Parks Canada Agency Departmental Performance Report 2013-14

Statement of Management Responsibility Including Internal Control Over Financial Reporting

Responsibility for the integrity and objectivity of the accompanying financial statements for the fiscal year ended March 31, 2014, 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, 2014 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 oversees management's responsibilities for maintaining adequate control systems and the quality of financial reporting, and which recommends the financial statements to the Chief Executive Officer.

The financial statements of the Agency have not been audited.

Original signed by

Alan Latourelle,
Chief Executive Officer

Gatineau, Canada
August 27, 2014
Original signed by

Maria Stevens,
Chief Financial Officer


Statement of Financial Position as at March 31 (Unaudited)
(In thousands of dollars)
2014 2013
Liabilities
Accounts payable and accrued liabilities (Note 3) 81,975 67,790
Deferred revenue (Note 4) 16,253 15,216
Lease obligation for tangible capital assets (Note 5) 3,831 4,140
Employee future benefits (Note 6) 13,561 54,342
Environmental liability (Note 7) 20,761 20,704
Total net liabilities 136,381 162,192
Financial Assets
Due from Consolidated Revenue Fund (Note 8) 89,789 74,335
Accounts receivable and advances (Note 9) 8,785 6,998
Total net financial assets 98,574 81,333
Net Debt 37,807 80,859
Non-financial Assets
Prepaid expenses 2,553 3,089
Inventory of consumable supplies (Note 10) 8,286 7,272
Tangible capital assets (Note 11) 1,856,228 1,831,048
Collections and archaeological sites (Note 12) 1 1
Total non-financial assets 1,867,068 1,841,410
Net financial position (Note 13) 1,829,261 1,760,551
Contingent liabilities and contractual obligations (Notes 14 and 15)
The accompanying notes form an integral part of these financial statements.


Original signed by

Alan Latourelle,
Chief Executive Officer

Gatineau, Canada
August 27, 2014
Original signed by

Maria Stevens,
Chief Financial Officer


Statement of Operations and Net Financial Position for the Year Ended March 31 (Unaudited)

(In thousands of dollars)
2014
Planned
results
2014 2013
Expenses
Parks Canada Programs
Heritage places establishment 35,354 26,124 12,845
Heritage resources conservation 164,189 131,184 147,135
Public appreciation and understanding 43,058 44,450 54,254
Visitor experience 221,632 217,439 218,158
Townsite and throughway infrastructure 77,910 75,003 51,307
Internal services 66,749 89,618 93,950
608,892 583,818 577,649
Amortization of tangible capital assets 80,389 81,221 78,173
Total expenses 689,281 665,039 655,822
Revenues
Entrance fees 59,409 59,038 58,468
Recreational fees 24,527 24,504 23,974
Rentals and concessions 22,552 22,281 21,816
Other operating revenues 7,254 5,942 4,924
Townsites revenues 3,374 3,085 3,272
Staff housing 3,427 3,022 3,029
Revenues earned on behalf of Government - (50) (168)
Total revenues 120,543 117,822 115,315
Net cost from continuing operations 568,738 547,217 540,507
Transferred operations
Expenses (Note 20a) - 536 -
Net cost of operations before government funding and transfers 568,738 547,753 540,507
Government funding and transfers
Net cash provided by Government 601,429 556,480 507,816
Change in Due from Consolidated Revenue Fund (10,504) 15,454 5,773
Services provided without charge by other government departments (Note 16a) 50,080 44,513 48,267
Transfer of assets and liabilities from other governments departments (Note 20b) - 16 12
Net cost of operations after government funding and transfers (72,267) (68,710) (21,361)
Net financial position - Beginning of Year 1,781,360 1,760,551 1,739,190
Net financial position - End of Year 1,853,627 1,829,261 1,760,551
Segmented information (Note 18)
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)
2014
Planned
results
2014 2013
Net cost of operations after government funding and transfers (72,267) (68,710) (21,361)
Change due to tangible capital assets
Acquisition and improvements of tangible capital assets 114,916 110,399 78,315
Amortization of tangible capital assets (80,389) (81,221) (78,173)
Proceeds from disposal of tangible capital assets (213) (2,988) (274)
Net loss on disposal of tangible capital assets including adjustments (480) (1,026) (5,658)
Transfer of assets from other government departments - 16 12
Total change due to tangible capital assets 33,834 25,180 (5,778)
Change due to inventory of consumable supplies 115 1,014 1,458
Change due to prepaid expenses 625 (536) 476
Net decrease in net debt (37,693) (43,052) (25,205)
Net debt at beginning of year 78,538 80,859 106,064
Net debt at end of year 40,845 37,807 80,859
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)
2014 2013
Operating activities
Net cost of operations before government funding and transfers 547,753 540,507
Non-cash items:
Amortization of tangible capital assets (81,221) (78,173)
Net loss on disposal of tangible capital assets including adjustments (1,026) (5,658)
Services provided without charge by other government departments (44,513) (48,267)
Variations in Statement of Financial Position:
Increase (decrease) in accounts receivable and advances 1,787 (1,238)
Increase (decrease) in prepaid expenses (536) 476
Increase in inventory of consumable supplies 1,014 1,458
(Increase) decrease in accounts payable and accrued liabilities (14,185) 14,671
Increase in deferred revenue (1,037) (1,411)
Decrease in employee future benefits 40,781 10,412
Increase in environmental liability (57) (3,361)
Cash used in operating activities 448,760 429,416
Capital investing activities
Acquisitions and improvements to tangible capital assets 110,399 78,315
Proceeds from disposal of tangible capital assets (2,988) (274)
Cash used in capital investing activities 107,411 78,041
Financing activities
Decrease in lease obligations for tangible capital assets 309 359
Cash used in financing activities 309 359
Net cash provided by Government of Canada 556,480 507,816
The accompanying notes form an integral part of these financial statements.

Notes to Financial Statements for the Year Ended March 31, 2014 (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 17 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 2013-2014 Corporate Plan.

b) Amounts due from Consolidated Revenue Fund

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.

Amounts due from or to the CRF are the result of timing differences at year-end between when a transaction affects authorities and when it is processed through the CRF. Amounts due from the CRF represent the net amount of cash that the Agency is entitled to draw from the CRF without further authorities to discharge its liabilities.

c) Deferred revenue

Deferred revenue represents the balance at year-end of unearned revenues stemming from accounts received from external parties that are restricted in order to fund the expenditures related to specific research projects and stemming from amounts received for fees prior to services being performed. Revenue is recognized in the period in which these expenditures are incurred or in which the service is performed.

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.

Leases are recorded as leased tangible capital assets when, under the terms of the lease, substantially all of the benefits and risks incident to ownership are, in substance, transferred to the Agency. Benefits and risks are substantially transferred when one or more of the following conditions are met: there is reasonable assurance that the Agency will obtain ownership of the leased property by the end of the lease term, the lease term is of such a duration that the Agency will receive substantially all of the economic benefits expected to be derived from the use of the leased property over its life span or, the lessor would be assured of recovering the investment in the leased property and of earning a return on investment as a result of the lease agreement.

Intangible assets are not capitalized.

Assets under construction are not amortized. The costs of assets under construction 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 class Amortization period
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) 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.

(ii) Severance benefits

Until April 23, 2013, certain employees entitled to severance benefits under labour contracts or conditions of employment earned these benefits as services necessary to earn them were rendered. 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.

h) Expenses:

Expenses are recorded on the accrual basis.

(i) Transfer payments

Transfer payments are recorded as expenses when authorization for the payment exists and the recipient has met the eligibility criteria or the entitlements established for the transfer payment program. In situations where payments do not form part of an existing program, transfer payments are recorded as expenses when the Government announces a decision to make a non-recurring transfer, provided the enabling legislation or authorization for payment receives parliamentary approval prior to the completion of the financial statements. Transfer payments that become repayable as a result of conditions specified in the contribution agreement that have come into being are recorded as a reduction to transfer payment expense and as a receivable.

(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

Environmental liabilities consist of estimated costs related to the remediation of environmentally contaminated sites. Remediation liabilities are recorded as accrued liabilities to recognize the estimated costs related to the management and remediation of contaminated sites where the Agency is obligated, or likely to be obligated, to remediate the sites. If the responsibility to remediate is undeterminable, the amount is disclosed as a contingent liability. If the responsibility to remediate is undeterminable and a reasonable estimate cannot be made, the nature, source and extent of contamination is disclosed as a contingent liability.

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, liabilities at the date of the financial statements and the reported amounts of revenues and expenses for the year. At the time of preparation of these statements, management believes the estimates and assumptions to be reasonable. The most significant items where estimates are used are employee-related liabilities, estimated useful lives of tangible capital assets, lease obligation for tangible capital assets and environment-related liabilities. 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.

3. Accounts payable and accrued liabilities

The following table presents details of the Agency's accounts payable and accrued liabilities:

(In thousands of dollars)
2014 2013
Accounts payable - Other government departments and agencies 12,151 9,456
Accounts payable - External parties 61,460 39,483
Total accounts payable 73,611 48,939
Accrued liabilities 8,364 18,851
81,975 67,790

In Canada's Economic Action Plan 2012, the Government announced savings measures to be implemented by departments over the next three fiscal years starting in 2012-2013. As a result, the Agency recorded an obligation for termination benefits to reflect the estimated workforce adjustment costs for which an amount of $0.3 million ($2.4 million in 2013) is included in the accrued liabilities at March 31, 2014.

4. Deferred Revenue

Included in the deferred revenue total of $16.3 million ($15.2 million in 2013) is an amount of $12 million ($11.7 million in 2013) representing the balance, at year end, for entrance fees, recreational fees, and rentals/concessions fees collected in advance. The remaining $4.3 million ($3.5 million in 2013) of deferred revenue, represents monies received from external organizations which must be used for specified purposes.

(In thousands of dollars)
2014 2013
Deferred revenue, beginning of year 15,216 13,805
Amounts received 13,038 12,922
Revenue recognized (12,001) (11,511)
16,253 15,216

5. 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 2013) and accumulated amortization of $5.6 million ($4.9 million in 2013), as at March 31, 2014. The obligations related to the upcoming years, in the total amount of $3.8 million ($4.1 million in 2013), include the following:

(In thousands of dollars)
2014 2013
2013-14 - 559
2014-15 544 544
2015-16 544 544
2016-17 544 544
2017-18 544 544
2018-19 and beyond 2,980 2,980
Total future minimum lease payment 5,156 5,715
Less: imputed interest (6,3%) 1,325 1,575
Balance of obligations under leased tangible capital assets 3,831 4,140

6. Employee Future Benefits

a) Severance benefits:

Until April 23, 2013, the Agency provided severance benefits to certain employees based on eligibility, years of service and final salary. These severance benefits are not pre-funded. Benefits will be paid from future authorities.

As part of changes to conditions of employment, the accumulation of severance benefits under the employee severance pay program ceased. Employees subject to these changes have been given the option to be immediately paid 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. These changes have been reflected in the calculation of the outstanding severance benefit obligation.

(In thousands of dollars)
2014 2013
Accrued benefit obligation, beginning of year 54,342 64,754
Expense for the year 2,182 5,365
Benefits paid during the year (42,963) (15,777)
Accrued benefit obligation, end of year 13,561 54,342

b) Pension benefits:

The Agency's employees participate in the public service pension plan (the "Plan"), which is sponsored and administered by the Government of Canada. 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 Plan benefits and they are indexed to inflation.

Both the employees and the Agency contribute to the cost of the Plan. Due to the amendment of the Public Service Superannuation Act following the implementation of provisions related to Economic Action Plan 2012, employee contributors have been divided into two groups - Group 1 relates to existing plan members as of December 31, 2012 and Group 2 relates to members joining the Plan as of January 1, 2013. Each group has a distinct contribution rate.

The 2013-2014 expense amounts to $33.8 million ($39.5 million in 2012-2013). For Group 1 members, the expense represents approximately 1.6 times (1.7 times in 2012-2013) the employee contributions and, for Group 2 members, approximately 1.5 times (1.6 times in 2012-2013) the employee contributions.

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.

7. Environmental liability:

The Agency has identified approximately 476 sites (473 sites in 2013) that are known or suspected of contamination. A remediation liability of $20.8 million ($20.7 million in 2012-2013) has been recorded for the sites where the Agency is obligated, or likely to be obligated, to remediate. The amount recorded as environmental liability is based on estimates and could change by a material amount in the near term. The net present value technique is used to calculate the liability, the estimated total undiscounted expenditures represents $21.7 million at a discount rate of 1.5%. There is no environmental contingent liability. A contingent liability is disclosed when the Agency determines that it is not directly responsible, nor does it accept responsibility, however, there is uncertainty as to whether the department may be responsible. 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 of existing sites. These liabilities are accrued by the Agency in the year in which they become likely and are reasonably estimable.

8. Due from Consolidated Revenue Fund

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.

Included in the Consolidated Revenue Fund are the following:

(In thousands of dollars)
2014 2013
General operations account 75,179 62,572
Specified purpose accounts 4,274 3,831
New parks and historic sites account 10,336 7,932
89,789 74,335

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, 2014, the Agency has a balance of $4.3 million ($3.8 million in 2013) for specified purpose accounts. Details on the New parks and historic sites account are disclosed in Note 13.

9. Accounts receivable and advances

The following table presents details of the Agency's accounts receivable and advances balances:

(In thousands of dollars)
2014 2013
Receivables - Other government departments and agencies 1,167 899
Receivables - External parties 8,034 6,555
Employee advances 197 199
Subtotal 9,398 7,653
Allowance for doubtful accounts on receivables from external parties (613) (655)
8,785 6,998

10. Inventory of Consumable Supplies

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

(In thousands of dollars)
2014 2013
Stationery, office and miscellaneous supplies 1,597 1,424
Equipment, materials and supplies 1,458 1,294
Fabricated wood and metal products 1,065 559
Fuel and other petroleum products 995 1,050
Top soil, sand, gravel and other crude material 962 1,142
Printed books, publications and maps 829 592
Safety equipment 751 645
Construction material and supplies 375 377
Uniforms and protective clothing 254 189
8,286 7,272

The cost of consumed inventory recognized as an expense in the Statement of Operations and Net Financial Position is $35.6 million in 2013-2014 ($27.7 million in 2012-2013).

11. Tangible Capital Assets

(In thousands of dollars)
Cost
Opening balance Acquisitions Adjustments Disposals and write-offs Closing balance
Buildings, fortifications and leasehold improvements 937,581 21,239 (1,111) 3,031 954,678
Improved grounds 666,102 4,124 (94) 1,540 668,592
Roads 1,222,644 24,990 740 547 1,247,827
Bridges 346,215 22,064 (48) 2,552 365,679
Canal and marine facilities 596,748 12,628 (102) 3,192 606,082
Utilities 254,800 11,231 (54) 83 265,894
Vehicles and equipment 132,156 12,271 2,968 5,453 141,942
Exhibits 106,242 1,582 1,390 14 109,200
Leased tangible capital assets 21,172 - - - 21,172
4,283,660 110,129 3,689 16,412 4,381,066
Land
-Acquired land 155,893 270 - 7 156,156
-Crown land 1 - - - 1
-Donated land 20,210 - - - 20,210
176,104 270 - 7 176,367
4,459,764 110,399 3,689 16,419 4,557,433

(In thousands of dollars)
Accumulated Amortization Net Book Value
Opening balance Amortization Adjustments Disposals and write-offs Closing balance 2014 2013
Buildings, fortifications and leasehold improvements 601,896 17,564 362 2,201 617,621 337,057 335,685
Improved grounds 560,939 7,818 (443) 1,303 567,011 101,581 105,163
Roads 727,981 24,254 445 481 752,199 495,628 494,663
Bridges 113,073 6,463 (5) 1,468 118,063 247,616 233,142
Canal and marine facilities 319,260 8,540 (98) 1,725 325,977 280,105 277,488
Utilities 122,813 5,635 97 1 128,544 137,350 131,987
Vehicles and equipment 89,870 7,028 3,238 5,191 94,945 46,997 42,286
Exhibits 87,953 3,225 41 14 91,205 17,995 18,289
Leased tangible capital assets 4,931 694 15 - 5,640 15,532 16,241
2,628,716 81,221 3,652 12,384 2,701,205 1,679,861 1,654,944
Land
-Acquired land - - - - - 156,156 155,893
-Crown land - - - - - 1 1
-Donated land - - - - - 20,210 20,210
- - - - - 176,367 176,104
2,628,716 81,221 3,652 12,384 2,701,205 1,856,228 1,831,048

The Agency owns land, which comprises national parks and national park reserves, national marine conservation areas, and national historic sites. The total cost of tangible capital assets includes $82.7 million ($58.1 million in 2013) of assets under construction disclosed within their respective asset category.

During 2013-2014 fiscal year, the Agency was transferred assets from Fisheries and Oceans Canada. The transfers are included in the adjustment columns. Details on the tranfers are disclosed in Note 20 b).

12. 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 Parks 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.

13. Net financial position

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 in the restricted funds of the New parks and historic sites account for the year ended March 31 are highlighted in the following analysis:

(In thousands of dollars)
2014 2013
New parks and historic sites account
Available at beginning of year - Restricted 7,932 9,754
Receipts:
Parliamentary authorities 500 500
Proceeds on disposal of tangible capital assets 2,950 251
Donations 7 7
3,457 758
Expenditures:
Capital expenditures 1,053 2,580
1,053 2,580
Available at end of year - Restricted 10,336 7,932
Unrestricted 1,818,925 1,752,619
Net financial position at year end 1,829,261 1,760,551

14. Contingent Liabilities

Contingent liabilities arise in the normal course of operations and their ultimate disposition is unknown.

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 $16 million ($14.2 million in 2013) at March 31, 2014.

15. Contractual obligations

a) The nature of the Agency's activities can result in some large multi-year contracts and obligations whereby the Agency will be obligated to make future payments when the services/goods are received. The Agency has entered into agreements for operating leases for a total of $3.6 million ($3.6 million in 2013). Minimum annual payments under these agreements for the next five years and beyond are as follows:

(In thousands of dollars)
2014-15 1,907
2015-16 414
2016-17 221
2017-18 165
2018-19 and beyond 861
3,568

b) The Agency has entered into contracts for operating and capital expenditures for approximately $67.9 million ($84.4 million in 2013). The majority of payments under these contracts are expected to be made over the next three years.

16. 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)
2014 2013
Employer's contribution to the health and dental insurance plans paid by Treasury Board of Canada Secretariat 25,879 29,695
Accommodation provided by Public Works and Government Services Canada 17,684 17,432
Legal services provided by the Department of Justice 832 1,004
Other services received without charge 118 136
44,513 48,267

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 $79.6 million ($52.7 million in 2013) for services provided by Government departments, including an amount of $70.7 million ($46.1 million in 2013) with Public Works and Government Services Canada mostly related to architectural, engineering and environmental services of $46.5 million ($22.8 million in 2013), construction services of $5.9 millions ($0.5 million in 2013), repairs and maintenance $1.3 million ($4.1 million in 2013) and payments in lieu of taxes of $13 million ($13.5 million in 2013). Revenues generated from related parties amounted to $2 million ($1.1 million in 2013).

17. 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) Reconciliation of net cost of operations to current year authorities used:

(In thousands of dollars)
2014 2013
Net cost of operations before government funding and transfers 547,753 540,507
Revenue received pursuant to section 20 of the Parks Canada Agency Act 119,060 118,011
Adjustments for items affecting net cost of operations but not affecting authorities:
Amortization of tangible capital assets (81,221) (78,173)
Net loss on disposal of tangible capital assets including adjustments (1,026) (5,658)
Services provided without charge by other government departments (44,513) (48,267)
Variation in vacation pay and compensatory leave (678) 1,434
Variation in employee future benefits 40,781 10,412
Variation in environmental liability (57) (3,361)
Variation in accrued liabilities not charged to authorities 1,112 18,371
Bad debt expense (104) (76)
Refund of prior years' expenditures (768) (1,165)
(86,474) (106,483)
Adjustments for items not affecting net cost of operations but affecting authorities:
Acquisitions and improvements to tangible capital assets 110,399 78,315
Proceeds on disposal of tangible capital assets (2,988) (274)
Variation in lease obligation for tangible capital assets 309 359
Variation in inventory of consumable supplies 1,014 1,458
Variation in prepaid expenses (536) 476
Variation in New parks and historic sites account 2,404 (1,822)
110,602 78,512
Current year authorities used 690,941 630,547

b) Authorities provided and used:

(In thousands of dollars)
2014 2013
Authorities voted:
Vote 25 - Program expenditures 667,236 607,936
Vote 30 - New parks and historic sites account 500 500
Statutory amounts:
Revenue received pursuant to section 20 of the Parks Canada Agency Act 119,060 118,011
Contributions to employee benefits plan 48,030 55,254
Total authorities 834,826 781,701
Less:
Lapse 18,836 4,497
Authorities available for future years 125,049 146,657
143,885 151,154
Current year authorities used 690,941 630,547

18. 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 2014 2013
Salaries and employee benefits 5,061 83,795 32,299 140,419 19,606 64,686 345,866 385,850
Operating expenses
Professional and special services 1,621 15,523 3,246 17,383 16,549 7,993 62,315 50,435
Utilities, materials and supplies 98 9,790 1,224 27,805 12,125 5,278 56,320 42,642
Repairs and maintenance - 1,772 41 6,642 20,293 - 28,748 14,473
Accommodation received without charge 791 3,973 1,347 6,586 2,272 2,714 17,683 17,432
Transportation and communication 449 3,975 1,696 3,894 318 3,981 14,313 12,821
Rentals 138 5,832 505 3,868 478 2,551 13,372 13,992
Payments in lieu of taxes 983 2,401 580 4,377 3,310 1,364 13,015 13,493
Miscellaneous expenses 9,154 - 15 1,099 - 1,046 11,314 6,315
Information 40 224 2,039 4,951 40 5 7,299 6,461
Total operating expenses 13,274 43,490 10,693 76,605 55,385 24,932 224,379 178,064
Grants and contributions 7,789 3,899 1,458 415 12 - 13,573 13,735
Total expenses (excluding amortization) 26,124 131,184 44,450 217,439 75,003 89,618 583,818 577,649
Amortization 81,221 78,173
Total expenses 665,039 655,822
Entrance fees - 9 - 59,027 2 - 59,038 58,468
Recreational fees - - - 24,499 - 5 24,504 23,974
Rentals and concessions - 35 - 866 1,152 20,228 22,281 21,816
Other operating revenues - 663 118 1,861 760 2,540 5,942 4,924
Townsites revenues - - - - 3,085 - 3,085 3,272
Staff housing - 22 - 10 - 2,990 3,022 3,029
Revenues earned on behalf of Government - - - - - (50) (50) (168)
Total revenues - 729 118 86,263 4,999 25,713 117,822 115,315
Net cost from continuing operations 547,217 540,507
Transferred Operations 536 -
Net cost of operations before goverment funding and transfers 547,753 540,507

19. Accounting Changes

During the fiscal year, the Agency revised its accounting method for the disclosure of the environmental contingent liability in compliance with Treasury Board Accounting Standards and the adjustment was applied retroactively. This change has no impact on the environmental liability in the Statement of Financial Position.

20. Transfers from/to other government departments

a) Shared Services Canada

At March 31, 2014, the Agency transferred all its workplace technology software expenditures to Shared Services Canada in accordance with Order-in-Council 2013-0368. The expenses transferred amounted to $0.5 million and is presented separately as Transferred operations expenses in the Statement of Operations and Net Financial Position

b) Other

Effective April 1, 2013, the Agency was transferred the responsibility for a land, infrastructure, and buildings from Fisheries and Oceans 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 $0.016 million.

Effective June 27, 2013, the Agency was transferred the responsibility for a boat from Fisheries and Oceans 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 $1.

21. Comparative information

Comparative figures have been reclassified to conform to the current year's presentation.


Annex to the Statement of Management Responsibility including Internal Control over Financial Reporting - Fiscal Year 2013-14

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 2013-14. This document provides summary information on the measures taken byParks Canada to maintain an effective system of internal control over financial reporting (ICFR) including information on internal control management, 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 and Report on Plans and Priorities.

2 Parks Canadas's System of internal control over financial reporting (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 Internal control management

Parks Canada has a well-established governance and accountability structure to support departmental assessment efforts and oversight of its system of internal control. An internal control framework, approved by the Chief Executive Officer and Chief Financial Officer, is in place and includes:

  • Organizational accountability structures as they relate to internal control management to support sound financial management, including roles and responsibilities of senior managers in their areas of responsibility for control management;
  • Internal control structure and management approach, which depicts the overall approach for internal control identification, documentation and evaluation;
  • Values and ethics; Parks Canada has recently updated the Values and Ethics Code. Parks Canada also has an Ombudsman whose mission is to promote and intervene in favour of an organizational culture based on the fundamental values of the Agency. The Ombudsman is also the Senior Integrity Officer for internal disclosure and wrongdoing;
  • Ongoing communication and training on statutory requirements, and policies and procedures for sound financial management and control; and
  • Monitoring and regular updates on internal control management, as well as the provision of related assessment results and action plans to the Chief Executive Officer and senior management and the Departmental Audit Committee (DAC).
  • The DAC provides advice to the Chief Executive Officer on the adequacy and functioning of Parks Canada's risk management, control and governance frameworks and processes.

2.2 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 shared with Canadian Heritage. The services are administered through an MOU whereby Parks Canada shares equally the expenses (incl. maintenance, training, user support, etc.) as well as the responsibilities and risks in relation to the financial system. 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 2013-14

The following summarizes the key assessment results from the documentation, design effectiveness, operating effectiveness testing and on-going monitoring completed as of March 31, 2014.

3.1 Documentation of control activities

Parks Canada focussed its efforts on the entity level controls by completing the documentation of Parks Canada's Financial Management and Internal Control Frameworks.

3.2 Design effectiveness testing of key controls

In the current year, the Agency completed design effectiveness testing of the environmental liabilities business process.
As a result of design effectiveness testing, the Agency identified the following remediation required:

  • Environmental liabilities: Clarify roles and responsibilities within stakeholders.

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

3.3 Operating effectiveness testing of key controls

Parks Canada has completed the operating effectiveness testing of the following key business processes - revenue management and financial reporting.
As a result, the Agency identified the following remediation required:

  • Revenue management: Increase consistencies in applying the documented procedures.

Remediation of key control deficiencies were communicated and are currently being addressed.
No remediations were identified and need to be addressed for the processes covered in financial reporting.

3.4 On-going monitoring of key controls

  • Parks Canada has not yet begun the on-going monitoring assessment of key controls. The Agency has established its on-going monitoring plan for entity level controls, IT general controls and business processes controls and has included its commitments in the action plan (see section 4.2 for more details).

4 Parks Canada's Action Plan

4.1 Progress during fiscal year 2013-14

During 2013-14, the Agency has continued to make significant progress in assessing and improving its key commitments in last year's action plan. 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 & Accountability - documentation Documentation of governance was completed with the Agency's Financial Management and Internal Control Frameworks.
Revenue Management - operating effectiveness Operating effectiveness testing completed, corrective measures identified and currently addressed.
Environmental Liabilities - design effectiveness Design effectiveness testing completed, corrective measures identified and currently addressed.
Financial Reporting - operating effectiveness Operating effectiveness testing completed for Financial Statements and Public Accounts processes. No remediation required.

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 rotation 1
Entity Level Controls

Governance & Accountability

Completed 2014-15 2014-15 2015-16
IT General Controls under Departmental Management
IT General Controls Completed Completed Completed 2014-15
Business Processes Controls
Chart of Accounts Completed Completed 2014-15 2015-16
Accounts Payable Completed 2014-15 2015-16 2016-17
Revenue Management Completed Completed Completed 2014-15
Capital Assets Completed Completed 2014-15 2015-16
Environmental Liabilities Completed Completed 2014-15 2015-16
Financial Reporting Completed Completed Completed 2014-15

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