Reports

Departmental Performance Report 2011-12

Financial Statements 2011-12

Statement of Management Responsibility Including Internal Control Over Financial

Responsibility for the integrity and objectivity of the accompanying financial statements for the year ended March 31, 2012, 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 and have been approved by the Executive Management Committee of the Agency as recommended by 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, 2012 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.

_________________________________
Alan Latourelle,
Chief Executive Officer

_________________________________
Lianne Wright
Acting Chief Financial Officer

Gatineau, Canada
September 27, 2012

Statement of Financial Position as at March 31 (Unaudited)
(in thousands of dollars)
2012 2011
Liabilities
Accounts payable and accrued liabilities
Federal government departments and agencies 15,184 30,338
Others 67,277 63,882
82,461 94,220
Deferred revenue (Note 3) 13,805 15,981
Lease obligation for tangible capital assets (Note 4) 4,499 -
Employee future benefits (Note 5) 64,754 62,488
Environmental liability (Note 6b) 17,343 19,810
Total net liabilities 182,862 192,499
Financial assets
Due from Consolidated Revenue Fund (Note 7)
General operations account 56,499 85,790
Specified purpose accounts 2,309 4,639
New parks and historic sites account 9,754 17,200
68,562 107,629
Accounts receivable 8,236 9,524
Total net financial assets 76,798 117,153
Net Debt 106,064 75,346
Non-financial assets
Prepaid expenses 2,613 6,640
Inventory of consumable supplies (Note 8) 5,814 6,247
Tangible capital assets (Note 9) 1,816,745 1,796,132
Collections and archaeological sites (Note 10) 1 1
Total non-financial assets 1,825,173 1,809,020
Net Financial Position 1,719,109 1,733,674

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

_________________________________
Lianne Wright
Acting Chief Financial Officer

Gatineau, Canada
September 27, 2012

Statement of Operations and Net Financial Position for the Year Ended March 31 (Unaudited)
(in thousands of dollars)
2012 Planned results 2012 2011
Expenses
Parks Canada program activities
Heritage places establishment 13,318 14,614 14,361
Heritage resources conservation 165,013 163,845 153,330
Public appreciation and understanding 44,838 59,520 55,061
Visitor experience 224,686 245,721 242,526
Townsite and throughway infrastructure 106,225 46,537 45,366
Internal services 74,554 93,616 89,087
628,634 623,853 599,731
Amortization of tangible capital assets 84,361 101,924 88,749
Total expenses 712,995 725,777 688,480
Revenues
Entrance fees 56,631 56,292 55,308
Recreational fees 24,121 23,240 23,434
Rentals and concessions 18,594 21,369 20,961
Other operating revenues 6,033 6,873 6,447
Townsites revenues 2,882 3,247 3,015
Staff housing 2,990 3,197 3,064
111,251 114,218 112,229
Net cost from continuing operations 601,744 611,559 576,251
Transferred operations
Expenses (Note 15) 16,594 9,034 15,424
Net cost of operations before government funding and transfers 618,338 620,593 591,675
Government funding and transfers
Net cash provided by Government 599,362 765,938
Change in Due from Consolidated Revenue Fund (39,067) 6,657
Services provided without charge by other government departments (Note 12a)) 46,922 47,077
Transfer of assets and liabilities to other governments departments (Note 15) (1,189) -
Net cost of operations after government funding and transfers 14,565 (227,997)
Net financial position - Beginning of year 1,733,674 1,505,677
Net financial position - End of year 1,719,109 1,733,674

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)
2012 2011
Net cost of operations after government funding and transfers 14,565 (227,997)
Change due to Tangible Capital Assets
Acquisition and improvements of tangible capital assets 126,908 286,389
Amortization of tangible capital assets (101,924) (88,749)
Proceeds from disposal of tangible capital assets (517) (498)
Net loss on disposal of tangible capital assets (1,712) (1,718)
Transfer of assets to other government departments (2,142) -
Total change due to Tangible Capital Assets 20,613 195,424
Change due to Inventory of consumable supplies (433) (48)
Change due to Prepaid Expenses (4,027) (7)
Net increase (decrease) in Net Debt 30,718 (32,628)
Net Debt at Beginning of Year 75,346 107,974
Net Debt at End of Year 106,064 75,346

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)
2012 2011
Operating activities
Net cost of operations before government funding and transfers 620,593 591,675
Non-cash items:
Amortization of tangible capital assets (101,924) (88,749)
Net loss on disposal of tangible capital assets (1,712) (1,718)
Services provided without charge by other government departments (46,922) (47,077)
Variations in Statement of Financial Position:
(Decrease) increase in accounts receivable (1,288) 1,772
Decrease in prepaid expenses (4,027) (7)
Decrease in inventory of consumable supplies (433) (48)
Decrease (increase) in accounts payable and accrued liabilities 11,759 (7,508)
Decrease (increase) in deferred revenue 2,176 (2,275)
Increase in employee future benefits (2,266) (2,463)
Decrease in environmental liability 2,467 36,445
Transfer of liabilities to other government departments (953) -
Cash used in operating activities 477,470 480,047
Capital investing activities
Acquisitions and improvements to tangible capital assets 126,908 286,389
Proceeds from disposal of tangible capital assets (517) (498)
Cash used in capital investing activities 126,391 285,891
Financing activities
Lease obligation for tangible capital assets (4,499) -
Cash used in financing activities (4,499) -
Net cash provided by Government of Canada 599,362 765,938

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

Notes to Financial Statements for the Year Ended March 31, 2012 (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 are the amounts reported in the future-oriented financial statements included in the 2011-2012 Corporate Plan. The future-oriented financial statements have been reclassified to conform to the current year presentation.

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 recognition:

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.

m) Measurement uncertainty:

The preparation of 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.

3. Deferred Revenue

Included in the deferred revenue total of $13.8 million ($16 million in 2011) is an amount of $11.5 million ($11.4 million in 2011) representing the balance, at year end, for entrance fees, recreational fees, and rentals/concessions fees collected in advance.

The remaining $2.3 million ($4.6 million in 2011) of deferred revenue, represents monies received from external organizations which must be used for specified purposes.

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 and accumulated amortization of $4.2 million, as at March 31, 2012. The obligations related to the upcoming years, in the total amount of $4.5 million, include the following:

(In thousands of dollars)
2012 2011
2012-13 631 -
2013-14 559 -
2014-15 544 -
2015-16 544 -
2016-17 and beyond 4,068 -
Total future minimum lease payment 6,346 -
Less: imputed interest (6.3%) 1,847 -
Balance of obligations under leased tangible capital assets 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)
2012 2011
Accrued benefit obligation, beginning of year 62,488 60,025
Expense for the year 8,083 7,613
Benefits paid during the year (5,817) (5,150)
Accrued benefit obligation, end of year 64,754 62,488

As part of changes to conditions of employment for executives, the accumulation of severance benefits under the employee severance pay program ceased for these employees commencing in 2012. 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.

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 2012 expense amounts to $39.8 million ($39.5 million in 2011), which represents approximately 1.8 times (1.9 times in 2011) 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 $0.3 million ($6.6 million in 2011) at March 31, 2012.

b) Environmental liability:

The Agency has identified 461 sites that are known or suspected of contamination. Based on the information available and detailed environmental assessments conducted thus far on 425 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 $17.3 million ($19.8 million in 2011). The Agency has estimated additional clean-up costs of $107.7 million ($121.9 million in 2011) 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, 2012, the balance of the General operations account is $56.5 million ($85.8 million in 2011).

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, 2012, the Agency has a balance of $2.3 million ($4.6 million in 2011) 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)
2012 2011
Available at beginning of year 17,200 20,461
Receipts:
Parliamentary authorities 500 500
Proceeds on disposal of tangible capital assets 269 543
Donations 14 71
783 1,114
Expenditures:
Capital expenditures 8,229 4,375
8,229 4,375
Available at end of year 9,754 17,200

8. Inventory of Consumable Supplies

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

(In thousands of dollars)
2012 2011
Top soil, sand, gravel and other crude material 931 1,027
Stationery, office and miscellaneous supplies 923 1,304
Fuel and other petroleum products 901 864
Equipment, materials and supplies 736 777
Printed books, publications and maps 639 462
Fabricated wood and metal products 602 605
Safety equipment 597 713
Construction material and supplies 327 324
Uniforms and protective clothing 158 171
5,814 6,247

9. Tangible Capital Assets

(In thousands of dollars)
Cost
Opening balance Acquisitions Adjustments Disposals and write-offs Closing balance
Buildings, fortifications and leasehold improvements 905,286 20,733 (251) 4,503 921,265
Improved grounds 668,552 6,079 (5,511) 1,010 668,110
Roads 1,192,678 44,485 2,818 1,510 1,238,471
Bridges 278,329 12,182 (1,598) 326 288,587
Canal and marine facilities 587,884 9,251 (1,734) 52 595,349
Utilities 246,737 5,819 997 22 253,531
Vehicles and equipment 147,804 8,567 (1,173) 27,308 127,890
Exhibits 104,237 3,273 (893) 578 106,039
Leased tangible capital assets - 8,897 12,263 - 21,160
4,131,507 119,286 4,918 35,309 4,220,402
Land (Note 2e (ii))
-Acquired land 148,270 7,622 57 29 155,920
-Crown land 1 - - - 1
-Donated land 20,144 - 66 - 20,210
168,415 7,622 123 29 176,131
Total 4,299,922 126,908 5,041 35,338 4,396,533

(In thousands of dollars)
Accumulated Amortization Net Book Value
Opening balance Amortization Adjustments Disposals and write-offs Closing balance 2012 2011
Buildings, fortifications and leasehold improvements 561,112 27,590 3,780 2,998 589,484 331,781 344,174
Improved grounds 550,547 17,558 (875) 946 566,284 101,826 118,005
Roads 685,380 24,654 904 1,316 709,622 528,849 507,298
Bridges 98,923 6,271 243 305 105,132 183,455 179,406
Canal and marine facilities 305,318 9,444 91 19 314,834 280,515 282,566
Utilities 112,801 5,496 1,014 288 119,023 134,508 133,936
Vehicles and equipment 106,678 7,327 (1,013) 26,764 86,228 41,662 41,126
Exhibits 83,031 2,387 45 473 84,990 21,049 21,206
Leased tangible capital assets - 1,197 2,994 - 4,191 16,969 -
2,503,790 101,924 7,183 33,109 2,579,788 1,640,614 1,627,717
Land (Note 2e (ii))
-Acquired land - - - - - 155,920 148,270
-Crown land - - - - - 1 1
-Donated land - - - - - 20,210 20,144
- - - - - 176,131 168,415
Total 2,503,790 101,924 7,183 33,109 2,579,788 1,816,745 1,796,132

Effective November 15, 2011, the Agency transferred information technology equipment with a net book value of $2.2 million to Shared Services Canada. This transfer is included in the adjustments columns (see note 15 for further detail on the transfer).

The total cost of tangible capital assets includes $143 million ($170.6 million in 2011) of construction in progress disclosed with their respective asset category. The Agency owns land, which comprises national parks and national park reserves, national marine conservation areas, and national historic sites.

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, 43 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)
2012 2011
Authorities voted:
Vote 25 - Program expenditures 603,447 767,405
Vote 30 - New parks and historic sites account 500 500
Statutory amounts:
Revenue received pursuant to section 20 of the Parks Canada Agency Act 118,172 113,416
Contributions to employee benefits plan 55,307 56,249
Total authorities 777,426 937,570
Less:
Authorities available for future years 99,414 46,260
Lapsed: Operating - 7,416
Current year authorities used 678,012 883,894
b) Reconciliation of net cost of operations to current year authorities used:
(In thousands of dollars)
2012 2011
Net cost of operations before government funding and transfers 620,593 591,675
Revenue received pursuant to section 20 of the Parks Canada Agency Act 118,172 113,416
Adjustments for items affecting net cost of operations but not affecting authorities:
Amortization of tangible capital assets (101,924) (88,749)
Services provided without charge by other government departments (Note 12a)) (46,922) (47,077)
Refund of prior years' expenditures (925) -
Bad debt expense (123) -
Net loss on disposal of tangible capital assets (1,712) (1,718)
(151,606) (137,544)
Variation in accounts affecting net cost of operations but not affecting authorities:
Vacation pay included in the accounts payable and accrued liabilities 1,154 (210)
Accrued liabilities not charged to authorities (20,488) -
Employee future benefits (2,266) (2,463)
Environmental liability 2,467 36,445
Lease obligation for tangible capital assets (4,499) -
(23,632) 33,772
Adjustments for items not affecting net cost of operations but affecting authorities:
Acquisitions and improvements to tangible capital assets 126,908 286,389
Proceeds on disposal of tangible capital assets (517) (498)
Change in prepaid expenses (4,027) (7)
Change in inventory of consumable supplies (433) (48)
Change in New parks and historic sites account (7,446) (3,261)
114,485 282,575
Current year authorities used 678,012 883,894

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)
2012 2011
Contributions covering employer's share of employees' insurance premiums and costs paid by Treasury Board Secretariat 27,881 28,098
Accommodation provided by Public Works and Government Services Canada 17,399 16,617
Salary and associated costs of legal services provided by Justice Canada 1,477 1,571
Other services received without charge 165 791
46,922 47,077

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 and audit services provided by the Office of the Auditor General 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 $70 million ($197.1 million in 2011) for services provided by Government departments, including an amount of $63.2 million ($188.2 million in 2011) with Public Works and Government Services Canada mostly related to architectural, engineering and environmental services of $29.5 million ($105.4 million in 2011), construction services of $3.1 millions ($27 million in 2011), repairs and maintenance $2.9 million ($21.1 million in 2011) and payments in lieu of taxes of $12 million ($12.9 million in 2011). Revenues generated from related parties amounted to $1.9 million ($1.9 million in 2011).

13. Contractual obligations

a) The Agency has entered into agreements for operating leases of equipment and accommodations for a total of $2.7 million ($8.9 million in 2011). 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)
2012-13 793
2013-14 637
2014-15 470
2015-16 251
2016-17 and beyond 523

b) The Agency has entered into contracts for operating and capital expenditures for approximately $64.8 million ($157.9 million in 2011). The majority of payments under these contracts are expected to be made over the next three years.

14. Segmented information

Presentation by segment is based on the Agency's program activity 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 program activities, 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 2012 Total 2011 Total
Salaries and employee benefits 7,953 115,598 41,863 172,091 21,348 67,872 426,725 406,539
Operating expenses
Professional and special services 2,688 12,369 4,021 16,091 7,275 11,235 53,679 59,131
Utilities, materials and supplies 332 10,073 1,053 25,317 9,939 2,244 48,958 50,285
Accommodation received without charge 654 4,218 1,640 5,780 1,936 3,171 17,399 16,617
Transportation and communication 1,223 5,550 2,711 3,657 319 1,798 15,258 16,660
Rentals 147 6,260 605 4,433 184 1,892 13,521 13,076
Repairs and maintenance 4 3,213 49 5,264 3,173 538 12,241 12,570
Payments in lieu of taxes 379 2,428 886 4,533 1,633 2,098 11,957 12,865
Information 170 372 3,164 4,554 5 1,056 9,321 7,979
Net loss on disposal of tangible capital assets - - - - - 1,712 1,712 1,718
Miscellaneous expenses - - - 181 479 - 660 5,600
Environmental liability - (1,229) - - - - (1,229) (20,186)
Total operating expenses 5,597 43,254 14,129 69,810 24,943 25,744 183,477 176,315
Grants and contributions 1,064 4,993 3,528 3,820 246 - 13,651 16,877
Total expenses (excluding amortization) 14,614 163,845 59,520 245,721 46,537 93,616 623,853 599,731
Amortization 101,924 88,749
Total expenses 725,777 688,480
Entrance fees - 8 - 56,271 10 3 56,292 55,308
Recreational fees - 18 6 23,191 11 14 23,240 23,434
Rentals and concessions 63 5 - 1,153 1,561 18,587 21,369 20,961
Other operating revenues 2 1,084 95 2,129 963 2,600 6,873 6,447
Townsites revenues - - - - 3,247 - 3,247 3,015
Staff housing - 1 - 6 - 3,190 3,197 3,064
Total revenues 65 1,116 101 82,750 5,792 24,394 114,218 112,229
Net cost from continuing operations 611,559 576,251
Transferred Operations (Note 15) 9,034 15,424
Net cost of operations before government funding and transfers 620,593 591,675

15. Transfer from/to other government departments

a) Shared Services Canada

Effective November 15, 2011, the Agency transferred its information technology infrastructure accountabilities for e-mail, data centres and networks to Shared Services Canada, including the stewardship responsiblity for the assets and liabilities related to these services, in accordance with Order-in-Council 2011-1297. The amount of expenses for information technology services provided internally up to the transition date amounted to $9 million ($15.4 million in 2011) and is presented separately as Transferred operations expenses in the Statement of Operations and Net Financial Position. Accordingly, the Agency transferred the following assets and liabilities to Shared Services Canada on November 15, 2011:

(In thousands of dollars)
Assets:
Tangible capital assets (Net book value) 2,152
Total assets transferred 2,152
Liabilities:
Accounts payable and accrued liabilities 313
Accrued salary and vacation pay 147
Employee future benefits 493
Total liabilities transferred 953
Adjustment to the Net financial position 1,199

In addition, the comparative figures have been reclassified on the Statement of Operations and Net Financial Position to present the expenses of the transferred operations.

During the transition period, the Agency continued to administer the transferred activities on behalf of Shared Services Canada. The administered expenses amounted to $7.4 million for the year. These expenses are not recorded in these financial statements.

b) Other

Effective April 1, 2011, the Agency was transferred the responsibility for a parcel of land at the Pointe-au-Père Lighthouse National Historical Site from Transport Canada (net book value, $0.001 million) in accordance with an administrative arrangement, including the stewardship responsibility for this asset.

Effective May 31, 2011, the Agency was transferred the responsibility for a vehicle from the National Energy Board (net book value, $0.01 million) in accordance with an administrative arrangement, including the stewardship responsibility for this asset.

Effective February 8, 2012, the Agency was transferred the responsibility for a Zodiac vessel from the Department of Fisheries and Oceans (net book value, $0 million) in accordance with an administrative arrangement, including the stewardship responsibility for this asset.

16. Accounting changes

During 2011-2012 fiscal year, amendments were made to Treasury Board Accounting Standard 1.2 -- Departmental and Agency Financial Statements to improve financial reporting by government departments and agencies. The amendments are effective for financial years ending March 31, 2012, and later. The significant changes to the Agency's financial statements are described below.

Net debt (calculated as liabilities less financial assets) is now presented in the Statement of Financial Position. Accompanying this change, the Agency now presents a Statement of Change in Net Debt and no longer presents a Statement of Equity.

Government funding and transfers, as well as the credit related to services provided without charge by other government departments, are now recognized in the Statement of Operations and Net Financial Position below "Net cost of operations before government funding and transfers". In previous years, the Agency recognized these transactions directly in the Statement of Equity of Canada.

17. Obligation for termination benefits

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 at March 31, 2012, the Agency has recorded an obligation for termination benefits for an amount of $16.1 million as part of accrued liabilities to reflect the estimated workforce adjustment costs.

18. Comparative Figures

Some of the previous year's comparative figures have been reclassified to conform to the current year's presentation.