Quarterly Financial Report

Quarterly financial report for the quarter ended September 30, 2013

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 Secretariat. This report should be read in conjunction with the Main Estimates, the Supplementary Estimates and the previous Quarterly Financial Reports as well as Canada's Economic Action Plan 2012 (Budget 2012).

A summary description of the Parks Canada Agency's programs can be found in Part II of the Main Estimates.

This quarterly financial report has not been subject to an external audit. However, it has been reviewed by the Agency Audit Committee.

Basis of Presentation

The quarterly financial report has been prepared using an expenditure basis of accounting (modified cash accounting). The accompanying Statement of Authorities includes the Parks Canada Agency's spending authorities granted by Parliament and those used by the Agency, consistent with the Main Estimates and Supplementary Estimates for the 2013-2014 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 funds 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.

In accordance with Treasury Board accounting policies, the Agency uses the full accrual method of accounting to prepare and present its annual departmental financial statements that are part of the department performance reporting process. However, the spending authorities voted by Parliament remain on an expenditure basis.

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, 2012 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 2012-2013 Main Estimates. In 2013-2014, the changes to departmental authorities resulting from Budget 2012 were reflected in the 2013-2014 Main Estimates tabled in Parliament.

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

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

The above chart outlines the total authorities available within the Agency as of September 30 of each year, the year to date expenditures as well as the expenditures during the quarter. Further analysis is provided below.

Significant Changes to Statement of Authorities

Authorities available for use:
This second quarterly report, ending September 30, 2013, reflects the authorities that were approved for this period. The funding available for use includes the 2013-2014 Main Estimates and the carry-forward. As per the Statement of Authorities Table, at September 30, 2013, Parks Canada's authorities "total available for use for the year ending March 31, 2014" are $5.5 million (0.7%) lower when compared to the same quarter of the previous year.

These changes in Authorities are a result of decreases totaling $56.6 million which are offset by increases totaling $51.1 million. The decreases are mainly attributable to a $19.7 million decrease for savings identified as part of the Budget 2012, a $15 million decrease as a result of the planned completion of a section of the Trans-Canada Highway in Banff National Park, a $7.5 million decrease for emergency response funding for natural disasters, a $4.5 million decrease supporting building the Trans-Canada Trail and a number of small decreases amounting to $9.9 million. The increases are mainly attributable to $47.2 million carried over from 2012-2013 and a number of other small increases amounting to $3.9 million.

Authorities used during the quarter:
In the second quarter of 2013-2014, total budgetary expenditures were $196.8 million compared to $197.6 million reported in the same period of 2012-2013, indicating a $0.8 million (0.4%) decrease for this period.

Authorities used in Vote 20 – Program expenditures during the second quarter of 2013-2014 decreased by $0.7 million compared to the same quarter last year.

Statutory Authorities used during the second quarter of 2013-2014 show $0.8 million decrease in Contributions to Employee Benefit Plans and an increase of $0.7 million in expenditures equivalent to revenues.

Year to date used:
The year to date total budgetary expenditures were $298.8 million compared to $318.1 million reported at the same time last year, indicating a $19.3 million (6.1%) decrease. This variance is mostly due to spending restraint measures put in place as well as the impact to our workforce resulting from implementing Budget 2012 saving measures.

Significant Changes to Budgetary Expenditures by Standard Object

Expended:
As per the Budgetary Expenditures by Standard Object Table, the total expended in the second quarter ending September 30, 2013 decreased by $0.8 million compared to the previous year. This difference can be explained by the following:

Personnel expenditures have continued to decrease in the second quarter by $3.2 million, compared to the previous year and the year to date expenditures have decreased by $17.4 million mainly due to spending restraint measures put in place as well as the impact to our workforce resulting from implementing Budget 2012 savings measures.

Transfer Payment expenditures have decreased by $1.7 million in the second quarter. This is mainly attributable to a contribution agreement for the Trans-Canada Trail that ended last year.

The majority of the increase relates to Professional and Special Services expenditures which is $6.2 million higher compared to the previous year and the year to date expenditures have increased by $6.4 million. The Agency has increased its expenditures in high risk assets which involve projects requiring engineering consulting services.

All other expenditures are consistent with prior year spending trends.

Planned:
As per the Budgetary Expenditures by Standard Object Table, the total planned expenditures in the second quarter ending September 30, 2013 decreased by $5.5 million compared to the previous year, from $749.1 million to $743.7 million, which is mostly due to spending restraint measures put in place as well as the impact to our workforce resulting from implementing Budget 2012 saving measures. There are no changes from the previous quarterly financial report.

Risks and Uncertainties

Parks Canada Agency is funded at 78 percent through voted parliamentary spending authorities appropriated over a two-year period and at 22 percent through respendable revenue of which 60 percent originate from entrance and camping fees. These revenues are impacted by economic fluctuations, competition from other parks and cultural attractions and weather conditions.

In accordance with the Directive for Dam Safety Program of Parks Canada Dams and Water-Retaining Structures, the Agency continues to conduct dam safety reviews for the purpose of assessing their overall status, condition, functionality and identifying recapitalization requirements to ensure public safety and compliance with the Canadian Dam Association Standards. The results of the Dam Safety Reviews will inform the capital and human resource investment required to improve dam condition and/or address public safety risks.

Significant Changes in Relation to Operations, Personnel and Programs

On July 15, 2013, the Right Honourable Stephen Harper, Prime Minister of Canada, announced that Parks Canada will be reporting to the Honourable Leona Aglukkaq, the new Minister of the Environment.

Budget 2012 Implementation

This section provides an overview of the savings measures announced in Budget 2012 of $6.0 million for 2012-2013, $19.7 million for 2013-2014 and $29.2 million for 2014-2015.

These savings are being achieved through efficiencies and streamlining of operations within Parks Canada while the Agency continues to emphasize quality delivery to Canadians. In addition, the Agency is absorbing salary increases as announced in Budget 2010, as well as inflation.

The following are the major elements being implemented:

• Streamlining and consolidating technical and professional services.
• Aligning the seasonality of our workforce to reflect visitor usage patterns of Canada's Parks.

On October 18, 2012, the government announced the navigation season on canals for 2013 to provide a workable schedule going forward while minimizing the impact on the local economies and visitors.

Parks Canada has implemented national human resources strategies to maintain internal networks and focus on attracting, retaining and engaging its workforce. This is aimed at ensuring that Parks Canada's professional and dedicated workforce continues to provide quality services and programs to Canadians.

Approval by Senior Officials

Approved by: