Quarterly Financial Report

Quarterly financial report for the quarter ended June 30, 2012

Introduction

This quarterly financial report has been prepared by management as required by section 65.1 of the Financial Administration Act and in the form and manner prescribed by the Treasury Board.

The report should be read in conjunction with the Main Estimates and Supplementary Estimates.

A summary description of the Parks Canada Agency’s program activities can be found in Part II of the Main Estimates.

Basis of Presentation
This quarterly financial report has been prepared using an expenditure basis of accounting. The accompanying Statement of Authorities includes the Parks Canada Agency’s spending authorities granted by Parliament and those used by the Agency, consistent with the Main Estimates and Supplementary Estimates for the 2012-13 fiscal year. This quarterly financial report has been prepared using a special purpose financial reporting framework designed to meet financial information needs with respect to the use of spending authorities.

The authority of Parliament is required before moneys can be spent by the Government. Approvals are given in the form of annually approved limits through appropriation acts or through legislation in the form of statutory spending authority for specific purposes.

As Part of the Parliamentary business of supply, the Main Estimates must be tabled in Parliament on or before March 1 preceding the new fiscal year.  Budget 2012 was tabled on March 29, after the tabling of the Main Estimates on February 28, 2012.  As a result the measures announced in the Budget 2012 could not be reflected in the 2012-13 Main Estimates.

In fiscal 2012-2013, frozen allotments will be established by Treasury Board authority in departmental votes to prohibit the spending of funds already identified as savings measures in Budget 2012.  In future years, the changes to departmental authorities will be implemented through the Annual Reference Level Update, as approved by Treasury Board, and reflected in the subsequent Main Estimates tabled in Parliament.

As part of the performance reporting process, the Parks Canada Agency prepares financial statements on a full accrual basis in accordance with Treasury Board accounting policies, which are based on Canadian Generally Accepted Accounting Principles (GAAP) for the public sector. However, the spending authorities voted by Parliament remain on an expenditure basis.

The quarterly financial report has not been subject to an external audit or review.

Highlights of fiscal quarter and fiscal year to date (YTD) results

This section highlights the significant items that contributed to the net increase in resources available for the year and net decrease in actual expenditures for the quarter ended June 30.

The above chart outlines the total authorities available within the Agency as of June 30 of each year, the year-to-date expenditures as well as the expenditures during the quarter.

Significant Changes to Authorities

As at June 30, 2012, total authorities available for the year are $14.1 million higher than compared to the same quarter of the previous year.

The differences are primarily attributable to the following:

• $55 million increase to the Agency’s funds appropriated over a two year period
• $7.5 million increase for emergency response to natural disasters, and unanticipated health and safety related capital repairs
• $5.9 million increase for the assessment, management and remediation of federal contaminated sites
• $4.5 million increase to support the building of the Trans-Canada Trail
• $45 million reduction in funding as a result of completing the Trans-Canada Highway from a two-lane undivided highway to a four-lane divided highway in Banff National Park (Canada’s Economic Action Plan and other)
• $15.7 million reduction for the transfer of e-mail, data center and telecommunications services to Shared Services Canada.

Significant Changes to Budgetary Expenditures

Expended:
As per the Budgetary Expenditures by Standard Object Table, the total expended in the first quarter ending June 30, 2012 decreased by $15.7 million compared to the previous year, from $136.3 million to $120.6 million. This represents a 12% decrease of expenditures recorded as compared to the same period in 2011-12. The majority of the decrease between 2011-12 and 2012-13 relates to expenditures in transportation and communications, professional and special services, purchased repair and maintenance, other subsidies and payments. These decreases are mainly attributable to the transfer made to Shared Services Canada for e-mail, data center and telecommunications services, as well as lower expenditures recorded for the Trans-Canada Highway compared to the same period in 2011-12. All other expenditures are consistent with prior year spending trends.

Planned:
As per the Budgetary Expenditures by Standard Object Table, the total planned expenditures as of the first quarter ending June 30, 2012 increased by $14.1 million compared to the previous year, from $735 million to $749.1 million. This represents a 2% increase in planned expenditures as compared to the same period in 2011-12. The increase in planned personnel expenditures is mostly attributable to the adjustment made to the Agency’s reference levels for personnel in order to reflect historical spending patterns. The majority of the increase to the transfer payment standard object is for the renewal of the Agency’s General Class Contribution Program. The other subsidies and payments standard object has also increased as the Agency is planning on investing a significant amount for the establishment and expansion of national parks and marine conservation areas. The decreases in standard object planned expenditures mostly relate to the transfer made to Shared Services Canada for e-mail, data center and telecommunications services and the decrease in the Trans-Canada Highway funding as a result of nearing completion of the project.

Risks and Uncertainties

Parks Canada Agency is primarily funded through voted parliamentary spending authorities appropriated over a two year period for program expenditures, including capital expenditures and transfer payments. Also, Parks Canada is partially funded through respendable revenue which originates mainly from entrance and camping fees.   These revenues are impacted by economic fluctuations, competition from other parks and cultural attractions and weather conditions.  At the end of the first quarter, the Agency’s operational revenues (also referred to as expenditures equivalent to the revenues in the Statement of Authorities Table) were $4.1 million higher than at the same time last fiscal year.  This is a result of an increase in real property and business fees as well as improvement in the recording of revenue in the financial system.

In addition to the Budget announcements, the Agency has also been undertaking a concerted review of its dams to determine short term remedial measures to reduce risks and capital repairs to ensure compliance with safety codes.  As part of ongoing due diligence in operations and maintenance, the Agency plans to complete dam safety reviews for 39 high risk dams at a cost of approximately $15.6 million.  This work began in 2011-12 and will be completed in 2014-15.

Budget 2012 Implementation

This section provides an overview of the savings measures announced in Budget 2012 that will be implemented in order to refocus government and programs; make it easier for Canadians and business to deal with their government; and, modernize and reduce the back office.

Parks Canada will achieve Budget 2012 savings of $29.2 million by fiscal year 2014-15 through both reductions and restraint to streamline and focus operations while ensuring continued quality delivery to Canadians on its important mandate.

The following are the major steps to implement:

• Streamlining and consolidating technical and professional services.
  
• Aligning the seasonality of our workforce to the work requirements.
  
• Parks Canada will align the length of its season, hours of operation, and personal service at locks on those canals it operates to focus investments on the periods of highest requirements.
  

The 2012-13 Budget 2012 savings will be reflected later in the fiscal year.

Significant Changes in Relation to Operations, Personnel and Programs

On November 15, 2011, along with 43 other departments and agencies, Parks Canada’s Information Technology (IT) services in the domains of e-mail, data centres, network and telecommunications support were transferred to Shared Services Canada. This represents a reduction to the Agency’s 2012-13 Authorities of $15.7 million.

Approval by Senior Officials

Approved by:

Statement of Authorities (Unaudited)
(in thousands of dollars)	Fiscal Year 2012-2013			Fiscal Year 2011-2012
	Total available for use for the year ending March 31, 2013*	Used during the quarter ended June 30, 2012	Year-to-date used at quarter end	Total available for use for the year ending March 31, 2012*	Used during the quarter ended June 30, 2011	Year-to-date used at quarter end
- Vote 25 - Program expenditures	585,879	80,768	80,768	575,531	101,593	101,593
- Vote 30 - Payments to the New Parks and Historic Sites Account	500	0	0	500	0	0
Budgetory statutory authorities
- Employee benefit plans	51,763	12,941	12,941	47,942	11,986	11,986
- Expenditures equivalent to revenues resulting from the conduct of operations pursuant to section 20 of the Parks Canada Agency Act	111,000	26,863	26,863	111,000	22,750	22,750
Total Budgetary Authorities	749,142	120,572	120,572	734,973	136,329	136,329
* Includes authorities available for use and granted by Parliament at quarter-end

Budgetary Expenditures by Standard Object (Unaudited)
(in thousands of dollars)	Fiscal Year 2012-2013			Fiscal Year 2011-2012
	Planned expenditures for the year ending March 31, 2013*	Expended during the quarter ended June 30, 2012	Year-to-date used at quarter end	Planned expenditures for the year ending March 31, 2012*	Expended during the quarter ended June 30, 2011	Year-to-date used at quarter end
Expenditures:
Personnel	376,286	90,853	90,853	338,000	92,470	92,470
Transportation and communications	19,000	2,041	2,041	41,000	4,228	4,228
Information	12,000	1,547	1,547	11,000	1,502	1,502
Professional and special services	103,036	6,550	6,550	149,985	12,339	12,339
Rentals	15,000	2,233	2,233	19,000	2,589	2,589
Purchased Repair and maintenance	94,000	5,781	5,781	50,000	7,992	7,992
Utilities, materials and supplies	44,000	5,781	5,781	72,000	6,015	6,015
Acquisition of land, buildings and works	23,000	367	367	22,726	1,226	1,226
Acquisition of machinery and equipment	23,000	1,983	1,983	13,000	2,471	2,471
Transfer payments	13,820	2,323	2,323	3,262	1,756	1,756
Other subsidies and payments	26,000	1,113	1,113	15,000	3,741	3,741
Total gross budgetary expenditures	749,142	120,572	120,572	734,973	136,329	136,329
* Includes authorities available for use and granted by Parliament at quarter-end