Section III - Supplementary Information

2011-2012 Management Responsibility for Future-oriented Financial Statements

Responsibility for the compilation, content, and presentation of the accompanying future-oriented financial information for the year ended March 31, 2011 rests with the management of the Parks Canada Agency. The future-oriented financial information has been prepared by management in accordance with Treasury Board accounting policies which are consistent with Canadian generally accepted accounting principles for the public sector. The future-oriented financial information is submitted for Part III of Estimated (Report on Plans and Priorities), and will be used in the Agency's Departmental Performance Report to compare with actual results.

Management is responsible for the integrity and objectivity of the information contained in future-oriented financial information and for the process of developing assumptions. Assumptions and estimates are based upon information available and known to management at the time of development, reflect current business and economic conditions, and assume a continuation of current governmental priorities and consistency in departmental mandate and strategic objectives. Much of the future-oriented financial information is based on these assumptions, best estimates, and judgment and gives due consideration to materiality. These statements are based on the best information available and assumptions adopted as at January 11, 2011 and reflect the plans described in the Report on Plans and Priorities. Management believes the estimates and assumptions to be reasonable. However, as with all such assumptions, there is a measure of uncertainty surrounding them. This uncertainty increases as the forecast horizon extends.

The actual results achieved for the fiscal years covered in the accompanying future-oriented financial information will vary from the information presented and the variations may be material.

PARKS CANADA AGENCY

Future-oriented Statement of Operations for the Year Ended March 31

(in thousands of dollars)

Information for the year ended March 31, 2011, includes actual amounts from April 1, 2010 to January 11, 2011. The accompanying notes are an integral part of the financial statements.

PARKS CANADA AGENCY

Notes to Future-oriented Financial Statements for the Year Ended March 31, 2011

(Tables in thousands of dollars)

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, and the Heritage Railway Stations Protection Act.

2. Significant Assumptions

The future-oriented financial statements have been prepared on the basis of the government priorities and the plans of the Agency's as described in the Report on Plans and Priorities.

The main assumptions are as follows:

a) The Agency's core activities will remain substantially the same as for the previous year.
b) Expenses and revenues, including the determination of amounts internal and external to the government, are based on historical experience. The general historical pattern is expected to continue.
c) Allowances for uncollectibility are based on historical experience. The general historical pattern is expected to continue.
d) Estimated year end information for 2010-2011 is used as the opening position for the 2011-2012 forecasts.
e) Due to uncertainty over the estimated amount, the Agency has decided not to report current year's forecasted lapse in the statements.

These assumptions are adopted as at January 11, 2010.

3. Variations and Changes to the Forecast Financial Information

While every attempt has been made to accurately forecast final results for the remainder of 2010-2011 and for 2011-2012, actual results achieved for both years are likely to vary from the forecast information presented, and this variation could be material.

In preparing these financial statements the Agency has made estimates and assumptions concerning the future. These estimates and judgements may differ from the subsequent actual results. Estimates and judgements are continually evaluated and are based on historical experience and other factors, including expectations of future events that are believed to have reasonable certainty under the circumstances.

Factors that could lead to material differences between the future-oriented financial statements and the historical financial statements include:

a) The timing and amounts of acquisitions and disposals of property, plant and equipment may affect gains/losses and amortization expense.
b) Economic conditions may affect the amount of revenue earned.
c) Further changes to the operating budget through additional new initiatives or technical adjustments later in the year.

Once the Report on Plans and Priorities is presented, the Agency will not be updating the forecasts for any changes to appropriations or forecast financial information made in ensuing supplementary estimates. Variances will be explained in the Departmental Performance Report.

4. Summary of Significant Accounting Policies

The Agency's future-oriented financial statements are prepared in accordance with Treasury Board accounting policies, which are consistent with Canadian generally accepted accounting principles for the public sector.

a) Parliamentary appropriations:

The Agency is financed mainly by the Government of Canada through Parliamentary appropriations. Appropriations provided to the Agency do not parallel financial reporting according to Canadian generally accepted accounting principles, as they are based in a large part on cash flow requirements. Consequently, items recognized in the Statement of Operations and the Statement of Financial Position are not necessarily the same as those provided through appropriations from Parliament. Note 5 provides a high level reconciliation between bases of reporting.

b) 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.

c) 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.

d) Tangible capital assets:

(i) Tangible capital assets (excluding land):

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 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 Equity of Canada. 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 are 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:

(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 Equity of Canada.

e) Collections and archaeological sites:

Collections and archaeological sites are recorded at nominal value.

f) Employee future benefits:

(i) Severance benefits:
The Agency accrues its obligations and the related costs as the benefits accrue to employees. The Agency's liability for employee severance benefits is calculated using information derived from the results of the actuarially determined liability for employee severance benefits for the Government as a whole. Employee severance benefits liabilities payable on cessation of employment represent obligations of the Agency that are normally funded by future years' appropriations.

(ii) Pension benefits:
The Agency's employees participate in the Public Service Pension Plan, which is sponsored and administered by the Government of Canada. Pension benefits accrue up to a maximum period of 35 years at a rate of two 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 contributions are expensed during the year in which the services are rendered and represent the total pension obligation of the Agency. The Agency is not required under present legislation to make contributions with respect to actuarial deficiencies of the Public Service Pension Plan.

g) Expenses:

Expenses are recorded on the accrual basis.

(i) Contributions:
Contributions are recognized in the year in which the recipient has met the eligibility criteria or fulfilled the terms of a contractual transfer agreement.

(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 Equity of Canada.

h)Provision for environmental clean-up:

The Agency records a liability for environmental clean-up in situations where the Agency is obligated or is likely to be obligated to incur costs related to the remediation and removal of contaminated material from environmentally contaminated sites, and the cost can be reasonably estimated following a detailed environmental assessment. If the likelihood of the Agency's obligation to incur these costs is not determinable, or if an amount cannot be reasonably estimated, the costs are disclosed as contingent liabilities in the notes to the future-oriented financial information.

i) 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.

j) Measurement uncertainty:

The preparation of the future-oriented 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, environment-related liabilities and claims are the most significant items where estimates are used. Actual results could differ significantly from those estimated.

5. Parliamentary Appropriations

a) Appropriations requested:

Forecast authorities requested for the year ending March 31, 2012 are the planned spending amounts presented in the 2011-2012 Report on Plans and Priorities. Estimated authorities requested for the year ending March 31 2011 include amounts presented in the 2010-2011 Main Estimates and Supplementary Estimates (A) and (B), planned for presentation in Supplementary Estimates (C) and estimates of amounts to be allocated at year-end from Treasury Board central votes.

b) Reconciliation of net cost of operations to authorities requested :

6. Employee Future Benefits

Pension benefits:

The Agency and all eligible employees contribute to the Public Service Pension Plan. This pension plan provides benefits based on years of service and average earnings at retirement. The Agency's and employees' contributions to the Public Service Pension Plan for the year were as follows:

7. Contingencies

a) Claims:

In the normal course of business, claims have been made against the Agency. Legal proceedings for claims totalling approximately $7.4 million were still pending at the date of the preparation of these future-oriented financial statements. Some of these potential liabilities 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 in the Financial Statements. The details of cases and extent of claims are not disclosed for sensitive reasons.

b)Provision for environmental clean-up:

The Agency has identified 442 sites that are known or suspected of contamination. Based on the information available and detailed studies conducted thus far on 393 of these sites, the Agency has estimated clean-up costs of $139.9 million that are not recorded as a liability, as these are not considered likely to be incurred at this time. 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 liabilities will be accrued in the year in which they become known.

8. Summary of Expenses by Major Classification

9. Summary of Revenues by Major Classification

10. Related Party Transactions

a) Transactions in the normal course of business:

The Agency is related in terms of common ownership to all Government of Canada departments, agencies, and Crown corporations. The Agency enters into transactions with these entities in the normal course of business and on normal trade terms that would apply to all individuals and enterprises.

b) Services received without charge:

During the year, the Agency will receive services without charge which are recorded at their estimated cost in the future-oriented financial statements as follows: