Quarterly Financial Report

Quarterly financial report for the quarter ended December 2011

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 2011-12 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 performance reporting process, the Parks Canada Agency prepares its annual audited 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 decrease in resources available for the year and actual expenditures for the quarter ended December 31.

The above chart outlines the total authorities available within the Agency as of December 31 of each year, the year-to-date expenditures as well as the expenditures during the quarter.

Significant Changes to Authorities

As at December 31, 2011, total authorities available for the year are $160.8 million less than compared to the same quarter of the previous year.

The difference is primarily attributable to the end of funding under the Canada Economic Action Plan (CEAP). The major reductions are:

• $142.6 million for improvements and upgrades to national historic sites and Parks Canada’s visitor facilities (CEAP)
• $16.6 million for the assessment, management and remediation of federal contaminated sites (CEAP)
• $15 million for upgrading a section of the Trans-Canada Highway from a two-lane undivided highway to a four-lane divided highway in Banff National Park (CEAP and other)
• $4.5 million for Budget 2010 – Cost containment measures

This decrease is offset by the Voted Appropriations received through the 2011-12 Supplementary Estimates B. The major items are:

• $16.6 million for emergency response to natural disasters, and unanticipated health and safety related capital repairs
• $5.5 million to support the building of the Trans Canada Trail (including a transfer from Environment Canada)
• $4.9 million to support the bicentennial commemoration of the War of 1812
• This increase was reduced by funds available within the Agency’s authority for cost related to contribution to employee benefits plan from 2010-11 in the amount of $7.6 million

Significant Changes to Budgetary Expenditures

Expended:
As per the Budgetary Expenditures by Standard Object Table, the total expended in the third quarter ending December 31, 2011 decreased by $56.5 million compared to the previous year, from $216.3 million to $159.8 million. This represents a 26% decrease of expenditures recorded for the same period in 2010-11. The majority of the decrease between 2010-11 and 2011-12 relates to transportation and communication, professional and special services, repair and maintenance, acquisition of land, buildings & works and is a result of the end of funding relating to the Canada Economic Action Plan for improvements and upgrades to national historic sites and Parks Canada’s visitor facilities. All other expenditures are consistent with prior year spending trends.

Planned:
The decrease in planned expenditures for acquisition of land, buildings and works is also a result of the end of funding related to the Canada Economic Action Plan for improvements and upgrades to national historic sites and Parks Canada’s visitor facilities. However, the increase in planned expenditures for 2011-12 compared to the second quarter, relates mainly to the Agency receiving additional funds through the 2011-12 Supplementary Estimates B. The funds received are to address the most immediate needs related to the unprecedented number of severe weather events that affected 26 national parks and national historic sites by destroying or damaging numerous visitor and operational facilities as well as several highways.

The increase to the transfer payments is mainly due to the funds received in the 2011-12 Supplementary Estimates B to support building the Trans Canada Trail.

Risks and Uncertainties

Parks Canada is primarily funded through voted parliamentary spending authorities appropriated over a 2 year period for program expenditures, including capital expenditures and transfer payments. Also, Parks Canada Agency 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 Quarter 3, the Agency’s operational revenues (also referred to as expenditures equivalent to the revenues in the Statement of Authorities Table) were $3.9 million higher than at the same time last fiscal year. This is a result of an increase in business and land rental revenues as well as improvements to the revenue recording time.

The Federal Budget 2010 announced that the operating budgets of departments/agencies would be frozen at their 2010-11 levels for the fiscal years 2011-12 and 2012-13. To that effect, Parks Canada was required to absorb a $4.5 million collective agreement salary increase and has put in place the following measures to address this:

• A series of interim measures were initially put in place for a 6 month period and have now been extended into 2011-12. The interim measures include: operational cost controls and targeted restrictions on filling vacant positions.
• The Agency is monitoring closely its resources to ensure operating costs are contained, and reallocate throughout the year as necessary.

Budget 2011 announced that departmental budgets would be examined through a Strategic and Operating Review. Pursuant to this review, it is expected that future years' budgets will be reduced for fiscal years commencing in 2012-13. However, at this time, the nature and extent of any reductions are not known.

Parks Canada is responsible for 233 dams and 110 locks that control water levels along its nine historic canals. The replacement value of this infrastructure is estimated at approximately $4 billion. A preliminary vulnerability assessment has recently been carried out and in collaboration with Public Works and Government Services Canada, detailed inspections are now being carried out to determine short-term remedial measures to reduce risks and capital repairs to ensure compliance with safety codes.

Significant Changes in Relation to Operations, Personnel and Programs

Shared Services Canada was created on August 4, 2011 at which time portions of Public Works and Government Services Canada became Shared Services Canada. The second Order-in-Council was passed on November 15 transferring financial accountability for information technology responsibilities from 44 departments to Shared Services Canada. Pursuant to s.31.1 of the Financial Administrative Act and Order-in-Council P.C. 2011-0877 effective November 15, 2011, $7,493,192 is deemed to have been appropriated to Shared Services Canada (Operating Expenditures), which results in a reduction for the same amount in Parks Canada Agency, Vote 25, Appropriation Act No.1, 2011-2012. To date $1,796,125 expenditures have been incurred on behalf of Shared Services Canada by Parks Canada Agency against Shared Services Canada (Operating Expenditures).

Approval by Senior Officials

Approved by:

Statement of Authorities (Unaudited)
	Fiscal Year 2011-2012			Fiscal Year 2010-2011
	Total available for use for the year ending March 31, 2012* (in thousands of dollars)	Used during the quarter ended December 31, 2011 (in thousands of dollars)	Year-to-date used at quarter end (in thousands of dollars)	Total available for use for the year ending March 31, 2011* (in thousands of dollars)	Used during the quarter ended December 31, 2010 (in thousands of dollars)	Year-to-date used at quarter end (in thousands of dollars)
- Vote 25 - Program expenditures	604,866	120,936	365,284	767,404	173,165	475,932
- Vote 30 - Payments to the New Parks and Historic Sites Account	500	0	0	500	0	0
Budgetory statutory authorities
- Employee benefit plans	47,942	11,966	35,938	46,229	15,410	34,672
- Expenditures equivalent to revenues resulting from the conduct of operations pursuant to section 20 of the Parks Canada Agency Act	111,000	26,849	98,168	111,000	27,762	94,316
Total Budgetary Authorities	764,308	159,751	499,390	925,133	216,337	604,920
* Includes authorities available for use and granted by Parliament at quarter-end

Pursuant to s.31.1 of the Financial Administrative Act and Order-in-Council P.C. 2011-0877 effective November 15th, 2011, $7,493,192 is deemed to have been appropriated to Shared Services Canada (Operating Expenditures), which results in a reduction for the same amount in Parks Canada Agency, Vote 25, Appropriation Act No.1, 2011-2012. To date $1,796,125 expenditures have been incurred on behalf of Shared Services Canada by Parks Canada Agency against Shared Services Canada (Operating Expenditures).

Budgetary Expenditures by Standard Object (Unaudited)
	Fiscal Year 2011-2012			Fiscal Year 2010-2011
	Planned expenditures for the year ending March 31, 2012* (in thousands of dollars)	Expended during the quarter ended December 31, 2011 (in thousands of dollars)	Year-to-date used at quarter end (in thousands of dollars)	Planned expenditures for the year ending March 31, 2011* (in thousands of dollars)	Expended during the quarter ended December 31, 2010 (in thousands of dollars)	Year-to-date used at quarter end (in thousands of dollars)
Expenditures:
Personnel	345,631	87,801	291,553	343,737	91,863	291,455
Transportation and communications	41,000	4,448	15,633	41,002	7,513	18,011
Information	11,000	2,556	6,728	11,010	1,950	5,217
Professional and special services	150,134	25,506	60,563	159,122	46,950	98,028
Rentals	19,000	2,944	11,214	16,330	4,572	12,273
Repair and maintenance	50,000	17,413	49,682	57,330	35,215	84,496
Utilities, materials and supplies	72,000	9,407	25,967	63,722	8,994	25,991
Acquisition of land, buildings and works	38,151	4,221	7,952	205,110	18,756	30,570
Acquisition of machinery and equipment	13,000	4,218	10,450	10,400	4,663	12,606
Transfer payments	9,392	3,222	8,179	4,370	3,446	9,500
Other subsidies and payments	15,000	-1,985	11,469	13,000	-7,585	16,772
Total gross budgetary expenditures	764,308	159,751	499,390	925,133	216,337	604,919
* Includes authorities available for use and granted by Parliament at quarter-end