Quarterly financial report for the quarter ended December 31, 2021

1. Introduction

This quarterly 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. This report should be read in conjunction with the Main Estimates, the Supplementary Estimates and the previous Quarterly Financial Reports.

A summary description of the Parks Canada Agency’s programs can be found in Part II of the Main Estimates, and a detailed description in Part III – Departmental Plans.

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

1.1 Basis of presentation

This quarterly 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 A and B for the 2021-22 fiscal year. This quarterly 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.

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.

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2. Highlights of fiscal quarter and fiscal year to date results

This section:

• highlights the financial results for the quarter and fiscal year-to-date ended December 31, 2021
• provides explanations of significant variances compared with the same period last year

2.1 Statement of Authorities

Authorities available for use

This quarterly report reflects the funding available for use from the 2021-22 Main Estimates, the 2021-22 Supplementary Estimates A, the 2021-22 Supplementary Estimates B and the 2020-21 unused spending authority^{Footnote 1}. The authorities at the same time last year consisted of 2020-21 Main Estimates, the 2020-21 Supplementary Estimates A, the 2020-21 Supplementary Estimates B, and the 2019-20 unused spending authority.

At December 31, 2021, Parks Canada’s total authorities available for use for the year ending March 31, 2022, are $14.8 million or 1% lower when compared to the same quarter of the previous year (from $1,546.8 million to $1,531.9 million). This decrease in authorities is primarily due to the following factors:

• A net decrease of $142.1 million in spending authorities related to infrastructure investments;
• An increase of $47.8 million in spending authorities related to the initiative to conserve Canada’s land and freshwater, protect species, advance Indigenous reconciliation and increase access to nature (Budget 2021);
• An increase of $44.7 million in spending authorities related to the Youth Employment and Skills Strategy (YESS);
• An increase of $24.1 million due to ratification of collective agreement;
• An increase of $8.8 million in the unused spending authority from 2020-21 (included in the 2021-22 authorities) as compared to 2019-20.

The 2021-22 total authorities available for use includes an approved up-to amount of $71.7 million to, if necessary, partially cover pandemic related revenue shortfalls over the course of the first six months of 2021-22. Given the flattening of the pandemic curve and loosening of restrictions during this period (pre-Omicron), revenue shortfalls, net of savings generated, were immaterial and this funding will not be needed. Revenue impacts, however, have continued into the last six months and are expected to continue into the next fiscal year.

Authorities used during the quarter

In the third quarter of 2021-22, total net budgetary expenditures were $257.2 million compared to $311.9 million reported for the same period in 2020-21, resulting in a decrease of $54.7 million or 18 percent. The decrease in authorities used during the quarter is primarily related to infrastructure investments. The decrease is partially offset by an increase in personnel expenditures due to revised salary rates as a result of ratification of the collective agreement.

Table 1 provides information on the authorities available for use and used during this quarter.

2.2 Budgetary expenditures by standard object (Table 2)

Planned by standard object

Total planned expenditures, for the year ending March 31, 2022, are $14.8 million or 1 percent lower compared to the previous year. The decreases are mainly observed in Acquisition of land, buildings and works and professional services planned expenditures, mainly due to infrastructure investments.

These decreases are partially offset by increases in Personnel and Transfer payments planned expenditures, largely due to additional funding received for the Youth Employment and Skills Strategy (YESS) and the ratification of collective agreements.

Expended by standard object

As per Table 2 (Budgetary expenditures by standard object), the total expended in the third quarter ending December 31, 2021, is $54.7 million or 18 percent lower compared to the previous year.

The major variances are as follows:

• a decrease of $65.3 million in Acquisition of land, buildings and works expenditures related to infrastructure investments; and
• an increase of $8.7 million in Personnel expenditures due to ratification of collective agreement.

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3. Risks and uncertainties

The Agency undertakes a corporate risk assessment every year to support programs, priority setting and resource allocation. The risk assessment identifies key corporate risks that have the greatest impact on the Agency's ability to deliver its Core Responsibility and achieve Departmental Results. The Agency has identified the following key corporate risks for 2021-22:

Environmental forces adaptation and response:

Due to the magnitude and rapid pace of environmental changes, including climate change, there is a risk that the integrity of ecosystems, cultural resources and infrastructure cannot be maintained or improved which may lead to Parks Canada being unable to deliver its mandate.

Relationships with Indigenous peoples:

If Parks Canada does not allocate the necessary time, effort and investment to build and maintain relationships with Indigenous peoples, there is a risk that the Agency may not be able to fulfill its obligations and deliver on its programs and services, which may result in damaged reputation, increased litigation and challenges meeting conservation targets.

Built asset condition and long-term sustainability:

Due to aging infrastructure, inadequate level of recapitalization and maintenance, climate change and inflationary impacts, there is a risk that Parks Canada will not be able to maintain a sustainable asset portfolio which may result in compromised public safety, loss of irreplaceable cultural heritage, and damage to the Agency’s reputation.

Competitive position:

If the Agency does not respond to changing socio-economic conditions and other market influences, there is a risk that Parks Canada’s programs and services may not meet the expectations of Canadians which may lead to a decrease in Agency relevance as measured by a decrease in tourism market share and visitation.

Business Innovation:

If the Agency does not modernize its corporate and internal services, there is a risk that Parks Canada may not have the capacity, business processes and tools to effectively and efficiently support service delivery and meet government management accountability expectations.

Workforce, Equity, Accessibility, Inclusion and Diversity, and Well-Being

If the Agency fails to foster an inclusive and barrier-free work environment that reflects Canada’s diverse population, there is a risk that it may no longer be an employer of choice and will lack the perspective needed to serve all Canadians, which may result in impacts on programs and services, and damage the Agency’s reputation.

COVID-19 pandemic:

Parks Canada’s priority, as it manages through the pandemic, is the health and safety of its employees, visitors and all Canadians. Parks Canada continues to follow public health measures (social distancing, restriction on indoor and group activities, travel restrictions) and to monitor efforts and progress regarding vaccinations with a view to being ready, as appropriate, to adjust operations.

The pandemic continues to create uncertainty with respect to the Agency’s financial situation, particularly its ability to generate revenue to pre-Covid 19 levels, which represents 25% of its on-going operational budget. Funding, up to $71.7 million, had been approved to compensate the Agency for revenue shortfalls it may experience for the period of April 1 to September 30, 2021, if necessary. Given the flattening of the pandemic curve and loosening of restrictions during this period (pre-Omicron), revenue shortfalls, net of savings generated, were immaterial and this funding will not be needed. Revenue impacts, however, have continued into the last six months and are expected to continue into next fiscal year.

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4. Significant changes in relation to operations, personnel and programs

Rima Hamoui, Vice President, Strategic Policy and Planning, has departed the Parks Canada Agency in November 2021. Jewel Cunningham has been occupying the position on an interim basis until an indeterminate successor is identified.

Starting this fiscal year, the Agency transitioned from a multi-year appropriation cycle to a single year and is preparing to transition from one parliamentary vote (or envelop) to two votes (operating and capital) starting next fiscal year, April 1, 2022. Changes to the internal financial management regime are underway to ensure effective financial management under these new requirements.

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5. Approval by senior officials

Approved by:

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Parks Canada Agency
For the quarter ended December 31
Statement of Authorities - Table 1
(Unaudited)

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Parks Canada Agency
For the quarter ended December 31, 2021
Budgetary Expenditures by Standard Object - Table 2
(Unaudited)