful life or service potential are recorded at cost.

Intangible assets are not capitalized.

Construction in progress is not amortized. The costs of construction in progress are transferred to the appropriate asset category upon completion and are amortized once in service.

Amortization is calculated on a straight-line method using rates over the estimated useful life of the assets as follows:

Asset Useful life
Buildings 25-50 years
Fortifications 50-100 years
Leasehold improvements Lesser of the remaining term of lease or estimated useful life of the improvement
Leased tangible capital assets Term of lease or economic life of the property if the lease contains a bargain purchase option
Improved grounds 10-40 years
Roads 40 years
Bridges 25-50 years
Canals and marine facilities 25-80 years
Utilities 20-40 years
Vehicles and equipment 3-15 years
Exhibits 5-10 years
(ii) Land:

Acquired lands are recorded at historical cost. Crown lands acquired as a result of Confederation or the subsequent joining of a province or territory are recorded at a nominal value. Donated lands are recorded at their estimated market value at time of acquisition with a corresponding amount credited directly to the Net financial position.

f) Collections and archaeological sites

Collections and archaeological sites are recorded at nominal value.

g) Employee future benefits:
(i) Severance benefits

Employees are entitled to severance benefits under labour contracts or conditions of employment. These benefits are accrued as employees render the services necessary to earn them. The obligation relating to the benefits earned by employees is calculated using information derived from the results of the actuarially determined liability for employee severance benefits for the Government as a whole.

(ii) Pension benefits

Eligible employees participate in the Public Service Pension Plan, a multiemployer pension plan administered by the Government. The Agency's contributions to the Plan are charged to expenses in the year incurred and represent the total obligation to the Plan. Current legislation does not require the Agency to make contributions for any actuarial deficiencies of the Plan.

h) Expenses:

Expenses are recorded on the accrual basis.

(i) Transfer payments

Contributions are recognized in the year in which the recipient has met the eligibility criteria or fulfilled the terms of a contractual transfer agreement, provided that the transfer is authorized and a reasonable estimate can be made.

(ii) Services received without charge

Services received without charge from other Government departments are recorded as operating expenses at their estimated cost. A corresponding amount is credited directly to the Net financial position.

(iii) Vacation pay and compensatory leave

Vacation pay and compensatory leave are accrued as the benefits are earned by employees under their respective terms of employment.

i) Accounts receivable

Accounts receivable are stated at the lower of cost and net recoverable value. A valuation allowance is recorded for accounts receivable where recovery is considered uncertain.

j) Contingent liabilities

Contingent liabilities are potential liabilities that may become actual liabilities when one or more future events occur or fail to occur. To the extent that the future event is likely to occur or fail to occur, and a reasonable estimate of the loss can be made, an estimated liability is accrued and an expense recorded. If the likelihood is not determinable or if an amount cannot be reasonably estimated, the contingency is disclosed in the notes to the financial statements.

k) Environmental liability

The Agency records an environmental liability in situations where the following conditions are met: (1) contamination exceeds the environmental standard; (2) the Agency is directly responsible or accepts responsibility of the contamination; (3) it is expected that future economic benefits will be given up; (4) a reasonable estimate of the amount can be made following a detailed environmental assessment.

The costs will be disclosed as a contingent liability if one of the following conditions is met: (1) the occurrence of the confirming future event is likely but the amount of the liability cannot be reasonably estimated; (2) the occurrence of the confirming future event is likely and a liability has been recorded, but there is risk this liability may increase; (3) or the occurrence of the confirming future event is not determinable.

l) Revenue

Entrance fees, recreational fees, rentals and concessions, other operating, townsites and staff housing revenues are recognized in the year in which the goods or services are provided by the Agency. Funds received for future services are recorded as deferred revenue.

Revenues that are non-respendable are not available to discharge the Agency's liabilities. While the Agency is expected to maintain accounting control, it has no authority regarding the disposition of non-respendable revenues. As a result, non-respendable revenues are considered to be earned on behalf of the Government of Canada and are therefore presented in reduction of the Agency's gross revenues.

m) Measurement uncertainty

The preparation of the financial statements in accordance with Canadian generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses for the year. Employee-related liabilities, estimated useful lives of tangible capital assets, lease obligation for tangible capital assets, environment-related liabilities and claims are the most significant items where estimates are used. Actual results could differ significantly from those estimated. Management's estimates are reviewed periodically and, as adjustments become necessary, they are recorded in the financial statements in the year they become known.

Planned results for 2012-13 were presented in PCA's Future-Oriented Financial Statements and were based on estimates prepared in January 2012.

3. Deferred Revenue

Included in the deferred revenue total of $15 million ($13.8 million in 2012) is an amount of $11.5 million ($11.5 million in 2012) representing the balance, at year end, for entrance fees, recreational fees, and rentals/concessions fees collected in advance.

The remaining $3.5 million ($2.3 million in 2012) of deferred revenue, represents monies received from external organizations which must be used for specified purposes.

(In thousands of dollars)
2013 2012
Deferred revenue, beginning of year 13,805 15,981
Amounts received 12,922 11,444
Revenue recognized (11,511) (13,620)
15,216 13,805

4. Lease obligation for tangible capital assets

The Agency has entered into agreements to lease commercial and office spaces under capital leases with a cost of $21.2 million ($21.2 million in 2012) and accumulated amortization of $4,9 million ($4.2 million in 2012), as at March 31, 2013. The obligations related to the upcoming years, in the total amount of $4.1 million ($4.5 million in 2012), include the following:

(In thousands of dollars)
2013 2012
2012-13 - 631
2013-14 559 559
2014-15 544 544
2015-16 544 544
2016-17 544 544
2017-18 and beyond 3,524 3,524
Total future minimum lease payment 5,715 6,346
Less: imputed interest (6.3%) 1,575 1,847
Balance of obligations under leased tangible capital assets 4,140 4,499

5. Employee Future Benefits

a) Severance benefits:

The Agency provides severance benefits to its employees based on eligibility, years of service and final salary. These severance benefits are not pre-funded. Benefits will be paid from future authorities. Information about the severance benefits, measured as at March 31, is as follows:

(In thousands of dollars)
2013 2012
Accrued benefit obligation, beginning of year 64,754 62,488
Expense for the year 5,365 8,083
Benefits paid during the year (15,777) (5,817)
54,342 64,754

As part of changes to conditions of employment, the accumulation of severance benefits under the employee severance pay program ceased at the end of 2012-2013. Employees subject to these changes have been given the option to be paid, during 2013-2014, the full or partial value of the benefits earned to date or collect the full or remaining value of benefits on termination from the public service.

b) Pension benefits:

The Agency's employees participate in the Public Service Pension Plan, which is sponsored and administered by the Government. Pension benefits accrue up to a maximum period of 35 years at a rate of 2 percent per year of pensionable service, times the average of the best five consecutive years of earnings. The benefits are integrated with Canada/Québec Pension Plans benefits and they are indexed to inflation. Both the employees and the Agency contribute to the cost of the Plan. The 2013 expense amounts to $39.5 million ($39.8 million in 2012), which represents approximately 1.7 times (1.8 times in 2012) the contributions by employees.

The Agency's responsibility with regards to the Plan is limited to its contributions. Actuarial surpluses or deficiencies are recognized in the financial statements of the Government of Canada, as the Plan's sponsor.

6. Contingent Liabilities

Contingent liabilities arise in the normal course of operations and their ultimate disposition is unknown. They are grouped into two categories as follows:

a) Claims and litigation:

Claims have been made against the Agency in the normal course of operations. These claims include items with pleading amounts and other for which no amount is specified. While the total amount claimed in these actions is significant, their outcomes are not determinable. The Agency has recorded an allowance for claims and litigations where it is likely that there will be a future payment and a reasonable estimate of the loss can be made. Claims and litigations for which the outcome is not determinable and a reasonable estimate can be made by management amount to approximately $14.2 million ($0.3 million in 2012) at March 31, 2013.

b) Environmental liability:

The Agency has identified 473 sites that are known or suspected of contamination. Based on the information available and detailed environmental assessments conducted thus far on 427 of these sites, the Agency has estimated liability and contingent liability amounts. The estimated amounts are adjusted to reflect inflation and will be paid from future authorities.

The Agency has estimated and recorded a liability of $20.7 million ($17.3 million in 2012). The Agency has estimated additional clean-up costs of $111.6 million ($107.7 million in 2012) that are not recorded as a liability as the Agency is not able to determine if these costs will be incurred. The Agency's ongoing efforts to assess contaminated sites may result in additional environmental liabilities related to newly identified sites, or changes in the assessments or intended use of existing sites. These contingent liabilities will be recorded as liabilities by the Agency in the year in which they become reasonably estimable and the occurrence of the confirming future event is determinable.

7. Due from Consolidated Revenue Fund

The Agency operates within the CRF which is administered by the Receiver General for Canada. All cash received by the Agency is deposited to the CRF and all cash disbursements made by the Agency are paid from the CRF.

Included in the Consolidated Revenue Fund are the following:

a) General operations account

General operations account represents the amount of cash that the Agency is entitled to draw from the Consolidated Revenue Fund of the Government, without further authorities. As at March 31, 2013, the balance of the General operations account is $62.6 million ($56.5 million in 2012).

b) Specified purpose accounts:

Specified purpose accounts represent money received from external organizations which must be used for the purposes for which they are received. As at March 31, 2013, the Agency has a balance of $3.8 million ($2.3 million in 2012) for specified purpose accounts.

c) New parks and historic sites account:

A portion of the Net financial postion is used for a specific purpose. Related revenues and expenses are included in the Statement of Operations and Net Financial Position.

The Government of Canada includes in its receipts and expenditures the transactions of certain consolidated accounts established for specified purposes. Parks Canada Agency Act requires that the receipts of the specified purpose account be earmarked and that the related payments and expenses be charged against such receipts. The transactions do not represent liabilities to third parties but are internally restricted for specified purposes.

Funds are provided to the New parks and historic sites account by voted authorities, proceeds from the sale of lands and buildings that are surplus to operational requirements and all general donations. Furthermore, the Minister of Finance may, on the request of the Minister of the Environment, authorize the making of advances of up to $10.0 million to the New parks and historic sites account. All amounts received remain in this account until eligible capital expenditures are made for the purpose of establishing or developing new parks or historic sites and heritage areas, in compliance with the terms and conditions set out in the Parks Canada Agency Act and related Treasury Board directives.

Details of activities for the year ended March 31 are highlighted in the following analysis:

(In thousands of dollars)
2013 2012
Available at beginning of year 9,754 17,200
Receipts:
Parliamentary authorities 500 500
Proceeds on disposal of tangible capital assets 251 269
Donations 7 14
758 783
Expenditures:
Capital expenditures 2,580 8,229
2,580 8,229
Available at end of year 7,932 9,754

8. Inventory of Consumable Supplies

The inventory of consumable supplies as at March 31 consists of the following:

(In thousands of dollars)
2013 2012
Stationery, office and miscellaneous supplies 1,424 923
Equipment, materials and supplies 1,294 736
Top soil, sand, gravel and other crude material 1,142 931
Fuel and other petroleum products 1,050 901
Safety equipment 645 597
Printed books, publications and maps 592 639
Fabricated wood and metal products 559 602
Construction material and supplies 377 327
Uniforms and protective clothing 189 158
7,272 5,814

9. Tangible Capital Assets

(In thousands of dollars)
Cost
Opening balance Acquisitions Adjustments Disposals and write-offs Closing balance
Buildings, fortifications and leasehold improvements 921,265 18,316 1,419 3,419 937,581
Improved grounds 668,110 3,296 (4,467) 837 666,102
Roads 1,238,471 18,479 (32,402) 1,904 1,222,644
Bridges 288,587 23,200 35,767 1,339 346,215
Canal and marine facilities 595,349 2,706 (31) 1,276 596,748
Utilities 253,531 1,110 190 31 254,800
Vehicles and equipment 127,890 8,216 (517) 3,433 132,156
Exhibits 106,039 2,961 (827) 1,931 106,242
Leased tangible capital assets 21,160 - 12 - 21,172
4,220,402 78,284 (856) 14,170 4,283,660
Land
-Acquired land 155,920 31 (58) - 155,893
-Crown land 1 - - - 1
-Donated land 20,210 - - - 20,210
176,131 31 (58) - 176,104
Total 4,396,533 78,315 (914) 14,170 4,459,764

(In thousands of dollars)
Accumulated Amortization Net Book Value
Opening balance Amortization Adjustments Disposals and write-offs Closing balance 2013 2012 Restated
Note 15
Buildings, fortifications and leasehold improvements 587,160 17,691 (275) 2,680 601,896 335,685 334,105
Improved grounds 553,999 7,744 (52) 752 560,939 105,163 114,111
Roads 704,885 23,419 (207) 116 727,981 494,663 533,586
Bridges 108,316 5,685 (63) 865 113,073 233,142 180,271
Canal and marine facilities 313,036 6,761 (59) 478 319,260 277,488 282,313
Utilities 117,181 5,676 (17) 27 122,813 131,987 136,350
Vehicles and equipment 86,158 7,021 (115) 3,194 89,870 42,286 41,732
Exhibits 84,781 3,408 (27) 209 87,953 18,289 21,258
Leased tangible capital assets 4,191 768 (28) - 4,931 16,241 16,969
2,559,707 78,173 (843) 8,321 2,628,716 1,654,944 1,660,695
Land
-Acquired land - - - - - 155,893 155,920
-Crown land - - - - - 1 1
-Donated land - - - - - 20,210 20,210
- - - - - 176,104 176,131
Total 2,559,707 78,173 (843) 8,321 2,628,716 1,831,048 1,836,826

The total cost of tangible capital assets includes $58.1 million ($143 million in 2012) of construction in progress disclosed within their respective asset category. The Agency owns land, which comprises national parks and national park reserves, national marine conservation areas, and national historic sites. Certain bridges were reclassified from the Roads category to the Bridges categoy during the fiscal year.

10. Collections and Archaeological Sites

Core to the Agency's mandate to protect and present nationally significant examples of our cultural heritage is the management of collections and archaeological sites. Although not capitalized like other cultural assets such as buildings or fortifications, these treasures have inestimable cultural value.

a) Collections:

The Agency manages collections that are made up of archaeological and historical objects.

The collection of archaeological objects includes specimens and records that represent a cross-section of human habitation and activities. These holdings consist of a range of functional groups of artifacts that represent domestic activities to industrial processes and includes tools, ships' fittings, as well as soil and botanical samples.

The collection of historic objects dates from the 10th century to the present day. They encompass ethnographic material, civilian, military and fur trade items, furniture and furnishings, tools and documents.

In addition, the Agency manages a collection of reproductions including period costumes, tools and furniture that have been copied from original objects or made based on historical data.

b) Archaeological sites:

An archaeological site encompasses surface, subsurface, or submerged remains of human activity. Archaeologists define a site by identifying the different activities that were conducted within an area. There are many archaeological sites identified within Canada's 167 national historic sites, 44 national parks, and 4 marine conservation areas. The types of sites vary greatly, from Aboriginal villages, hunting camps, observation areas, and animal processing areas, to European fur trade and military posts, battlefields, shipwrecks, homesteads, and transportation and industrial sites.

11. Parliamentary Authorities

The Agency receives most of its funding through annual Parliamentary authorities. Items recognized in the Statement of Operations and Net Financial Position and the Statement of Financial Position in one year may be funded through Parliamentary authorities in prior, current or future years. Accordingly, the Agency has different net results of operations for the year on a government funding basis than on an accrual accounting basis. The differences are reconciled in the following tables:

a) Authorities provided and used:
(In thousands of dollars)
2013 2012
Authorities voted:
Vote 25 - Program expenditures 607,936 603,447
Vote 30 - New parks and historic sites account 500 500
Statutory amounts:
Revenue received pursuant to section 20 of the Parks Canada Agency Act 118,011 118,172
Contributions to employee benefits plan 55,254 55,307
Total authorities 781,701 777,426
Less:
Lapse 4,497 -
Authorities available for future years 146,657 99,414
151,154 99,414
Current year authorities used 630,547 678,012
b) Reconciliation of net cost of operations to current year authorities used:
(In thousands of dollars)
2013 2012 Restated
Note 15
Net cost of operations before government funding and transfers 540,507 618,077
Revenue received pursuant to section 20 of the Parks Canada Agency Act 118,011 118,172
Adjustments for items affecting net cost of operations but not affecting authorities:
Amortization of tangible capital assets (78,173) (99,408)
Services provided without charge by other government departments (48,267) (46,922)
Refund of prior years' expenditures (1,165) (925)
Bad debt expense (76) (123)
Net loss on disposal of tangible capital assets (5,658) (1,712)
(133,339) (149,090)
Variation in accounts affecting net cost of operations but not affecting authorities:
Vacation pay included in the accounts payable and accrued liabilities 1,434 1,154
Employee future benefits 10,412 (2,266)
Environmental liability (3,361) 2,467
Lease obligation for tangible capital assets 359 (4,499)
8,844 (3,144)
Adjustments for items not affecting net cost of operations but affecting authorities:
Acquisitions and improvements to tangible capital assets 78,315 126,908
Accrued liabilities not charged to authorities 18,371 (20,488)
Proceeds on disposal of tangible capital assets (274) (517)
Change in prepaid expenses 476 (4,027)
Change in inventory of consumable supplies 1,458 (433)
Change in New parks and historic sites account (1,822) (7,446)
96,524 93,997
Current year authorities used 630,547 678,012

12. Related Party Transactions

The Agency is related as a result of common ownership to all Government departments, agencies, and Crown Corporations. The Agency enters into transactions with these entities in the normal course of business and on normal trade terms.

a) Services provided without charge by other government departments:

During the year the Agency received services without charge from certain common service organizations, related to accommodation, legal services, the employer's contribution to the health and dental insurance plans and workers' compensation coverage. These services provided without charge have been recorded in the Agency's Statement of Operations and Net Financial Position as follows:

(In thousands of dollars)
2013 2012
Contributions covering employer's share of employees' insurance premiums and costs paid by Treasury Board Secretariat 29,695 27,881
Accommodation provided by Public Works and Government Services Canada 17,432 17,399
Salary and associated costs of legal services provided by Justice Canada 1,004 1,477
Other services received without charge 136 165
48,267 46,922

The Government has centralized some of its administrative activities for efficiency, cost-effectiveness purposes and economic delivery of programs to the public. As a result, the Government uses central agencies and common service organizations so that one department performs services for all other departments and agencies without charge. The costs of these services, such as the payroll and cheque issuance services provided by Public Works and Government Services Canada are not included in the Statement of Operations and Net Financial Position.

b) Other transactions with related parties:

The Agency incurred capital and operating expenses with related parties for a total of $52.7 million ($70 million in 2012) for services provided by Government departments, including an amount of $46.1 million ($63.2million in 2012) with Public Works and Government Services Canada mostly related to architectural, engineering and environmental services of $22.8 million ($29.5 million in 2012), construction services of $0.5 millions ($3.1 million in 2012), repairs and maintenance $4.1 million ($2.9 million in 2012) and payments in lieu of taxes of $13.5 million ($12 million in 2012). Revenues generated from related parties amounted to $1.1 million ($1.9 million in 2012).

13. Contractual obligations

a) The Agency has entered into agreements for operating leases of equipment and accommodations for a total of $3.6 million ($2.7 million in 2012). The agreements show different termination dates, with the majority ending within the next twelve years. Minimum annual payments under these agreements for the next five years and beyond are approximately as follows:

(In thousands of dollars)
2013-14 2,036
2014-15 571
2015-16 328
2016-17 82
2017-18 and beyond 563

b) The Agency has entered into contracts for operating and capital expenditures for approximately $84.4 million ($64.8 million in 2012). The majority of payments under these contracts are expected to be made over the next four years.

14. Segmented information

Presentation by segment is based on the Agency's program alignment architecture. The presentation by segment is based on the same accounting policies as described in the Summary of significant accounting policies in Note 2. The following table presents the expenses incurred and revenues generated for the main programs, by major object of expenses and by major type of revenues. The segment results for the period are as follows:

(In thousands of dollars)
Heritage places establishment Heritage resources conservation Public appreciation and understanding Visitor experience Townsite and throughway infrastructure Internal services 2013 2012 Restated
Note 15
Salaries and employee benefits 6,467 101,978 36,163 155,363 20,685 65,194 385,850 426,725
Operating expenses
Professional and special services 2,290 9,241 2,649 14,877 8,318 7,919 45,294 53,679
Utilities, materials and supplies 302 7,847 1,192 20,882 9,398 3,021 42,642 48,958
Accommodation received without charge 388 4,440 1,637 6,583 1,551 2,833 17,432 17,399
Repairs and maintenance 4 1,478 19 4,944 8,028 - 14,473 12,241
Rentals 356 6,112 412 3,411 525 3,176 13,992 13,521
Payments in lieu of taxes 678 3,021 746 4,755 2,404 1,889 13,493 11,957
Transportation and communication 623 3,623 1,577 2,612 179 4,207 12,821 15,258
Information 84 183 2,314 3,806 21 53 6,461 9,321
Net loss on disposal of tangible capital assets - - - - - 5,658 5,658 1,712
Environmental liability - 5,141 - - - - 5,141 (1,229)
Miscellaneous expenses 455 - 1 201 - - 657 660
Total operating expenses 5,180 41,086 10,547 62,071 30,424 28,756 178,064 183,477
Grants and contributions 1,198 4,071 7,544 724 198 - 13,735 13,651
Total expenses (excluding amortization) 12,845 147,135 54,254 218,158 51,307 93,950 577,649 623,853
Amortization 78,173 99,408
Total expenses 655,822 723,261
Entrance fees - 8 - 58,447 5 8 58,468 56,292
Recreational fees - 17 10 23,936 - 11 23,974 23,240
Rentals and concessions 92 3 - 899 1,171 19,651 21,816 21,369
Other operating revenues 5 291 6 1,314 859 2,449 4,924 6,873
Townsites revenues - - - - 3,272 - 3,272 3,247
Staff housing - 0 - 7 1 3,021 3,029 3,197
Revenues earned on behalf of Government - - - - - (168) (168) -
Total revenues 97 319 16 84,603 5,308 24,972 115,315 114,218
Net cost from continuing operations 540,507 609,043
Transferred Operations - 9,034
Net cost of operations before government funding and transfers 540,507 618,077

15. Correction of prior year's results

During 2012-2013 fiscal year, the Agency conducted a review of the value of its tangible capital assets. As a result of the review, the Agency identified tangible capital assets for which the related annual amortization expense was overstated since their acquisition. This was corrected in 2012-2013 financial statements. These changes have been applied retroactively and comparative information for 2011-2012 has been restated. The accumulated effect of the adjustment over the fiscal year prior to 2011-2012 was included in the opening balance of the Net financial position for the 2011-2012 fiscal year.

The following table summarizes the effects of this adjustment on the comparative figures.

(in thousands of dollars)
As previously stated
2012
Effects of
adjustment
Restated
amounts
2012
Statement of Financial Position
Tangible capital assets 1,816,745 20,081 1,836,826
Net Financial Position 1,719,109 20,081 1,739,190
Statement of Operations and Net Financial Position
Net Financial Position at beginning of Year 1,733,674 17,565 1,751,239
Amortization of tangible capital assets 101,924 (2,516) 99,408
Net cost of operations after government funding and transfers 14,565 (2,516) 12,049
Net Financial Position at end of Year 1,719,109 20,081 1,739,190
Statement of change in Net Debt
Net debt at Beginning of Year 75,346 75,346
Net cost of operations after government funding and transfers 14,565 (2,516) 12,049
Amortization of tangible capital assets (101,924) 2,516 (99,408)
Net debt at End of Year 106,064 106,064
Statement of Cash Flow
Net cost of operations before government funding and transfers 620,593 (2,516) 618,077
Amortization of tangible capital assets (101,924) 2,516 (99,408)
Net cash provided by government of Canada 599,362 599,362

16. Transfer from other government departments

Effective August 14, 2012, the Agency was transferred the responsibility for four vehicles from Environment Canada in accordance with an administrative arrangement, including the stewardship responsibility for these assets. Accordingly, the Agency recorded the assets at a net book value of $0.01 million.

17. Subsequent event

On June 19, 2013 a flooding caused permanent damages to some properties and tangible capital assets owned by the Agency located in the Province of Alberta. At the date of preparation of the financial statements, the total repairs and replacements costs to the Agency were estimated at $35.5 million. The impact of this subsequent event will be reflected in the 2013-2014 financial statements.




Annex to the Statement of Management Responsibility including Internal Control over Financial Reporting - Fiscal Year 2012-13

Table of Contents

  1. Introduction
  2. Control Environment of Parks Canada Relative to ICFR
  3. Parks Canada's Assessment Results During Fiscal Year 2012-13
  4. Parks Canada's Action Plan

1 Introduction

This unaudited document is attached to Parks Canada’s Statement of Management Responsibility Including Internal Control Over Financial Reporting for the fiscal year 2012-13. This document provides summary information on the measures taken by Parks Canada to maintain an effective system of internal control over financial reporting (ICFR) including information on internal control management and assessment results and related action plans.

Detailed information on Parks Canada’s authority, mandate and programs can be found in the attached Departmental Performance Report (http://www.pc.gc.ca/eng/docs/pc/rpts/rmr-dpr/03312013/rap-rep2013.aspx) and Report on Plans and Priorities (http://www.tbs-sct.gc.ca/rpp/2012-2013/inst/cap/cap-eng.pdf).

2 Control Environment of Parks Canada Relative to ICFR

Parks Canada recognizes the importance of setting the tone from the top to help ensure that staff at all levels understand their roles in maintaining effective systems of ICFR and is well equipped to exercise these responsibilities effectively. Parks Canada’s focus is to ensure that risks are well managed through a responsive and risk-based control environment that enables continuous improvement and innovation.

2.1 Key positions, roles and responsibilities

Below are Parks Canada’s key positions and committees with responsibilities for maintaining and reviewing the effectiveness of its system of ICFR.

Chief Executive Officer (CEO) - The CEO, as Accounting Officer, assumes overall responsibility and leadership for the measures taken to maintain an effective system of internal control. In this role, the CEO chairs the Executive Management Committee and is a member of the Audit Committee.

Chief Financial Officer (CFO) – Parks Canada’s CFO reports directly to the CEO and provides leadership for the coordination, coherence and focus on the design and maintenance of an effective and integrated system of ICFR.

Senior Managers – Parks Canada’s senior managers in charge of program delivery are responsible for maintaining and reviewing effectiveness of their system of ICFR falling within their mandate.

Chief Audit Executive (CAE) – Parks Canada’s CAE reports directly to the CEO and provides assurance through periodic internal audits which are instrumental to the maintenance of an effective system of ICFR.

Audit Committee – The Audit Committee provides objective views on Parks Canada’s risk management, control and governance frameworks. Established in 2008-09, the Committee is comprised of three external members and meetings are held on a quarterly basis.

Executive Management Committee (EMC) - As Parks Canada’s central decision-making body, the EMC reviews, approves and monitors the Corporate Risk Profile and the departmental system of internal control.

Operations Committee – Parks Canada’s Operations Committee is considered to be the recommending committee. They review, evaluate, recommend, coordinate and monitor implementation of initiatives and decisions that have significant operational and financial impacts.

Resource Allocation Committee (RAC) - The RAC is a recommending body reporting to the EMC. The Committee oversees the development and updates of the Parks Canada’s Investment Plan, recommends its approval by the EMC and monitors its implementation. The RAC annually reviews, evaluates, prioritizes, recommends and monitors a portfolio of projects related to the centralized investment programs.

2.2 Key measures taken by Parks Canada

Parks Canada’s control environment also includes a series of measures to equip its staff to manage risks well through raising awareness, providing appropriate knowledge and tools as well as developing skills. Key measures include:

  • The Agency’s Code of Ethics is a cornerstone of the Agency’s organizational character. It enhances working conditions, employer/employee relations, interpersonal relationships and decision making at Parks Canada;
  • An Ombudsman under the CEO whose mission is to promote and intervene in favour of an organizational culture based on the fundamental values of the Agency, as specified in the Agency’s Code of Ethics. The Ombudsman is also the Agency’s Senior Integrity Officer for internal disclosure and wrongdoing;
  • A dedicated resource under the CFO on internal controls with the mandate to facilitate the implementation of the Policy on Internal Control and Common Business Processes across the Agency;
  • Annual performance agreements for all Executives with defined financial management responsibilities;
  • Letter of representations are signed annually by the field unit superintendant and their finance representative;
  • Training program and communications in core areas of financial management;
  • Link to TBS financial policies, along with financial directives, guides and tools tailored to the Agency business and environmental requirements;
  • Regularly updated delegated authorities matrix and electronic specimen signature card system;
  • IT processing systems to achieve greater security, data integrity, efficiency and effectiveness;
  • An annual risk based audit plan which is instrumental to the assessment of ICFR;
  • A Corporate Risk Profile, updated regularly to identify, assess and manage key areas of risk, including financial management;
  • A detailed independent HR framework, policies and staffing rules reflecting the Agency’s status as a separate employer within the Government of Canada;
  • A strategic and operating forum for all PCXs, held at least annually, to discuss strategic, management and operations issues, promoting the community of management within the organization. PCX teleconference calls with the CEO are also held on a monthly basis; and
  • A focal point of expertise for risk management within the organization including experts in subject matter.
2.3 Service arrangements relevant to the financial statements

Parks Canada relies on other organizations for the processing of certain transactions that are recorded in its financial statements as follows:

Common Arrangements:

  • Public Works and Government Services Canada centrally administers the payments of salaries through its payroll system, the procurement of goods and services and the provision of accommodation.
  • The Treasury Board Secretariat provides the Agency with contributions covering the employer’s share of employees’ medical and dental insurance premiums.
  • The Treasury Board Secretariat provides the Agency with information used to calculate various accruals and allowances, such as the accrued severance liability.
  • The Department of Justice provides legal services.
  • Shared Services Canada (SSC) provides IT infrastructure services to the Agency in the areas of data centre and network services. The scope and responsibilities are addressed in the interdepartmental arrangement between SSC and the Agency.

Specific Arrangement:

  • Parks Canada’s financial system related functional services are provided by Canadian Heritage. The services are delivered through an MOU whereby Parks Canada shares the expenses. The financial system’s Information Technology (IT) related services are provided by Agriculture Canada to both Parks Canada and Canadian Heritage through a separate MOU.

3 Parks Canada's Assessment Results During Fiscal Year 2012-13

The following summarizes the key assessment results from the documentation, design effectiveness, operating effectiveness testing and on-going monitoring completed as of March 31st, 2013.

3.1 Documentation of control activities

Parks Canada focussed all its efforts on gathering all information pertaining to processes, risks and controls relevant to ICFR, including appropriate policies and procedures and on documenting control activities. In the current year, the Agency completed the documentation of the following key business process – chart of accounts, accounts payable, revenue management, capital assets, environmental liabilities and financial reporting.

As a result of these assessments, the Agency identified the following significant adjustments that will need to be addressed through the implementation of the Policy on Internal Control:

  • documentation limited to one standardized process across the Agency to facilitate implementation of common business processes; increase the overall effectiveness of process; and simplify testing of key controls (i.e. Accounts Payable – Procurement to Pay process);
  • greater consistency in the quality, reliability and availability of documentation of controls across the Agency which must also be aligned with Office of the Comptroller General’s common business requirements; and
  • further supporting documentation in some areas (e.g. procedures).
3.2 Design effectiveness testing of key controls

In the current year, the Agency completed design effectiveness testing of the following key business processes – chart of accounts, revenue management, capital assets and financial reporting. Design effectiveness is in progress for the accounts payable process as the process is under review for standardization across the Agency as per TBS’ Common Business Process guidelines. As for the environmental liabilities process, design effectiveness is significantly advanced and correctives measures will be communicated upon process validation from all stakeholders.

As a result of design effectiveness testing, the Agency identified the following remediation required:

  • Chart of accounts: Clarify roles and responsibilities, document internal procedures when processing a request for creation, modification or deletion of an account, and review Parks Canada’s chart of accounts.
  • Revenue management: Clarify roles and responsibilities and develop an ongoing monitoring plan.
  • Capital assets: Strenghten national direction for management of capital assets, reinforce communication between asset custodian and finance officers, and increase monitoring to ensure the reasonableness of the amortization expense.
  • Financial reporting: Clarify roles and responsibilities of the Public Accounts process and increase its effectiveness by integrating further analysis in the mid-year review.

Remediation of key control deficiencies were communicated and are currently being addressed.

3.3 Operating effectiveness testing of key controls

Parks Canada has not yet started the assessment of operating effectiveness of key controls. The Agency is committed to undertaking operating effectiveness testing of control activities after the completion of design effectiveness testing of controls related to standardized business processes. Operating effectiveness will not commence until the associated remediation of design effectiveness has been implemented and sufficient time has passed to allow the controls to function over a fiscal-year period.

3.4 On-going monitoring of key controls

Parks Canada has not yet started the on-going monitoring assessment of key controls. The Agency is committed to undertaking on-going monitoring of control activities after the completion of operating effectiveness testing of controls related to standardized processes. On-going monitoring will not commence until the associated remediation of operating effectiveness has been implemented and sufficient time has passed to allow the controls to function over a fiscal-year period.

4 Parks Canada's Action Plan

4.1 Progress during fiscal year 2012-13

During 2012-13, the Agency has continued to make significant progress in assessing and improving its key controls. Below is a summary of the main progress made by the Agency based on the plans identified in the previous fiscal year’s annex:

Element in previous year's action plan Status
Governance and Accountability – documentation Documentation of governance was deferred until 2013-14 due to potential restructuring and changes to service delivery models.
Chart of Accounts – documentation Documentation and design effectiveness completed for Chart of Accounts.
Remediation identified and in progress.
IT General Controls – Not in 2012-13 Action Plan No commitments in the 2012-13 Action Plan since the Agency's financial system service provider is Canadian Heritage and both organizations share the same financial system instance.
Accounts Payable – documentation Procure to Pay – documentation of current process completed. Process will be reconfigured and standardized in line with the Government-wide implementation timelines.
Interdepartmental Settlement – documentation of current process completed and the design effectiveness assessment has begun.
Revenue Management – documentation, design and operating effectiveness Documentation was reviewed due to Policy and Standards changes made in 2012-13. Design effectiveness completed and remedial actions will be addressed.
Operating effectiveness testing deferred until 2013-14 due to delays to full implementation of the Point of Sale automated system across the Agency and the need to address corrective measures.
Capital Assets – documentation In-scope subprocesses were documented (Amortization and Disposal). Design effectiveness completed and remediation will be addressed.
Environmental Liabilities – documentation and design effectiveness Documentation completed. Design effectiveness is significantly advanced, corrective measures will be communicated upon process validation from all stakeholders.
Financial Reporting – design effectiveness Documentation reviewed due to required changes for the non-audited financial statements. Design effectiveness completed, remediation identified and substantially advanced (Financial Statements and Public Accounts).
4.2 Status and action plan for the next fiscal year and subsequent years

The status and action plan for the completion of the key control areas were identified using a risk-based approach and the Agency commits to the following key risk areas for the next fiscal year and subsequent years. The action plan has also taken into account that certain corrective measures and anticipated business process transformations may require a full cycle of implementation before operational effectiveness testing may take place.

Key Control Areas Documentation Design effectiveness testing Operational effectiveness testing On-going monitoring rotation1
Entity Level Controls
Governance and Accountability 2013-14 2014-15 2015-16 Future Years
Chart of Accounts Complete Complete 2014-15 Future Years
IT General Controls under Departmental Management2
TBD TBD TBD TBD TBD
Business Processes Controls
Accounts Payable Complete 2014-15 2015-16 Future Years
Revenue Management Complete Complete 2013-14 Future Years
Capital Assets Complete Complete 2014-15 Future Years
Environmental Liabilities Complete In Progress 2014-15 Future Years
Financial Reporting Complete Complete 2013-14 Future Years

1 The frequency of the on-going monitoring of key control areas is risk-based and may occur over a multi-year cycle.

2 As Canadian Heritage provides the Agency with SAP financial system and shares the same system instance, no activities were deemed required in the 2013-14 Action Plan. The Agency may review its action plan following Guidelines on the ITGCs to be provided by Treasury Board Secretariat in Fall 2013.